CCM17830 - Discrepancy Enquiries: Penalty Cases: Opening letter where there may be a penalty

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 CCM17440.

Because you are using the formal enquiry powers under S19 TCA 2002 your first contact with the claimant(s) to open the enquiry must always be in writing. 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.

For cases where there may be a penalty you must use the standard template letter at TCC51A.

The letter formally opens your enquiry and tells the claimant what aspect of their award you are checking and what information you have. It then tells them you will be amending their award to reflect the information you hold and if they do not agree with this information they must contact you within 21 days of the date of the letter. It also tells them we will be charging a penalty and asks them to tell us anything they want us to take into account.

You must enclose a copy of WTC/FS1 which explains the enquiry process to the claimant and also enclose a copy of the leaflet Tax Credits - Penalty decisions which tells them more about penalties.

You should always state the date by which the claimant should get back to you and allow at least 21 days. For example, if you wrote on 06/08/08, you would specify 27/08/08 for a response. If you are aware that postal delays are likely, for example there is a strike or it is close to Christmas, allow a few extra days. Also allow a longer time if you know for example the claimant is abroad or incapacitated and it means they will not be able to reply within 21 days.

Where a person has been awarded tax credits in more than one entitlement unit - see CCM17450. You will need to issue a separate opening letter to each individual entitlement unit.

Your next action will depend on the response to the opening letter. If the claimant:

• Replies - and agrees that our information is correct - see CCM17850
• Replies - and does not agree that our information is correct - see CCM17860
• Does not respond, see CCM17920.

If the claimant replies to the opening letter they may also give you extra information that makes you think that another aspect of the award might be wrong. For example you write to the claimant about a discrepancy in their income from a second employer, and they tell you that not only did they forget to tell HMRC about this but they also forgot to tell you about the change in their childcare costs. This extra information may mean it is more appropriate to carry out a full enquiry into the claimant’s award. See CCM17520 if this happens.

If the claimant phones you to discuss your letter make full notes of everything they say and keep a record in your papers. If the claimant has fully answered your queries over the phone they do not need to reply in writing. If the claimant wants to discuss the penalty you will need to refer the call to a Band O.