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HMRC internal manual

Claimant Compliance Manual

Enquiries: Penalty cases: Overview

Potential enquiries will be sent to the manager who then allocates them to a Compliance Officer. The details are entered on the TCW or CCMIS.

Before an enquiry is opened a number of preliminary checks must be made on each case - see CCM16220. All of the checks must be satisfactory before moving on to the next step.

The next step is to decide whether a penalty might be appropriate, see CCM16230 

  • if a penalty might be appropriate continue as shown below.
  • if a penalty is not appropriate , see CCM16240.

You need to send the claimant a letter, see CCM16520. This formally opens your enquiry and tells the claimant what information you need. The letter also tells them we will be charging interest and a penalty and asks them to tell us anything they want us to take into account.

You then need to consider any response:

  • if the claimant provides the information you asked for, you will make a decision to either
    • take no further action
    • or 
    • adjust the award - see CCM16550 
  • If the claimant doesn’t respond within the time you gave them, you will make a decision as to whether or not to adjust the award - see CCM16710

If you are aware that the customer has applied for a disability benefit and this may have an impact for the enquiry year, you should delay the settlement of your enquiry until the customer has received a decision on entitlement from DWP. This is because they may be are entitled to backdating of the disability/severe disability element of tax credits to the point the DWP awarded it from and once we have closed their S19 enquiry we cannot make further amendments for the year.

For a full explanation on how the award of a disability benefit affects their tax credit award you will need to consider the customer’s individual circumstances and refer to guidance in the Tax Credits Technical Manual, see TCTM05310 for WTC and TCTM05320 for CTC.

Once you have made your decision you should write to the claimant explaining your decision and issue any notice setting out your decision and telling them your enquiry is now closed. The claimant has a right to appeal against your decision.

If the claimant appeals you will need to consider whether you can revise your decision to settle the appeal by agreement, see CCM16650. If you cannot revise your decision then the case may need to be heard by the Independent Appeals Tribunal.