CCM10710 - Penalties and Interest: Incorrect Claims - Behaviours Leading to a Penalty - Enquiries or Examinations.
A penalty can only be charged where a person makes an incorrect statement or declaration fraudulently or negligently.
For enquiries and examinations 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.
If you have determined the behaviour is Deliberate Error and you are using an S17 notice to finalise one year and set provisional payments for the CY see CCM10810
