Discrepancy Examinations: Penalty Cases: Claimant disputes HMRC information but you do not agree
If the claimant disputes the information held by HMRC but you do not accept the explanation provided by the claimant you must consult your Band O manager. Your manager will decide whether we will charge a penalty.
The Band O manager will need to consider the type of discrepancy and the claimant’s behaviour which led to the incorrect claim - see CCM10710. In deciding the behaviour category of the penalty the Band O manager will take into account any explanation the claimant has given regarding the error. If there is not enough information to decide on the behaviour category or your manager is not certain there is at least neglect, either your manager or another Band O will need to contact the claimant to discuss why they made the error in their claim.
If your manager decides there is no fraud or neglect there will be no penalty. You (the Compliance Officer) must close the case as shown in CCM17370.
If your manager decides to charge a penalty the papers should be referred to a Band O caseworker to continue to work the case.
Action by Band O caseworker
Your first step is to revise and process the claim for pre-award cases or to revise the award. post-award cases. You must write to the claimant(s) to let them know about your decision. You should always write to them even if you have spoken to them and explained the position on the phone.
You will then calculate the penalty. CCM chapter 10 gives detailed guidance on how to calculate the penalty. Once you have calculated the amount you should show the amount of the penalty on form 94NTC
You must use the standard letter template TCC81 for pre-award cases or TCC61 for post-award cases. The letter explains that you will be amending their claim or award for that year and they will soon receive a formal decision notice. It also explains what will happen about recovering any overpaid tax credits and tells them we will be charging a penalty.
If the claimant has authorised an agent to act for them remember to send a copy of the letter to the agent.
Once you have issued this letter you must then amend the claim or award- see CCOM20115 for pre-award cases or CCOM21210 post-award cases and then BF your papers for 30 days to allow for the appeal period.
If the claimant appeals, see CCM17750.