Burden of proof gross negligence

March 7, 2023

Where the Tax Authorities used to get away with evidence based on suspicions, this will no longer be possible. On January 13, 2023, the Supreme Court confirmed that for the presence of gross negligence, the Tax Authorities must also convincingly demonstrate the required facts and circumstances.

Gross negligence is a punishable offense under tax laws in many countries, but it is not enough for the Tax Authorities to simply claim that a taxpayer acted with gross negligence. In a recent court case, the Supreme Court ruled that the Tax Authorities has not demonstrated the presence of gross negligence sufficiently convincing. In line with a previous Supreme Court ruling, the Supreme Court once more made it clear that in case of doubt, the benefit of the doubt must be given to the taxpayer.

According to the Supreme Court, the required facts and circumstances must be established beyond reasonable doubt by the Tax Authorities in order to assume the presence of gross negligence resulting in a punishable offense. This is in accordance with the formulation “doen blijken” in the tax legislation. That concept means that the relevant facts and circumstances must be convincingly demonstrated. The Supreme Court confirms with this ruling that the Tax Authorities must also convincingly demonstrate the required facts and circumstances for the presence of gross negligence. They must demonstrate this fact convincingly, using evidence showing a conscious disregard for one’s tax obligations. In the event of doubt, the benefit of the doubt must be given to the taxpayer.

Key attention points for taxpayers include the following:

1. Keep accurate and complete records: taxpayers should always keep accurate and complete records of their business and financial transactions to help avoid any potential penalties.
2. Stay informed: taxpayers should stay informed about changes in tax laws and regulations and seek professional advice when necessary.
3. Seek professional advice: taxpayers should seek professional advice if they are unsure about their tax obligations or if they are facing an investigation.
4. Respond promptly to requests from Tax Authorities: taxpayers should respond promptly to requests from Tax Authorities and provide all the information required in a timely manner.
5. Challenge the findings of Tax Authorities: taxpayers have the right to challenge the findings of tax authorities and should do so if they believe the findings are incorrect.

By following these key attention points, taxpayers can reduce the risk of being penalized for gross negligence and ensure that their tax obligations are met.