CCM10780 - Penalties and Interest: Incorrect Claims - Penalty Reduction for Voluntary Disclosure

Where a claimant makes an unprompted voluntary disclosure of errors, a resulting penalty is eligible for a reduction. A disclosure is unprompted only if it was made before we contact a claimant to begin an enquiry or examination. A disclosure is unprompted if the claimant realises their error from reading our leaflets, website, etc provided we have not begun an examination or enquiry.

The amount of the reduction for an unprompted voluntary disclosure varies depending on the behaviour category which gave rise to the error:

• Failure to Take Reasonable Care, see CCM10730 - reduction of 100% of the penalty (ie no penalty)
• Serious or Deliberate Error, see CCM10740 - reduction of 50% of the penalty
• Deliberate and Systematic, see CCM10760, Over-Claims - reduction of 50% of the penalty.

Where the voluntary disclosure is prompted no reduction is available. A prompted voluntary disclosure is any disclosure which occurs after we have told the claimant we are beginning an examination or enquiry. To be unprompted, the voluntary disclosure must be made at a time when the claimant has no expectation or fear that we will challenge his claim.

To benefit from a penalty reduction, the claimant must have disclosed all the errors they made as a result of neglect - they must put ‘all their cards face up on the table’ If an examination or enquiry discovers another error which was due to neglect, then no part of the over-claim is treated as an unprompted voluntary disclosure. However, if the examination or enquiry identifies no other errors, or only errors which are not due to neglect, then the disclosure is treated as an unprompted voluntary disclosure.

It is not possible to receive a reduction to a penalty for voluntary disclosure once an enquiry or examination is underway, even if we had not identified the risk at the outset. For example, an enquiry has been opened and the sole risk is a P14 discrepancy. During the enquiry the claimant voluntarily discloses that they have overstated their child care costs. A reduction to the penalty would not be appropriate for the amount of the over-claim on this risk which we would not have found out about if the claimant had not voluntarily disclosed it.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)