CCM10735 – Penalties and Interest: Incorrect Claims – Examples of Failure to take Reasonable Care - Enquiries or Examinations Opened on or after 6 April 2008

It is impossible to provide a definitive list of the circumstances in which an incorrect claim will arise from a Failure to Take Reasonable Care. By the time you reach this stage you will have established the claimant’s entitlement and explored why they made an incorrect statement. Each case should be judged on its own merit, having established all of the claimant’s explanations and circumstances. The following examples show some of the situations you might encounter.

Example 1

Ashley showed profits of £7,956 on the claim for tax credits when the correct figure should have been £9,756. He says this was an accidental transposition error and there was no intent to over-claim credits. Before signing and submitting the claim form Ashley should have taken care to ensure all entries were correct so in principle this is a Failure to Take Reasonable Care.

A transposition error in excess of £1000 is a Serious Error if the difference is substantial - see CCM10740. In this case, the difference is over £1000 but not substantial, so it was a Failure to take Reasonable Care.

Ashley should be told that a repeat of this kind of error could result in a higher penalty.

However, you also need to consider whether there are any circumstances which influenced the mistake, at least on the first occasion. If there are you should check the guidance at CCM10730 to consider whether the behaviour amounts to Mistake or Misunderstanding.

Example 2

Nadine showed child care costs of £85 per week. An enquiry established this was only paid during the school holidays and for the remainder of the year she paid out £50 per week. Nadine says the notes were confusing and she did not realise she had made an incorrect claim. This amounts to a Failure to Take Reasonable Care as Nadine did not take reasonable steps to submit a correct claim – if she found the notes confusing she could have obtained help from the Call Centre or Enquiry Centre, or a reliable external source, and she did not tell us the higher child care costs only occurred in the school holidays.

Once again, you should consider whether there are circumstances which influenced the mistake, at least on the first occasion, see CCM10730.

Example 3

Kimberley B’s child care costs were complex but she did not phone the Helpline or contact an external adviser even though she says she has poor literacy skills. However, limited ability does not in itself mean there is no penalty, see CCM10730. The claimant must take reasonable steps to submit an accurate claim and a penalty may arise for a Failure to Take Reasonable Care. Claimants can seek advice from a Call Centre or Enquiry Centre or from advisory organisations, so should be able to take reasonable steps to make a correct claim. In this case Kimberley B did not take sufficient care to submit a correct claim so this is Failure to Take Reasonable care.