CCM10710 – Penalties and Interest: Incorrect Claims – Behaviours Leading to a Penalty - Enquiries or Examinations Opened on or after 6 April 2008
A penalty can only be charged where a person makes an incorrect
statement or declaration fraudulently or negligently – see
CCM10060 and
CCM10065.
For enquiries and examinations begun on or after 6 April
2008, the level of the penalty will vary depending on the behaviour
which led to the incorrect claim. The penalty is calculated as a
percentage of the tax credits over-claimed and is rounded down to
the nearest £10. The maximum penalty is £3,000 –
see
CCM10790.
Behaviours fall into one of five categories:
- Mistake or misunderstanding - no penalty, see
CCM10720.
- Failure to Take Reasonable Care - 15% penalty - see
CCM10730.
- Serious Error - 25% penalty - see
CCM10740.
- Deliberate Error - 25% penalty - see
CCM10750.
- Deliberate and Systematic Over-claims - 50% penalty - see
CCM10760.
Note: It is the behaviour of the claimant which determines the category of the penalty, not the size of the over-claim. You need to establish the behaviour which led to the error and the penalty category it falls into.
