CCM10100 - Penalties and Interest: Incorrect Claims - Disclosure / Co- Operation – Enquiries or Examinations Opened on or before 5 April 2008

Disclosure/co-operation - an abatement (discount) of up to 50% is available depending on the extent to which the claimant(s) disclosed details of the irregularity and co-operated with the examination or enquiry. This abatement is in keeping with the departmental policy of rewarding those who, regardless of what they have done wrong, help us to bring the examination or enquiry to a speedy conclusion.

The maximum of 50% is available to someone who co-operates fully and promptly with the examination or enquiry and who makes a full and complete disclosure of the irregularities on challenge.

No abatement will be given to someone who refuses to co-operate with the enquiry and who denies the irregularity or deliberately gives incorrect information to hinder our progress.

Between these two extremes will be many variations and you will have to use your judgement to decide on the appropriate abatement. You cannot penalise someone if they were not asked to do something or were not given an opportunity to do so. For example, you open a Section 19 enquiry because you believe the claimant started a second job during the year and the amount potentially involved does not allow this to be worked as a discrepancy enquiry. You already had details of the irregularities from the HMRC database and so you simply had to put your findings to the claimant who admitted the offence on challenge. They have not been asked to do very much other than agree your findings but this should not result in a low abatement.

You will be rewarding people who co-operate promptly but this does not mean they have to respond immediately to all of your communications. They are entitled to a reasonable amount of time and this might depend on their other commitments. For example, you ask the claimant to supply various documents and they say they would like to meet with you to discuss these papers but they cannot get any time off from work for at least a month. As long as they are trying to respond to your enquiries at the earliest possible opportunity they should not be penalised.

The claimant(s) should not be penalised simply because they disagree with your interpretation of something which affects their award of tax credits. They are entitled to disagree with your interpretation and ask you to issue a formal notice revising the award or imposing a penalty so that they can exercise their appeal right. This is not, in itself, lack of co-operation as long as there is a genuine disagreement regarding the interpretation of a particular item. However, a claimant who deliberately ignores your communications forcing you to use formal proceedings will receive little or no abatement.

You must compute your calculation of the penalties on a form 94NTC.