CCM10725 – Penalties and Interest: Incorrect Claims: Examples of Mistake or Misunderstanding - Enquiries or Examinations Opened on or after 6 April 2008
Example 1
Kelly is claiming tax credits for the first time. She incurs
childcare charges for her two children. One child goes to the
childminder full time and the other child goes to the childminder
during the school holidays only.
Kelly struggles to understand the guidance and seeks help
from the Helpline. However, Kelly is still unsure with the
explanation given and puts down the details she thinks she has been
told but makes a mistake on the details for the child in full time
childcare.
This is a Mistake or Misunderstanding because Kelly made the
effort to try to get her claim right. Although she made a mistake,
she was not careless in doing so.
Example 2
Peaches showed profits of £9,256 on her first claim for tax credits when the correct figure should have been £9,756. She says she misread the number ‘7’ as a ‘2’ on her calculations and there was no intent to over-claim credits. Before signing and submitting the claim form Peaches should have taken care to ensure all entries were correct. However, this was an understandable and minor mistake to make on a first claim, so can be accepted as a Mistake or Misunderstanding. Peaches should be told that a repeat of this kind of error could result in a penalty.
Example 3
Billy is in low paid work and lives with his mother. He rings the Helpline to ask if he is able to claim WTC and they say he can claim even though he is living with his mother. Billy fills in the claim form but misunderstands what is meant by a partner and shows his mothers name etc but not her income. His mother also signs the form. An enquiry establishes that Billy showed his mother in error and it should have been a single claim. Had Billy claimed as a single person he would have received exactly the same amount. The incorrect claim arose from a Mistake or Misunderstanding.
Example 4
Angela declared her income to be the amount shown on her P60
form - £16,000. That year she had two separate employments
with the same employer on different terms, one paid weekly the
other monthly, with a variety of hours worked every week. The P60
erroneously showed only information from the second employment,
understating her income by £2,000 – the correct figure
should have been £18,000. In the circumstances it was
reasonable for Angela to rely on her P60 as she could reasonably
expect it to be correct, calculating her annual income figure was
complicated and the amount the income was understated was not
substantial. She did not fail to take reasonable care in submitting
her claim, although for the future she should be advised to check
her P60 carefully for any obvious errors and so we would treat this
as Mistake or Misunderstanding.
As a general rule, taking the information shown on a P60 at
face value is reasonable. However, we would expect some claimants
to realise the information on their P60 is wrong. For example,
if
- their employment arrangements are simple – i.e. they have one employment with set hours for a fixed annual salary; or
- the amount of income understated on the P60 is substantial.
In these and similar circumstances the employer’s error on the P60 is obvious, so if the claimant does not identify the error they have failed to take reasonable care.
Example 5
Kimberley A’s child care costs were complex and she wasn’t sure she understood the guidance notes correctly so she phoned the Helpline. Kimberley had provided all the relevant information, but in completing the form made a small mistake. This was a Mistake or Misunderstanding because Kimberley A made a reasonable attempt to submit a correct claim, even though she made a mistake.
