Discrepancy Enquiries: 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 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 CCM17510.
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 the award.
If you are working an income discrepancy enquiry and the PY-1 income was also queried you will also need to revise the PY-1 award.
If you are working an income discrepancy enquiry and the CY estimate was also queried you will also need to revise the CY award.
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 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 must use the standard letter template TCC61. The letter explains that you will be amending their award for that year and they will soon receive a formal notification of their revised award. 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 award- see CCOM21210.
Then BF your papers for 30 days to allow for an appeal.
If the claimant appeals, see CCM17950.