6 May 2003

In amongst all the publicity for the new tax credits -"Money with your name on it" - there has been no mention of the enormous penalties that the Inland Revenue can impose on claimants who fail to give them information or give the wrong information.

In relation to most benefits, failure to provide information, unless you are committing deliberate fraud, is likely to result in your benefit being stopped and possibly any overpayment being recovered - but not a huge financial penalty. But tax credits are administered not by the Department of Work and Pensions, but by the Inland Revenue who have a very different approach to such matters.

If you fail to provide information requested by the Inland Revenue in connection with a tax credit claim you may face a penalty of up £300 plus a further £60 a day for every day that you continue to fail to provide the information. You should normally be given at least thirty days in which to provide any required information.

If you fraudulently or negligently give the Inland Revenue incorrect information in connection with your tax credit claim you can face a penalty of up to £3,000.

If you are claiming a tax credit you should attempt to deal with any requests for information as promptly as possible. If you do find yourself in difficulties, seek help from an advice agency without delay. The Inland Revenue should take into account any personal or health issues when deciding whether to impose a penalty and how much it should be. They can also choose not to recover a penalty from you if it would cause hardship and you have a right to appeal against any penalty that is imposed.


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