Discrepancy 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.
Your first step is to decide whether a penalty might be appropriate, see CCM17215
- if a penalty might be appropriate you will continue as shown below.
- if a penalty is not appropriate - see CCM17410.
If the enquiry will cover more than one aspect of the claim, see CCM17820 before preparing your opening letter.
If you are working an income discrepancy enquiry and also have reasonable grounds for believing the PY-1 conclusive decision was incorrect, follow guidance in CCM13000.
If you are working an income discrepancy enquiry and do not consider the CY estimated income is appropriate, follow guidance in CCM6830.
You need to send the claimant a letter, see CCM17830. This formally opens your enquiry and explains to the claimant what aspect of their award or claim you are checking and what information HMRC has. It tells them to get in touch if they do not agree the award should be amended. The letter also tells them we will be charging a penalty and asks them to tell us anything they want us to take into account.
Remember that there are strict time limits on when you can open an enquiry, see CCM17120.
We will need to consider any response:
- if the claimant agrees that they were wrong and that the information HMRC has is right, we will make a decision to amend the award or claim based on that information, (see CCM17850) and will consider the amount of any penalty.
if the claimant says that they were not wrong and either claims that HMRC’s information is incorrect or provides other information, we need to think about what they have said, see CCM17860. Once we have considered what the claimant says we will again make a decision. This will be that:
- HMRC’s information is incorrect and that the award or claim shouldn’t be amended, see CCM17860 or
- HMRC’s information is incorrect but that we need to amend the award or claim based on new information provided by the claimant, see CCM17880. We will also consider the amount of any penalty, or
- We are not satisfied with the claimant’s explanation and that HMRC’s information is correct and that the award or claim should be amended based on that information, see CCM17890. We will also consider the amount of any penalty.
- If the claimant doesn’t respond within the time you gave them, you will make a decision to amend the award or claim based on HMRC’s information, see CCM17920. You will then pass the papers to the Reviewing Officer - Formal Penalty submission to consider if a penalty is to be charged.
Once we have made the decision we will write to the claimant explaining the decision and will explain how we will ask them to pay the penalty.
If the claimant appeals against the decision to amend their award, check whether they previously agreed that HMRC’s information was correct. If the claimant previously agreed that HMRC’s information was correct and the claimant has not provided new information write to them reminding them of their previous agreement and invite them to withdraw their appeal, see CCM17950. In all other cases consider whether you can revise your decision to settle the appeal by agreement, see CCM17960. If you cannot revise your decision then the case may need to be heard by the Independent Appeals Tribunal. See CCOM21565.