“Deliberate Behaviour”: What HMRC Actually Means in COP9

The word “deliberate” carries an enormous amount of financial freight in UK tax law. Move a case from “careless” to “deliberate” and the assessment window jumps from 6 years to 20 years, the minimum penalty doubles and the taxpayer becomes liable for publication on HMRC’s deliberate defaulters list. Understanding what HMRC means by the term and how the case law constrains it, is the single most valuable knowledge in a COP9 negotiation.

The three categories of behaviour

Under Schedule 24 to the Finance Act 2007 and the equivalent offshore matrices, HMRC categorises inaccuracies into three behavioural bands. Each band drives the penalty range and the assessment time limit:

• Careless , failure to take reasonable care. Penalty 0–30%, 6-year window.
• Deliberate (but not concealed) , the taxpayer knowingly submitted an inaccurate document. Penalty 20–70%, 20-year window.
• Deliberate and concealed , deliberate behaviour accompanied by active steps to hide it. Penalty 30–100%, 20-year window.

Within each band, the actual percentage depends on whether the disclosure was prompted or unprompted and on the quality of disclosure (telling, helping, giving access). Our penalty calculator models the mechanics.

The legal test for “deliberate”

HMRC’s internal Compliance Handbook (sections CH81120 to CH81160) sets out how its officers should approach the categorisation. The underlying legal test, however, has been developed by the Tribunals and the Supreme Court. The current settled position can be summarised as follows.

For an inaccuracy to be “deliberate”:

• The taxpayer (or someone acting on their behalf) must have known that the document being submitted was inaccurate
• And they must have intended HMRC to rely on it

This is a subjective test focused on the taxpayer’s actual state of mind. It is not enough that a reasonable person would have known the document was wrong, that would be carelessness, not deliberateness.

Objective vs subjective: the case law

Three tribunal and Supreme Court decisions frame the current law.

Auxilium Project Management Ltd v HMRC

The Upper Tribunal in Auxilium confirmed that deliberate behaviour requires actual knowledge of the inaccuracy. A taxpayer who genuinely (but mistakenly) believed the entry was correct cannot be deliberate, however unreasonable the belief.

HMRC v Tooth

The Supreme Court in Tooth confirmed the subjective nature of the test and added an important point: the “deliberate inaccuracy” must be an inaccuracy in the document, not merely a deliberate decision to submit the document. The taxpayer must know that what they are putting in front of HMRC is wrong.

Hicks v HMRC

The Upper Tribunal in Hicks examined what happens when the taxpayer turns a blind eye, suspects the entry might be wrong but chooses not to check. The Tribunal held that wilful blindness can amount to deliberate behaviour where the suspicion is sufficiently strong and the failure to investigate is deliberate.

“Knew or ought to have known”, the boundary line

The single most important phrase in the COP9 negotiation toolkit. The legal threshold for “deliberate” is knew. The standard for careless is what they ought to have known on the reasonable taxpayer test. Where the evidence shows the taxpayer ought to have known but cannot be shown actually to have known, the right category is careless, with all the financial consequences that follow.

HMRC officers sometimes blur the two standards, particularly under pressure to justify a 20-year window. Recognising the conflation and pushing back on the legal test is core specialist work.

Worked examples

Example 1: Turning a blind eye, deliberate

A taxi firm owner knows that drivers are taking cash from passengers and not declaring all of it. The owner takes a fixed weekly figure from each driver and does not check the underlying takings. When asked by HMRC, the owner says “I didn’t want to know.” This is deliberate behaviour via wilful blindness.

Example 2: Vague awareness, no checking, potentially deliberate

A company director notices that the bookkeeper has been processing some personal grocery and fuel expenses through the company without challenge for several years. The director never raises it, never asks. Whether this is deliberate or careless turns on the strength of the awareness and the obviousness of the inaccuracy. In our experience, HMRC will push this towards deliberate; the defence is usually a mixture of careless reliance and minor materiality arguments.

Example 3: Genuine reliance on professional advice, usually careless or innocent

A landlord with multiple properties relies on an accountant to file returns. The accountant misclassifies certain capital expenditure as repairs. The landlord reads the return, sees what the accountant has written and signs. When HMRC challenges the treatment, the landlord can point to the advice received. Provided the reliance was reasonable and the advice was on a contestable technical point, this is normally careless at worst, sometimes innocent error.

Example 4: Suppressed cash, almost always deliberate

A restaurant owner runs a parallel set of records for “real” takings and submits returns based on a reduced figure. There is no plausible “I didn’t know” defence. This is deliberate and the active maintenance of false records pushes the case towards deliberate-and-concealed.

Example 5: Fictitious invoices, deliberate and concealed

A construction company books false subcontractor invoices to reduce taxable profits. The invoices are physical documents created to deceive. This is deliberate-and-concealed by definition, the concealment is in the creation of the false document.

Deliberate and concealed, a separate higher category

Concealment is not merely “deliberate plus something extra to make the penalty higher.” It is a separate finding that requires HMRC to identify the concealing conduct. Examples include:

• Creating false invoices, contracts or accounting entries
• Routing transactions through nominee or offshore accounts to disguise their origin
• Lying in correspondence with HMRC during the enquiry
• Destroying or altering records to frustrate HMRC’s view
• Using cash or crypto to avoid leaving an audit trail of receipts

The distinction matters because the concealed category attracts the highest penalty bands (50–100% prompted, 200% in offshore cases) and is the strongest indicator HMRC uses internally when weighing criminal referral. Even within an accepted CDF, concealment findings can move the negotiated penalty up by 15–30 percentage points.

How to argue for careless rather than deliberate

Where the evidence is consistent with either category, the arguments that move HMRC towards careless are typically:

• Reliance on professional advice. A genuine, documented reliance on the work of an apparently competent accountant or tax adviser is one of the strongest arguments for careless rather than deliberate.
• Lack of personal involvement in records. Where the taxpayer was not the person preparing the figures and had no realistic means of detecting the error, deliberate behaviour is hard to establish.
• Inconsistent conduct. Behaviour that benefited and disadvantaged the taxpayer in roughly equal measure suggests carelessness rather than intent. A deliberate fraudster does not make mistakes against themselves.
• Voluntary disclosure of the inaccuracy. Coming forward unprompted (or substantially so) is inconsistent with the intent to deceive.
• Health, capacity and personal context. Documented illness, bereavement, addiction or capacity issues during the relevant period can support a careless characterisation.
• Technical contestability. Where the inaccuracy turns on a debatable point of tax law, deliberate behaviour is much harder to establish.

None of these arguments is decisive in isolation. Effective negotiation typically combines several, supported by documentary evidence and a coherent narrative submitted with the Disclosure Report. For the wider CDF process see our CDF guide.

Impact on penalties

The financial leverage on getting the behaviour categorisation right is significant. For a £100,000 underpayment of tax:

• Careless, prompted , penalty range £15,000 to £30,000
• Deliberate (not concealed), prompted , penalty range £35,000 to £70,000
• Deliberate and concealed, prompted , penalty range £50,000 to £100,000
• Offshore deliberate, prompted , penalty up to £200,000

The mid-band penalty within a category is normally where settlements land; the bottom of the band requires high-quality disclosure with full cooperation.

Impact on time limits

Section 36 of the Taxes Management Act 1970 (and equivalents for other taxes) caps HMRC’s assessment window. The category drives the cap:

• Innocent error: 4 years
• Careless: 6 years
• Deliberate (onshore): 20 years
• Offshore failure-to-correct: 12 years (non-deliberate)
• Offshore deliberate: 20 years

The 14-year gap between careless (6) and deliberate (20) is where most of the tax exposure in a serious case sits. A taxpayer whose conduct is properly characterised as careless can argue that years 7–20 are out of time and cannot be assessed.

Publication of deliberate defaulters’ details

Under the Publishing Details of Deliberate Defaulters (PDDD) scheme, HMRC publishes the name, address, occupation and tax shortfall of taxpayers whose deliberate defaults exceed £25,000 in tax. The list is published quarterly on GOV.UK and entries remain online for 12 months.

Cases settled through the CDF with high-quality disclosure are typically not published, because PDDD only applies where the maximum penalty reduction for disclosure has not been earned. This is one of the additional reasons it is worth approaching the disclosure constructively rather than defensively. For context on how CDF acceptance shapes the whole procedure, see the pillar COP9 guide and the practical first-steps article on receiving a COP9 letter.

Frequently asked questions

Related guides

• Code of Practice 9: the complete UK guide
• Received a COP9 letter? The first 7 days
• COP9 vs COP8
• The Contractual Disclosure Facility explained
• HMRC penalty calculator