Choosing the behaviour category in a disclosure

Q: How does the choice change the numbers?

Illustration only. A decorator has left about £1,000 of tax a year off his returns for 9 years. If the omissions were careless, the disclosure covers up to 6 years and, disclosed unprompted with full help, the penalty could be reduced to nil. If they were deliberate, all 9 years go in and the lowest unprompted penalty is 20%, so at least £1,800 on £9,000 of tax, plus interest on every year. If he also kept a second, hidden cash book, the floor rises to 30%. How the penalty moves within the range is explained in how HMRC reduces penalties for disclosure.

When you make a voluntary disclosure, you decide whether the tax went unpaid despite reasonable care, through carelessness or deliberately, and if deliberately whether you also concealed it. That label fixes how many years the disclosure must cover (up to 4, 6 or 20) and the penalty range you apply. HMRC checks the choice, and a disclosure that understates the behaviour can be rejected or followed by a wider check.

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Why does the behaviour category decide so much?

The years come from the assessment time limits in the Taxes Management Act 1970. Section 34 gives HMRC 4 years after the end of the tax year, section 36(1) gives 6 years where a loss of income tax or capital gains tax was brought about carelessly, and section 36(1A) gives 20 years where it was brought about deliberately or is attributable to a failure to notify chargeability under section 7. HMRC’s disclosure guide applies the same periods, and the penalty ranges come from factsheet CC/FS7a.

Behaviour	Years to include	Unprompted penalty range	Prompted penalty range
Reasonable care	Up to 4	No penalty	No penalty
Careless	Up to 6	0% to 30%	15% to 30%
Deliberate	Up to 20	20% to 70%	35% to 70%
Deliberate and concealed	Up to 20	30% to 100%	50% to 100%

Two points cut across the table. First, HMRC’s guide says that if you did not register for Self Assessment by the right deadline you must pay what you owe for up to 20 years, whatever your behaviour. Second, where an inaccuracy involves an offshore matter or transfer, the period can be up to 12 years even without deliberate behaviour, and penalties can reach 200%; those cases go through the Worldwide Disclosure Facility. Whether the disclosure is unprompted is a separate question, covered in prompted or unprompted disclosure.

When can you say you took reasonable care?

CH81120 says reasonable care depends on the person’s abilities and circumstances: HMRC does not expect the same expertise from an unrepresented self employed individual as from a multinational. It does expect records good enough to make a correct return, and it expects someone facing an unfamiliar transaction to find out the tax treatment or take advice. CH81130 gives examples of errors despite reasonable care, such as a reasonably held view that is later not upheld, a small arithmetical slip, or following wrong advice from a competent adviser who had all the facts.

HMRC’s disclosure guide is blunt: it does not expect many people’s circumstances to fall in this category, and it asks anyone who believes they took reasonable care to call the relevant helpline before making the disclosure. Note also paragraph 3(2) of Schedule 24 to the Finance Act 2007: an error that was innocent when made is treated as careless if you later discover it and do not take reasonable steps to tell HMRC. Delay after discovery can therefore change the category.

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What makes an error careless rather than deliberate?

Paragraph 3(1)(a) of Schedule 24 defines careless as a failure to take reasonable care. CH81140 applies the standard of a prudent and reasonable taxpayer in your position. The question is not whether you knew about the error; if you did, it is deliberate. Typical careless cases are poor record keeping, failing to check figures, or not asking about a new kind of income.

CH81140 adds that repetition does not automatically mean carelessness, but if a person becomes aware of the cause of an error and then repeats it, the repetitions may be deliberate. So behaviour is not always one label for the whole period. A trader who left out cash sales through muddle in early years, then realised and carried on leaving them out, may have careless years followed by deliberate ones, each with its own time limit and penalty range.

When is it deliberate, and when is it also concealed?

HMRC’s guide says deliberate means you knew you owed tax but chose not to tell HMRC, or knew the figures on your return were wrong when you sent it. CH81150 adds that HMRC does not need to show you knew the correct figure, only that you knew the figure given was not accurate. Its indicators include knowingly failing to record all sales, claiming personal expenses of a size or frequency that the error must have been known, and leaving out material offshore income where you knew you needed specialist advice and did not get it.

Under paragraph 3(1)(c), the behaviour is deliberate and concealed if you also made arrangements to hide the inaccuracy. CH81160 lists false invoices, backdated contracts, destroyed records, diverting takings into undisclosed bank accounts and altering purchase invoices. Simply not mentioning income is deliberate; building a paper trail to disguise it is concealment.

Does the same test apply to a failure to notify?

For someone who never registered, the penalty is for failure to notify under Schedule 41 to the Finance Act 2008. Factsheet CC/FS11 uses three behaviours: non deliberate, deliberate but not concealed, and deliberate and concealed. The non deliberate range depends on timing: 0% to 30% if disclosed unprompted within 12 months of the tax being due, 10% to 30% after that, and 10% to 30% or 20% to 30% if prompted. Deliberate ranges match those for inaccuracies. See failure to notify penalties.

Does an adviser’s behaviour count as yours?

Section 36(1B) of the Taxes Management Act 1970 says a loss brought about by another person acting on your behalf counts as brought about by you for the 6 and 20 year limits. CC/FS7a also says that if you ask someone else to act for you, you must do everything you reasonably can to prevent inaccuracies. Relying on an adviser can still show reasonable care where you gave full facts; see relying on an adviser and reasonable care.

How does the choice change the numbers?

Illustration only. A decorator has left about £1,000 of tax a year off his returns for 9 years. If the omissions were careless, the disclosure covers up to 6 years and, disclosed unprompted with full help, the penalty could be reduced to nil. If they were deliberate, all 9 years go in and the lowest unprompted penalty is 20%, so at least £1,800 on £9,000 of tax, plus interest on every year. If he also kept a second, hidden cash book, the floor rises to 30%.

How the penalty moves within the range is explained in how HMRC reduces penalties for disclosure.

What happens if HMRC disagrees with your choice?

The guide says HMRC will consider whether the penalty you applied is fair, that the form has space to explain your reasoning, and that if the penalty looks too low it may carry out a further check. It gives the example that HMRC may not accept that someone in business for many years earning significant amounts without telling it did not act deliberately. If checks show a disclosure is largely wrong, HMRC will seek much higher penalties.

A deliberate disclosure also raises other questions. Only the Contractual Disclosure Facility under Code of Practice 9 gives an assurance of no criminal investigation. HMRC says it will not publish the details of a deliberate defaulter who notifies, discloses fully with payment by the deadline and cooperates; see publishing deliberate tax defaulters.

What are the common mistakes?

Picking careless to keep to 6 years when the facts show the person knew income was taxable.
Using one label for every year when awareness changed partway through.
Claiming reasonable care without calling HMRC first, as the guide asks.
Leaving the explanation box empty, which invites HMRC to make its own judgement.
Forgetting that not registering for Self Assessment brings in up to 20 years regardless of the label.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.