HMRC internal manual

Claimant Compliance Manual

CCM14210 - Closing the Enquiry: Adjustment needed to the claim and penalties appropriate: Who will meet the settlement

You will normally have had this in mind whilst you were working the enquiry but you need only reach a firm conclusion when you reach the settlement stage. Where a couple claim NTC they are jointly and severally liable for any overpayments. This means that if a Mr and Mrs Green have been overpaid £1,500 we can pursue either of them or both of them until we get all of our money. The legislation also allows us to decide that each of them should pay a specified amount.

The legislation does not allow us to charge an innocent partner a penalty for fraudulently or negligently providing an incorrect claim or statement. For example the enquiry into Mr and Mrs Green’s claim established childcare costs had been overstated you might find out that Mr Green knew nothing about this. Perhaps he handed over the cash to his wife each week and expected her to pay the nursery but unknown to him the children went for less hours and his wife kept the spare cash. In these circumstances, if we believe he did not know about the incorrect claim and could not have been reasonably expected to have known about it, we cannot impose a penalty on him. We can only impose the penalty on Mrs Green for her fraud or neglect.

The legislation refers only to the non-pursuit of penalties from an innocent partner. Our Code of Practice 26 states that in law both partners remain liable to pay the full amount of any overpayment. However, where you are trying to secure a contract letter of offer, and one member of a couple is an innocent partner, it is reasonable to include the overpayment in the settlement being made by the other partner. The innocent partner will, therefore, not be required to repay the overpayment.

Where you encounter resistance from one member of a couple being asked to repay the overpayment in a letter of offer you should consult your manager who can seek further advice via the TALLO from Technical Advice Line .

Who you ask to meet the settlement will depend on the circumstances of the case - see CCM14215.