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HMRC internal manual

Claimant Compliance Manual

HM Revenue & Customs
, see all updates

Penalties and interest: guidance or advice is found to be incorrect

The Department takes great care to ensure its advice to the public is up to date and correct but on some rare occasions it might be found to be incorrect. This could be because:-

  • the legislation has been changed but the guidance has not been updated
  • the guidance was written in good faith but is now known to be incorrect
  • the guidance issued has been misunderstood by some staff so that incorrect advice has been given to customers.

Customers might therefore make incorrect claims or fail to notify changes of circumstances because of this incorrect guidance or advice.

We can only charge a penalty where an incorrect claim has been made fraudulently or negligently and if the reason for the error is the customer followed our guidance, which is now known to be incorrect, they have not behaved negligently. They have taken reasonable steps to ensure their claim is correct. However, that is only the position where:-

  • the overpayment relates to the incorrect guidance, it does not include overpayments relating to other errors
  • the customer has acted reasonably for example in making the claim for 2010/2011 they should refer to the notes that accompany or relate to that claim form. It would be unreasonable to base the claim on the 2008/2009 notes.

It is more difficult where the customer says they followed advice given by an Enquiry Centre or one of the telephone contact centres. If you believe what they say there is no negligence so there is no penalty but if you doubt what they say you are entitled to challenge their word. The telephone contact centres maintain a log of all calls made by a customer and you are entitled to access this information. Not only can you find out if a call was made to a telephone contact centre and if so on what date but you can also call for a copy of the telephone conversation. If you and your manager doubt what the customer says you can find out if a call was made and the contents of the call by following the guidance at CCM5475.

It will be very difficult to disprove advice allegedly given at an Enquiry Centre unless a note was made of the call at the time. It will always be worth checking whether a note was made on household notes but if not you will have to use your judgement as to whether you believe the customer. If you do not believe the customer and a penalty determination is issued it will carry a right of appeal. It would then be for HMRC and the customer to present their versions of events at the tribunal. It will therefore be worth bearing in mind whether the customer would make a reliable witness at an appeal hearing and whether the tribunal is likely to accept their word.

Note: From 30 June 2014 all HMRC Enquiry Centres will have closed and a new service of specialist help over the phone, supported by a mobile team of face to face advisors will be introduced. The new telephone and mobile advisory service will be available through normal helplines.