CCM4410 - Post-award examinations: Action: Is a penalty appropriate?
Where an incorrect claim or statement has been made fraudulently
or negligently HMRC can charge a penalty in addition to recovering
any over-claim. The maximum penalty is £3,000 per incorrect
claim or statement.
There are different opening letters for cases with and
without penalties so you need to decide whether a penalty might be
appropriate. When the case was entered on TCW an entry should have
been made for the tax credit at risk. This is the amount that might
be overpaid if we do not review the award.
In post-award examinations the claimant will not have
received all of the payments for that claim. However, it is still
HMRC’s policy to charge penalties to deter claimants from
‘trying it on’.
When deciding if a penalty might be appropriate you should
consider the following:-
Step 1
Is the amount of the tax credit at risk £2,000 or more?
- if it is , there might be a penalty, go to CCM4815
- if it is not, then go to step 2.
Step 2
Is the risk one of the following?
- a fictitious child
- income from a 2nd job has not been entered on the claim
- income from a partners job has not been entered on the claim
- if yes’ there might be a penalty – go to CCM4815
- if it is not, then go to step 3
Step 3
Has there been a previous claim within the last 2 years that was adjusted following compliance action.
