CCM4410 - Post-award examinations: 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.
In post-award examinations the customer will not have received all of the payments for that claim. However, it is still HMRC’s policy to charge penalties.
When deciding if a penalty might be appropriate you should consider the following
Step 1
Is the amount of the tax credit at risk £4,000 or more?
- If it is , there might be a penalty, go to CCM4815
- If not, then go to Step 2.
Step 2
Is the risk one of the following?
- a fictitious child
- income from a 2nd job has not been entered on the claim
- income from a partners job has not been entered on the claim
- If yes there might be a penalty - go to CCM4815
- If 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 CCM4815
- If no, there is no penalty - go to CCM4415