CCM8230 - Closing the Examination: Adjustment needed to the Claim and Penalties appropriate – Overview of Settlement including Penalties

In pre-award cases your examination will have established an incorrect application and in post-award cases your examination will have established either an incorrect application or a failure to notify a notifiable change of circumstances. In an examination into an unprocessed change of circumstances you will have established either that the notification was incorrect and/or the original application was incorrect. In addition to being able to revise or set the amount of the award the guidance in CCM Chapter 10 - Penalties ( CCM10000) will have shown you need to seek a penalty.

The way in which you close an examination involving a penalty is very different to the position where there is no penalty. HMRC’s preferred method of settling a case involving a penalty is with a contract letter of offer. If there is an overpayment which is recoverable in-year (see CCM8125) this will be included in the offer. In all other cases it will be a penalty-only offer. There will be a number of stages involved in a case where you intend to seek a penalty and these can be summarised as follows:

• are adjustments needed for an earlier or later year – see CCM8232
• what to include in the letter of offer – see CCM8235
• who will meet the settlement – see CCM8240
• is a settlement meeting needed – see CCM8295
• issuing the penalty leaflet – see CCM8300
• obtaining a certificate of full disclosure – see CCM8340
• amend or terminate the award or arrange for the claim to be processed – see CCM8380
• calculating the overpaid credits, if any – see CCM8400
• establishing ability to meet the settlement – see CCM8410
• calculating the penalties and interest – see CCM8470
• inviting the letter of offer – see CCM8480
• accepting the letter of offer – see CCM8560
• noting TCW – see CCM8630
• closing the office records and retain papers.

Although each of these are individual stages which need to be considered in the order shown above, in practice you need to be aware of each of them throughout your examination so that you and the claimant are aware of what happens next.