CCM17440 - Discrepancy Enquiries: Action: Opening letter where there is no penalty

Your first step is to decide whether a penalty might be appropriate, see CCM17215

  • if a penalty might be appropriate - see CCM17810
  • if a penalty is not appropriate you will continue as shown below

Because you are using the formal enquiry powers under S19 TCA 2002 your first contact with the claimant(s) to open the enquiry must always be in writing. If the enquiry will cover more than one aspect of the claim, see CCM17420 before preparing your opening letter.

If you are working an income discrepancy enquiry and also have reasonable grounds for believing the PY-1 conclusive decision was incorrect, follow guidance in CCM13000.

If you are working an income discrepancy enquiry and do not consider the CY estimated income is appropriate, follow guidance in CCM6830.

You must use the standard template letter at TCC50A

The letter tells the claimant what aspect of their award you are checking and what information you have. It then tells them you will be amending their award to reflect the information you hold and if they do not agree with this information they must contact you within 21 days of the date of the letter

You must also enclose a copy of the WTC/FS1 factsheet which explains the enquiry process to the claimant.

Where the claim has been made by a couple in a joint household, only one opening letter should be sent addressed to both claimants even if the query only relates to one of the claimants. When sending out joint letters the claimants must still be part of a couple and residing at the same address. If they are part of a couple but residing at different addresses or no longer part of a couple, then a separate letter and WTC/FS1 factsheet must still be sent to each claimant

If you do not send the letter to both claimants in joint claims your enquiry will not be valid. If you later realise that you made a mistake and only sent the letter to one of the claimants you can only correct this by sending a copy to the other claimant if you are still within the enquiry window, see CCM12115 for more guidance on this situation.

You need to send separate letters where a person has been awarded tax credits as an individual and as a member of a couple in your enquiry year. This is because they are part of more than one entitlement unit during the year. You must send separate letters in respect of each individual entitlement unit, see CCM17450 for an example.

You should always state the date by which the claimant should reply and allow at least 21 days. For example, if you wrote on 06/08/08, you would specify 27/08/08 for a response. If you are aware that postal delays are likely, for example there is a strike or it is close to Christmas, allow a few extra days. Also allow a longer time if you know for example the claimant is abroad or incapacitated and it means they will not be able to reply within 21 days.

Your next action will depend on whether there is any response to the opening letter. The claimant will either:

  • reply agreeing that our information is correct and their claim should be adjusted, see CCM17470
  • reply disagreeing with our information and/or providing alternative information, see CCM17480
  • not respond, see CCM17530.

If the claimant replies to the opening letter they may also give you extra information that makes you think that another aspect of the award might be wrong. For example you write to the claimant about a discrepancy in their income from a second employer, and they tell you that not only did they forget to tell HMRC about this but they also forgot to tell you about the change in their childcare costs. This extra information may mean it is more appropriate to carry out a full enquiry into the claimant’s award. See CCM17520 if this happens.

If the claimant phones you to discuss your letter, make full notes of everything they say and keep a record in your papers. If the claimant has fully answered your queries over the phone they do not need to complete the declaration.