CCM10660 - Penalties and Interest: Provisional Nil Awards and Penalties

Once someone makes a provisional claim to tax credits they are then required to notify certain changes of circumstance (see CCM10130) and complete end of year declarations. This would mean that someone who fails to notify a change of circumstances even though it might still result in a nil award would be liable for a penalty of up to £300 if they had not notified the change of circumstances within 1 month. Before 6 April 2007 claimants had 3 months to notify a change of circumstances, CCM1050.

It has been agreed we will not charge penalties where a nil award is made and an un-notified change of circumstances has occurred as long as there is no change to the award. The reason for this is we consider claimants to have a reasonable excuse for not notifying such changes of circumstance where the award remains at nil but they should notify them on any end of year declaration.

There will be some cases where a provisional nil award is made and there is then an un- notified change of circumstances which would still have left the award at nil. However, at a later point the claimant gets in touch to notify a reduction in their income which now gives them an award of WTC or CTC or both. It is better for us to learn of any previously un-notified change of circumstances at the time at which they notify us about their change of income but if they do not give this information or are not asked for it then we will allow them 1 month from the date of the new award to tell us about the previous change of circumstances. Before 6 April 2007 claimants had 3 months to notify a change of circumstances. If they have not notified us after this period, then penalties apply as normal.