CCM14330 - Closing the Enquiry: Calculating the penalties and interest
To arrive at the expected offer you will need to calculate the
proposed penalties and any interest. You should use a form 94 NTC
(see copy at
CCM21360). The 94 NTC includes lines for
overpaid credits, interest and penalties. The overpaid credits and
interest will only be included in your letter of offer where there
is no continuing award.
Chapter 10 of the CCM tells you how to calculate the
penalties and you should enter the appropriate penalty on the form
94 NTC.
Where in an enquiry case, an overpayment arises as a result
of fraud or neglect, interest will be charged if the overpayment is
not repaid within 30 days of the date of the first specified date,
see
CCM11045.
Where you are seeking a contract offer you will be doing so
because a penalty is due, therefore, unless the penalty purely
relates to a failure to notify a notifiable change of
circumstances, there must have been fraud or neglect so your
settlement should also include interest. Chapter 10 of the CCM
tells you how to calculate interest but you must bear in mind the
following points.
- No entitlement to tax credits – if you conduct an
examination and it establishes there is no
entitlement to tax credits, the overpayment is recoverable in-year
and interest (if applicable) runs from 30 days after the date of
the revised decision notice. However, where you establish no
entitlement to tax credits as a result of an
enquiry then interest (if applicable) runs from 30
days after the first specified date following the end of the tax
year regardless of the date on which you issue the revised award
notice.
- Enquiry concluded after the first specified date – in all
enquiry cases where interest is applicable it is calculated 30 days
from the first specified date if any part of the overpayment
remains outstanding on that date. In many enquiry cases interest
will therefore run from a date prior to when you opened your
enquiry. For example, on 1 December 2006 you open an enquiry for
2005/2006 and by 2 February 2007 you have established there is an
adjustment needed to the claim. If the overpayment arises as a
result of fraud or neglect interest will be charged from 30
September 2006 even though the overpayment was not established
until some time after that date. However, the overpayment itself is
only repayable 30 days after a revised award notice is issued.
Where we settle a case with a letter of offer we still allow the
claimant 30 days to repay the overpayment.
Once you have added up the four possible elements of the
settlement you should round the expected offer down to the nearest
£10. Your proposed figures should then be submitted to your HO
Operational Manager. The HO Operational Manager will need to ensure
the suggested offer is technically sound, the proposed penalty is
reasonable and any interest is correctly calculated. If the
proposed figures are approved the HO Operational Manager must
complete the form 94NTC to show the offer has been approved.
Your calculation of the suggested offer must take all
circumstances into account including the ability to pay and once
approved you must not normally depart from the suggested figure. It
is not your starting point for negotiations. It is intended to be
the bottom-line figure. The calculation and approval of the
suggested offer must be made before you discuss the settlement
proposals with the claimant.
