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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: miscellaneous charges: WFTC / DPTC penalty determinations and contract settlements

In certain circumstances, where fraud or negligence is suspected, overpayments of WFTC/DPTC are referred for investigation by the TCO. This may result in either a contract (enforceable) settlement or a penalty determination.

Penalty determinations may be raised on individuals for making a fraudulent or negligent claim, or on employers, if, for example, they fail to make correct payments or act fraudulently or negligently.

SAFE AMC action

Local TCO Compliance teams issue WFTC/DPTC related Contract Settlements and Penalty Determinations through SAFE which will make initial applications for payment.

If the charge is not paid, SAFE will enter the charge on a SAFE Local Action worklist and refer it for local action.

Debt technical office action

On receipt of a worklist item

  • send the customer a letter warning of proceedings
  • enclose a return envelope addressed to your office.

If the charge is not paid, consider enforcement action.

Contract Settlements

You can only enforce contract settlements through the county court (DMBM570030).

If you are in doubt about whether a contract is enforceable, seek advice from

  • in England & Wales - the Enforcement Technical Team (Debt Management Bradford)
  • in Scotland - the Recovery Support Group in Edinburgh
  • in Northern Ireland - EIS Edinburgh (Belfast Team).

Penalty Determinations

WFTC/DPTC penalty determinations are due and payable at the end of the period of 30 days beginning with the date of issue of the determination.

TMA70/S100A(3) provides that a penalty determination is recoverable as if it were tax charged in an assessment. You may therefore recover penalty determinations by any appropriate means.

Penalty Determinations under the Tax Credits Act 1999 attract interest under paragraph 8(2) Schedule 4 of that Act, at the rates applied by Section 178 Finance Act 1989. But interest will only be charged on determinations dated on or after 1 April 2002.

Describe the interest in your proceedings as ‘interest under paragraph 8 (2), Schedule 4 Tax Credits Act 1999’.

Interest is charged at the same rate as that charged on overdue income tax.

Correspondence and enquiries

Refer any written or verbal queries about the charge to the issuing TCO Compliance team.