CCM8470 - Closing the Examination: Calculating the Penalties and Interest

To arrive at the expected offer you will need to calculate the proposed penalties and detailed instructions regarding penalties can be found in the Chapter 10 - Penalties and Interest of the CCM. You should use a form 94NTC (see copy at CCM21360). The 94NTC includes lines for overpaid credits and interest, but in most examinations you will only be recovering a penalty. If the payment of the penalty is being delayed beyond the normal 30 days you will need to consider including interest in respect of the late payment of the penalty - see CCM10400.

If, exceptionally, you will be recovering overpaid credits and any interest thereon, they must be included on the form 94NTC to arrive at the amount of the offer. Having added up the 4 possible elements of the settlement you should round the expected offer down to the nearest £10. Your proposed figures must then be submitted for approval to your HO Operational Manager.

The authorising officer will need to ensure that the suggested offer is technically sound, the proposed penalty is reasonable and any interest is correctly charged. If the proposed figures are approved, the authorising officer 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 ability to pay and once approved you must not normally depart from this 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.

Schedule 2 of the Tax Credits Act 2002 provides time limits for the determination of penalties. These are linked to the period for opening and completing an enquiry, so there should not be a restriction to any examination involving a penalty. If, exceptionally, your examination has not been settled 12 months after the end of the tax year covered by the examination, then you will need to check with your manager if you can still claim penalties. (This text has been withheld because of exemptions in the Freedom of Information Act 2000)For examinations into 2006/2007 claims you can therefore determine penalties up to 30 August 2009 without any further thought for the penalty time limits.