CCM10270 - Penalties and interest: making a decision

S16(1) allows us to make a decision on the customer’s entitlement to tax credits where we have reasonable grounds for believing the award to be incorrect. S16(1) does not contain any details as to how we should reach the decision.

S18(1) and S19(3) both allow us to decide whether a person is entitled to tax credits and if so, the amount to which the person is entitled. Again, the legislation does not contain any details as to how we should reach the decision.

In the absence of any other legislation the decision must be made to the best judgement of the person making the decision. This does not mean you must be absolutely certain of the situation. You can make reasonable estimates but what you cannot do is make a total estimate on which all elements of judgement are missing. It is impossible to give guidance on all situations which you might encounter but the following gives an indication of what is and is not acceptable.

  1. You know the customer’s wife has been receiving income from a holiday flat. She is not an SA taxpayer because the rents are less than her personal allowances. You know she charges £180 per week and the holiday season lasts for 24 weeks. Despite a S19(2) notice you have not received details of the rents. It is reasonable to estimate the rents at £4,320 (£180 x 24). If you had not been told the flat was available for 24 weeks it would have been reasonable to conclude it was available for the summer season. It might be you estimate this to be 20 weeks or perhaps 28 weeks because you can use your local knowledge to estimate the length of the season. It would not be reasonable to estimate 52 weeks rent.
  2. In example 1. above if the customer had not told you how much his wife charged but you knew it was a 3 bedroom flat in a desirable part of Torquay you could use local knowledge to estimate the likely rent.
  3. In example 1 above if you did not know how much the customer’s wife charged and you did not know the size/description of the property it would not be possible to make a reasonable estimate. This could only ever be a total guess because in absence of any other information (for example, bank statements showing deposits of the rent) the elements you need for judgement are missing.
  4. The customer has accepted he was living with a partner since the summer of 2010. He cannot be sure of the precise date the partner moved in but knows she was there by the time the children broke up from school for the summer holiday. It would be reasonable to decide they were living together from 1 July 2010. In the absence of other information it would be unreasonable to decide they were living together from 6 April 2010.