Tax credits penalties
What happens at the end of a check
Contents
- Introduction
- Why we charge penalties
- Your penalty
- Not telling us about a change in circumstances
- Reasonable excuse
- Supplying incorrect information
- Couples
- Paying your penalty
- The amount of your penalty
- If you agree with the penalty
- Arranging payment
- If you disagree with the penalty
- Interest
- Co-operation
- Your rights
- Customer Service
- HM Revenue & Customs commitment
- Putting things right
- Customers with particular needs
- Further information
- Open Government
This leaflet tells you about the penalties you may get if your claim for tax credits is not correct. It also explains how to appeal against those penalties.
Introduction
When you make a claim for Child Tax Credit or Working Tax Credit you are responsible for making sure that the information on your claim form is correct.
This leaflet is for anyone who may get charged a penalty after we have carried out a check on their tax credits claim. It does not tell you everything about penalties, but it does tell you what is likely to happen and what you can do if we charge you a penalty.
Why we charge penalties
We charge penalties to
- encourage people to take care and make sure their claims Interest 5 are correct
- stop claimants from supplying incorrect information,
- and penalise those who try to defraud the system.
Your penalty
You may be liable to a penalty if
- we find that you have not told us about a change in your circumstances that results in a tax credits overpayment, or
- you have supplied incorrect information about your tax credits claim.
Not telling us about a change in circumstances
If you do not tell us about the following changes in your circumstances, we can charge you a maximum penalty of up to £300.
You must tell us within three months if
- you marry or become a civil partner or part of a couple who live together as husband and wife or as civil partners
- you stop being part of a married couple or civil partnership or a couple living together as husband and wife or as civil partners
- your childcare costs go down by £10 a week or more
- you stop paying childcare
- you or your partner leave the country for more than 8 weeks.
Reasonable excuse
We will not charge you a penalty if you have a reasonable excuse for not telling us about a change in your circumstances.
What is a reasonable excuse?
A reasonable excuse might be that
- you had a serious illness that prevented you from sending the information
- we received your notification late because of an unexpected postal dispute.
A reasonable excuse is not that
- you have been too busy to tell us about a change in circumstances
- you did not realise you had to tell us about a change in circumstances.
Please tell us if you think you have a reasonable excuse and we will consider what you say.
Whether your excuse is reasonable is a matter of law. If we do not agree that your excuse is reasonable you can ask the Appeals Tribunal to decide (see Your rights).
Supplying incorrect information
We can charge you a penalty of up to £3,000 if you have negligently not taken care to make sure any information you sent us was correct. This includes the information you give
- in your claim
- on any notification of a change in circumstances, and in response to a particular request for information during our checks. We will explain why we believe that you have been negligent. If you do not accept our explanation you can ask the Appeals Tribunal to decide (see Your rights).
What is negligence?
Negligence is not taking reasonable care. A careful person would make a complete and correct claim read the notes supplied with the claim that relate to their own circumstances ask for help if they are unable to cope with the claim or declaration themselves. Plain carelessness can be negligence. We will not consider you negligent if you have had wrong advice given to you by an HMRC Enquiry Centre, Job Centre Plus or an adviser such as the Citizens Advice Bureau.
Couples
If you have made a joint claim with your partner, you are both responsible for the information you provide in your claim. We will charge you a penalty as a couple where either of you could have told us about any change in circumstances, or you were both responsible for supplying incorrect information.
If the incorrect information relates to one partner - and the other person could not have reasonably known that it was not correct we will only charge the penalty on that partner. The maximum penalty for a joint claim is the same as for an individual claim.
Paying your penalty
We will contact you if we find that you have become
liable to a penalty. We can do this by phone in
a meeting, or
in writing. We will explain why we are charging
you a penalty and tell you the maximum amount chargeable.
We will always consider lesser penalty and we will
discuss this with you.
The amount of your penalty
When working out the amount of the penalty reduction, we will take into account the amount of tax credits over-claimed whether you have been liable for tax credits penalties before, and the extent to which you co-operate with us in providing information to establish your proper entitlement to tax credits and to bring our check to a close.
If you do not understand our explanation of the
penalty, you can ask us to put it in writing so
that you can seek
independent advice.
If you agree with the penalty
We will discuss the arrangements for payment covering
- any overpaid tax credits
- any interest due, and
- the penalty.
Depending on your circumstances, you can pay either in a lump sum or by instalments.
Arranging payment
Once we have agreed the arrangements we will ask you to sign a letter that sets out
- the total amount you have to pay, and
- the final date for payment, or the number of instalments and when they are due.
We will send you a final letter accepting the arrangement. This exchange of letters is a legally binding contract. If you refuse to pay, we will take legal action to recover any money you owe.
If you disagree with the penalty
You should let us know. We will listen to what you have to say.If we cannot agree, we will issue a penalty notice so that you can appeal or appoint a representative to appeal for you.
Interest
We may charge you interest if we have overpaid tax credits because of negligence on your part. We also charge interest on any penalties that you pay late.
Co-operation
The extent to which you co-operate and provide us with information is entirely up to you. You should remember that the level of your co-operation could affect the amount of any penalty.
If you are not sure whether to give us the information, we suggest you get independent advice before deciding what to do. We may decide to reduce or stop your current tax credits payments based on the information we hold. If you are reluctant to co-operate, we suggest you get independent advice before deciding what to do.
Help
You can get help from your local Citizens Advice Bureau. You will find them in The Phone Book.
Your rights
You have the right to appeal if we
- ask you to pay penalties or interest, or
- amend your award.
You can get more information about how to appeal by reading our leaflet How to appeal against a tax credits decision or award (PDF 41K), which you can also get from any HM Revenue & Customs Enquiry Centre.
We will not treat your right of appeal as non co-operation.
Appeals Tribunal
If we do not agree with your appeal we will send your claim to an independent Unified Appeals Tribunal. They will listen to both of us and decide whether you will have to the pay the penalty and how much you will have to pay.
If you disagree with the Appeals Tribunal’s decision, you can appeal to the Social Security Commissioners. You will be sent information on how to do this with the Appeals Tribunal’s decision notice.
Customer Service
HM Revenue & Customs commitment
We aim to provide a high quality service with guidance that is simple, clear and accurate.
We will
- be professional and helpful
- act with integrity and fairness, and
- treat your affairs in strict confidence within the law.
Putting things right
If you are not satisfied with our service, please let the person dealing with your affairs know what is wrong. We will work as quickly as possible to put things right and settle your complaint.
If you are still unhappy, ask for your complaint to be referred to the Complaints Manager.
Customers with particular needs
We offer a range of facilities for customers with particular needs, including
- wheelchair access to nearly all HMRC Enquiry Centres
- help with filling in forms
for people with hearing difficulties
- BT Typetalk
- induction loops.
We can also arrange additional support, such as
- services of an interpreter
- sign language interpretation
- leaflets in large print, Braille and audio
- home visits, if you have limited mobility or caring responsibilities and cannot get to one of our Enquiry Centres.
Further information
Open Government
The New Tax Credits Claimant Compliance Manual contains more details about our work in this area.
