CCM10620 - Penalties and Interest

Guidance or Advice is Incorrect - Incorrect Claims

We can only charge a penalty where an incorrect claim has been made fraudulently or negligently and if the reason for the error is the claimant followed our guidance, which is now known to be incorrect, they have not behaved negligently. They have taken reasonable steps to ensure their claim is correct. However, that is only the position where:-

• the overpayment relates to the incorrect guidance, it does not include overpayments relating to other errors
• the claimant has acted reasonably for example in making the claim for 2005/2006 they should refer to the notes that accompany or relate to that claim form. It would be unreasonable to base the claim on the 2003/2004 notes.

It is more difficult where the claimant says they followed advice given by an IREC or one of the telephone contact centres. If you believe what they say there is no negligence so there is no penalty but if you doubt what they say you are entitled to challenge their word. The telephone contact centres maintain a log of all calls made by a claimant and you are entitled to access this information. Not only can you find out if a call was made to a telephone contact centre and if so on what date but you can also call for a copy of the telephone conversation. If you and your manager doubt what the claimant says you can find out if a call was made and the contents of the call by following the guidance at CCM5475.

It will be very difficult to disprove advice allegedly given at a IREC unless a note was made of the call at the time. It will always be worth checking whether a note was made on household notes but if not you will have to use your judgement as to whether you believe the claimant. If you do not believe the claimant and a penalty determination is issued it will carry a right of appeal. It would then be for HMRC and the claimant to present their versions of events at the tribunal. It will therefore be worth bearing in mind whether the claimant would make a reliable witness at an appeal hearing and whether the tribunal is likely to accept their word.