CCM16230 - Enquiries: 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.

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 CCM16520
  • if it is not, then go to step 2.

Step 2

Is the risk one of the situations shown in CCM10750?

  • if yes’ there might be a penalty - go to CCM16520
  • 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.

  • If yes, there might be a penalty - go to CCM16520
  • If no, there is no penalty - go to CCM16240