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HMRC internal manual

Claimant Compliance Manual

Closing the Examination: Penalty Only

Many examinations will result in a penalty. You will have to show the nature of the offence in the statement of penalties.

For each offence leading to a penalty you will need to show the tax year to which the award of tax credits relates or did relate. For each penalty you will then need to describe the nature of the offence and you should choose your description from the following:

  • Penalty under Section 31(1)(a) Tax Credits Act 2002 for fraudulently/negligently *making an incorrect [statement or declaration in or in connection with a claim for tax credit.] [notification of a change of circumstances.] Or
  • Penalty under Section 31(1)(b) Tax Credits Act 2002 for fraudulently/negligently *giving incorrect information or evidence in response to a requirement imposed on you. Or
  • Penalty under Section 32(3) Tax Credits Act 2002 for failing to notify a change of circumstances on ……………………………………. .

  • Delete as appropriate.

For penalties under Section 31(1)(a) and (b) you must show either fraud or neglect, but not both. In almost all cases worked in the Claimant Compliance Centres you will be saying they have behaved negligently. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

For penalties under Section 32(3) you should show the date on which the change of circumstances occurred so that there is no doubt about the change to which this relates. Wherever possible you should show the precise date but on some occasions you might only have established the month of the change in which case you should show “in” followed by the month of the change.

Where your letter covers more than one penalty you should list each one separately in the statement of penalties.