Office of Public Sector Information
PART 1 continued
(1) After giving a notice under section 17 the Board must decide—
(a) whether the person was entitled, or the persons were jointly entitled, to the tax credit, and
(b) if so, the amount of the tax credit to which he was entitled, or they were jointly entitled,
for the tax year.
(2) But, subject to subsection (3), that decision must not be made before a declaration or statement has been made in response to the relevant provisions of the notice.
(3) If a declaration or statement has not been made in response to the relevant provisions of the notice on or before the date specified for the purposes of section 17(4), that decision may be made after that date.
(4) In subsections (2) and (3) “the relevant provisions of the notice” means—
(a) the provision included in the notice by virtue of subsection (2) of section 17,
(b) the provision included in the notice by virtue of subsection (4) of that section, and
(c) any provision included in the notice by virtue of subsection (6) of that section.
(5) Where the Board make a decision under subsection (1) on or before the date referred to in subsection (3), they may revise it if a new declaration or statement is made on or before that date.
(6) If the person or persons to whom a notice under section 17 is given is or are within paragraph (a) or (b) of subsection (8) of that section, the Board must decide again—
(a) whether the person was entitled, or the persons were jointly entitled, to the tax credit, and
(b) if so, the amount of the tax credit to which he was entitled, or they were jointly entitled,
for the tax year.
(7) But, subject to subsection (8), that decision must not be made before a statement has been made in response to the provision included in the notice by virtue of subsection (8) of section 17.
(8) If a statement has not been made in response to the provision included in the notice by virtue of that subsection on or before the date specified for the purposes of that subsection, that decision may be made after that date.
(9) Where the Board make a decision under subsection (6) on or before the date referred to in subsection (8), they may revise it if a new statement is made on or before that date.
(10) Before exercising a function imposed or conferred on them by subsection (1), (5), (6) or (9), the Board may by notice require the person, or either or both of the persons, to whom the notice under section 17 was given to provide any further information or evidence which the Board consider they may need for exercising the function by the date specified in the notice.
(11) Subject to sections 19 and 20 and regulations under section 21 (and to any revision under subsection (5) or (9) and any appeal)—
(a) in a case in which a decision is made under subsection (6) in relation to a person or persons and a tax credit for a tax year, that decision, and
(b) in any other case, the decision under subsection (1) in relation to a person or persons and a tax credit for a tax year,
is conclusive as to the entitlement of the person, or the joint entitlement of the persons, to the tax credit for the tax year and the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year.
(1) The Board may enquire into—
(a) the entitlement of a person, or the joint entitlement of persons, to a tax credit for a tax year, and
(b) the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year,
if they give notice to the person, or each of the persons, during the period allowed for the initiation of an enquiry.
(2) As part of the enquiry the Board may by notice—
(a) require the person, or either or both of the persons, to provide any information or evidence which the Board consider they may need for the purposes of the enquiry, or
(b) require any person of a prescribed description to provide any information or evidence of a prescribed description which the Board consider they may need for those purposes,
by the date specified in the notice.
(3) On an enquiry the Board must decide—
(a) whether the person was entitled, or the persons were jointly entitled, to the tax credit, and
(b) if so, the amount of the tax credit to which he was entitled, or they were jointly entitled,
for the tax year.
(4) The period allowed for the initiation of an enquiry is the period beginning immediately after the relevant section 18 decision and ending—
(a) if the person, or either of the persons, to whom the enquiry relates is required by section 8 of the Taxes Management Act 1970 (c. 9) to make a return, with the day on which the return becomes final (or, if both of the persons are so required and their returns become final on different days, with the later of those days), or
(b) in any other case, one year after the beginning of the relevant section 17 date.
(5) “The relevant section 18 decision” means—
(a) in a case in which a decision must be made under subsection (6) of section 18 in relation to the person or persons and the tax year to which the enquiry relates, that decision, and
(b) in any other case, the decision under subsection (1) of that section in relation to the person or persons and that tax year.
(6) “The relevant section 17 date” means—
(a) in a case in which a statement may be made by the person or persons in response to provision included by virtue of subsection (8) of section 17 in the notice given to him or them under that section in relation to the tax year, the date specified in the notice for the purposes of that subsection, and
(b) in any other case, the date specified for the purposes of subsection (4) of that section in the notice given to him or them under that section in relation to the tax year.
(7) A return becomes final—
(a) if it is enquired into under section 9A of the Taxes Management Act 1970 (c. 9), when the enquiries are completed (within the meaning of section 28A of that Act), or
(b) otherwise, at the end of the period specified in subsection (2) of that section in relation to the return.
(8) An enquiry is completed at the time when the Board give notice to the person or persons of their decision under subsection (3); but if the Board give notice to the persons at different times the enquiry is completed at the later of those times.
(9) The person, or either of the persons, to whom the enquiry relates may at any time before such notice is given apply for a direction that the Board must give such a notice.
(10) Such an application is to be heard and determined in the same way as an appeal against a decision under subsection (3); and the General Commissioners or Special Commissioners hearing the application must give the direction applied for unless satisfied that the Board have reasonable grounds for not making the decision or giving the notice.
(11) Where the entitlement of a person, or the joint entitlement of persons, to a tax credit for a tax year has been enquired into under this section, it is not to be the subject of a further notice under subsection (1).
(12) Subject to section 20 and regulations under section 21 (and to any appeal), a decision under subsection (3) in relation to a person or persons and a tax credit for a tax year is conclusive as to the entitlement of the person, or the joint entitlement of the persons, to the tax credit for the tax year and the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year.
(1) Where in consequence of a person’s income tax liability being revised the Board have reasonable grounds for believing that a conclusive decision relating to his entitlement to a tax credit for a tax year (whether or not jointly with another person) is not correct, the Board may decide to revise that decision.
(2) A person’s income tax liability is revised—
(a) on the taking effect of an amendment of a return of his under section 9ZA(1) of the Taxes Management Act 1970,
(b) on the issue of a notice of correction under section 9ZB of that Act amending a return of his (provided that he does not give a notice of rejection before the end of the period of thirty days beginning with the date of issue of the notice of correction),
(c) on the amendment of an assessment of his by notice under section 9C of that Act,
(d) on the amendment of a return of his under section 12ABA(3)(a) of that Act,
(e) on the amendment of a return of his under subsection (6)(a) of section 12ABB of that Act after the correction of a partnership return under that section (provided that the amendment does not cease to have effect by reason of the rejection of the correction under subsection (4) of that section),
(f) on the issue of a closure notice under section 28A of that Act making amendments of a return of his,
(g) on the amendment of a return of his under section 28B(4)(a) of that Act,
(h) on the making of an assessment as regards him under section 29(1) of that Act,
(i) on the vacation of the whole or part of an assessment of his under section 32 of that Act,
(j) on giving him relief under section 33 of that Act, or
(k) on the determination (or settlement) of an appeal against the making, amendment or vacation of an assessment or return, or a decision on a claim for relief, under any of the provisions mentioned in paragraphs (c), (f) and (h) to (j).
(3) But no decision may be made under subsection (1)—
(a) unless it is too late to enquire into the person’s entitlement under section 19, or
(b) after the period of one year beginning when the person’s income tax liability is revised.
(4) Where the Board have reasonable grounds for believing that—
(a) a conclusive decision relating to the entitlement of a person, or the joint entitlement of persons, to a tax credit for a tax year is not correct, and
(b) that is attributable to fraud or neglect on the part of the person, or of either of the persons, or on the part of any person acting for him, or either of them,
the Board may decide to revise that decision.
(5) But no decision may be made under subsection (4)—
(a) unless it is too late to enquire into the entitlement, or joint entitlement, under section 19, or
(b) after the period of five years beginning with the end of the tax year to which the conclusive decision relates.
(6) “Conclusive decision”, in relation to the entitlement of a person, or joint entitlement of persons, to a tax credit for a tax year, means—
(a) a decision in relation to it under section 18(1), (5), (6) or (9) or 19(3) or a previous decision under this section, or
(b) a decision under regulations under section 21 relating to a decision within paragraph (a),
including a decision made on an appeal against such a decision.
(7) Subject to any subsequent decision under this section and to regulations under section 21 (and to any appeal), a decision under subsection (1) or (4) in relation to a person or persons and a tax credit for a tax year is conclusive as to the entitlement of the person, or the joint entitlement of the persons, to the tax credit for the tax year and the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year.
Regulations may make provision for a decision under section 14(1), 15(1), 16(1), 18(1), (5), (6) or (9), 19(3) or 20(1) or (4) to be revised in favour of the person or persons to whom it relates if it is incorrect by reason of official error (as defined by the regulations).
(1) Regulations may make provision as to the manner and form in which—
(a) information or evidence is to be provided in compliance with a requirement imposed by a notice under section 14(2), 15(2), 16(3), 18(10) or 19(2), or
(b) a declaration or statement is to be made in response to a notice under section 17.
(2) Regulations may make provision as to the dates which may be specified in a notice under section 14(2), 15(2), 16(3), 17, 18(10) or 19(2).
(1) When a decision is made under section 14(1), 15(1), 16(1), 18(1), (5), (6) or (9), 19(3) or 20(1) or (4) or regulations under section 21, the Board must give notice of the decision to the person, or each of the persons, to whom it relates.
(2) Notice of a decision must state the date on which it is given and include details of any right to appeal against the decision under section 38.
(3) Notice need not be given of a decision made under section 14(1) or 18(1) or (6) on the basis of declarations made or treated as made by the person or persons in response to the notice given to him or them under section 17 if—
(a) that notice, or
(b) in the case of a decision under subsection (6) of section 18, that notice or the notice of the decision under subsection (1) of that section,
stated what the decision would be and the date on which it would be made.
(1) Where the Board have made an award of a tax credit, the amount of the tax credit awarded must be paid to the person to whom the award is made, subject to subsections (2) and (3).
(2) Where an award of a tax credit is made to the members of a married couple or an unmarried couple, payments of the tax credit, or of any element of the tax credit, are to be made to whichever of them is prescribed.
(3) Where an award of a tax credit is made on a claim which was made by one person on behalf of another, payments of the tax credit, or of any element of the tax credit, are to be made to whichever of those persons is prescribed.
(4) Where an award of a tax credit has been made to a person or persons for the whole or part of a tax year, payments may, in prescribed circumstances, continue to be made for any period, after the tax year, within which he is or they are entitled to make a claim for the tax credit for the next tax year.
(5) Payments made under subsection (4) are to be treated for the purposes of this section and the following provisions of this Part as if they were payments of the tax credit for the next tax year.
(6) Subject to section 25, payments of a tax credit must be made by the Board.
(7) Regulations may make provision about the time when and the manner in which a tax credit, or any element of a tax credit, is to be paid by the Board.
(8) If the regulations make provision for payments of a tax credit, or any element of a tax credit, to be made by the Board by way of a credit to a bank account or other account notified to the Board, the regulations may provide that entitlement to the tax credit or element is dependent on an account having been notified to the Board in accordance with the regulations.
(1) Regulations may require employers, when making Schedule E payments and in any such other circumstances as may be prescribed, to pay working tax credit, or prescribed elements of working tax credit, to employees.
(2) The regulations may, in particular, include provision—
(a) requiring employers to make payments of working tax credit, or prescribed elements of working tax credit, in accordance with notices given to them by the Board,
(b) for the payment by the Board of working tax credit in cases where an employer does not make payments of working tax credit, or prescribed elements of working tax credit, in accordance with the regulations and with any notices given by the Board,
(c) prescribing circumstances in which employers are not required to make, or to continue making, payments of working tax credit, or prescribed elements of working tax credit,
(d) for the provision of information or evidence for the purpose of enabling the Board to be satisfied whether employers are complying with notices given by the Board and with the regulations,
(e) requiring employers to provide information to employees (in their itemised pay statements or otherwise),
(f) for the funding by the Board of working tax credit paid or to be paid by employers (whether by way of set off against income tax, national insurance contributions or student loan deductions for which they are accountable to the Board or otherwise),
(g) for the recovery by the Board from an employer of funding under paragraph (f) to the extent that it exceeds the amount of working tax credit paid by the employer,
(h) for the payment of interest at the prescribed rate on sums due from or to the Board, and for determining the date from which interest is to be calculated, and
(i) for appeals with respect to matters arising under the regulations which would otherwise not be the subject of an appeal.
(3) Section 20 of the Taxes Management Act 1970 (c. 9) (power to call for documents etc.) applies (with sections 20B and 20BB) in relation to an employer’s compliance with regulations under this section as in relation to a person’s tax liability (but subject to the modifications provided by subsection (4)).
(4) Those sections apply by virtue of subsection (3) as if—
(a) the references to the taxpayer, a taxpayer or a class of taxpayers were to the employer, an employer or a class of employers,
(b) the reference to any provision of the Taxes Acts were to regulations under this section,
(c) the references to the proper assessment or collection of tax were to the proper award or payment of working tax credit,
(d) the reference to an appeal relating to tax were to an appeal relating to compliance with regulations under this section, and
(e) the reference to believing that tax has been, or may have been, lost to the Crown were to believing that the Crown has, or may have, incurred a loss.
(5) In this Part—
“employee” means a person who receives any Schedule E payment, and
“employer”, in relation to an employee, means a person who makes any such payment to the employee.
(6) “Schedule E payment” means a payment of, or on account of, any income assessable to income tax under Schedule E.
(7) “Student loan deductions” means deductions in accordance with regulations under section 22(5) of the Teaching and Higher Education Act 1998 (c. 30), section 73B(3) of the Education (Scotland) Act 1980 (c. 44) or Article 3(5) of the Education (Student Support) (Northern Ireland) Order 1998 (S.I. 1998/1760 (N.I. 14)).
(1) Regulations may provide that where—
(a) an employer which is a body corporate has failed to repay any funding to the Board in accordance with regulations made under section 25(2)(g), and
(b) the provision of the funding, or the failure by the employer to repay the funding, appears to the Board to be attributable to fraud or neglect on the part of one or more individuals who, at the time of the fraud or neglect, were officers of the body corporate (“culpable officers”),
the culpable officers are required to pay to the Board the amount of funding recoverable by the Board from the employer.
(2) Regulations under this section must include provision—
(a) for any amount paid to the Board by a culpable officer in accordance with the regulations to be deducted from the amount of funding liable to be repaid by the employer,
(b) for the amount which a culpable officer is liable to pay under the regulations to be reduced where the amount of funding recoverable from the employer is reduced by payments made to the Board by the employer, and
(c) for the Board to repay to a culpable officer the amount (if any) by which the amount that he has paid to the Board pursuant to the regulations exceeds the reduced amount that he is liable to pay by virtue of paragraph (b).
(3) Regulations under this section may include provision—
(a) requiring payments by culpable officers to be made in accordance with notices given to them by the Board,
(b) for determining, in cases of an employer in relation to which there is more than one culpable officer, the proportion of the amount of funding recoverable from the employer that is payable by each culpable officer,
(c) for the payment of interest at the prescribed rate on sums due to or from the Board, and for determining the date from which interest is to be calculated, and
(d) for appeals with respect to matters arising under the regulations.
(4) “Officer”, in relation to a body corporate, means—
(a) any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act as such, and
(b) in a case where the affairs of the body corporate are managed by its members, any member of the body corporate exercising functions of management with respect to it or purporting to do so.
Schedule 1 (rights of employees not to suffer unfair dismissal or other detriment) has effect.
(1) Where the amount of a tax credit paid for a tax year to a person or persons exceeds the amount of the tax credit to which he is entitled, or they are jointly entitled, for the tax year (as determined in accordance with the provision made by and by virtue of sections 18 to 21), the Board may decide that the excess, or any part of it, is to be repaid to the Board.
(2) In this Part such an excess is referred to as an overpayment.
(3) For overpayments made under awards on single claims, the person to whom the tax credit was awarded is liable to repay the amount which the Board decide is to be repaid.
(4) For overpayments made under awards on joint claims, the persons to whom the tax credit was awarded are jointly and severally liable to repay the amount which the Board decide is to be repaid unless the Board decide that each is to repay a specified part of that amount.
(5) Where it appears to the Board that there is likely to be an overpayment of a tax credit for a tax year under an award made to a person or persons, the Board may, with a view to reducing or eliminating the overpayment, amend the award or any other award of any tax credit made to the person or persons; but this subsection does not apply once a decision is taken in relation to the person or persons for the tax year under section 18(1).
(6) Where the Board decide under section 16 to terminate an award of a tax credit made to a person or persons on the ground that at no time during the period to which the award related did the person or persons satisfy—
(a) section 8(1) (if the award related to child tax credit), or
(b) section 10(1) (if it related to working tax credit),
the Board may decide that the amount paid under the award, or any part of it, is to be treated for the purposes of this Part (apart from subsection (5)) as an overpayment.
(1) Where an amount is liable to be repaid by a person or persons under section 28, the Board must give him, or each of them, a notice specifying the amount.
(2) The notice must state which of subsections (3) to (5) is to apply in relation to the amount or any specified part of the amount; and a notice may at any time be replaced by another notice containing a different statement.
(3) Where a notice states that this subsection applies in relation to an amount (or part of an amount), it is to be treated for the purposes of Part 6 of the Taxes Management Act 1970 (c. 9) (collection and recovery) as if it were tax charged in an assessment and due and payable by the person or persons to whom the notice was given at the end of the period of thirty days beginning with the day on which the notice is given.
(4) Where a notice states that this subsection applies in relation to an amount (or part of an amount), it may, subject to provision made by regulations, be recovered by deduction from payments of any tax credit under an award made for any period to the person, or either or both of the persons, to whom the notice was given.
(5) Where a notice states that this subsection applies in relation to an amount (or part of an amount), regulations under section 203(2)(a) of the Income and Corporation Taxes Act 1988 (c. 1) (PAYE) apply to it as if it were an underpayment of tax for a previous year of assessment by the person or persons to whom the notice was given.
(1) Where it has been determined in accordance with the provision made by and by virtue of sections 18 to 21 that a person was entitled, or persons were jointly entitled, to a tax credit for a tax year and either—
(a) the amount of the tax credit paid to him or them for that tax year was less than the amount of the tax credit to which it was so determined that he is entitled or they are jointly entitled, or
(b) no payment of the tax credit was made to him or them for that tax year,
the amount of the difference, or of his entitlement or their joint entitlement, must be paid to him or to whichever of them is prescribed.
(2) Where the claim for the tax credit was made by one person on behalf of another, the payment is to be made to whichever of those persons is prescribed.
(1) Where a person fraudulently or negligently—
(a) makes an incorrect statement or declaration in or in connection with a claim for a tax credit or a notification of a change of circumstances given in accordance with regulations under section 6 or in response to a notice under section 17, or
(b) gives incorrect information or evidence in response to a requirement imposed on him by virtue of section 14(2), 15(2), 16(3), 18(10) or 19(2) or regulations under section 25,
a penalty not exceeding £3,000 may be imposed on him.
(2) Where a person liable to a penalty under subsection (1) is a person making, or who has made, a claim for a tax credit for a period jointly with another and the penalty is imposed—
(a) under paragraph (a) of that subsection in respect of the claim, a notification relating to the tax credit claimed or a notice relating to the tax credit awarded on the claim, or
(b) under paragraph (b) of that subsection in respect of a requirement imposed on him with respect to the tax credit for the period,
a penalty of an amount not exceeding £3,000 may be imposed on the other person unless subsection (3) applies.
(3) This subsection applies if the other person was not, and could not reasonably have been expected to have been, aware that the person liable to the penalty under subsection (1) had fraudulently or negligently made the incorrect statement or declaration or given the incorrect information or evidence.
(4) Where penalties are imposed under subsections (1) and (2) in respect of the same statement, declaration, information or evidence, their aggregate amount must not exceed £3,000.
(5) Where a person acts for another—
(a) in or in connection with a claim or notification referred to in subsection (1), or
(b) in response to a notice so referred to,
subsection (1) applies to him (as well as to any person to whom it applies apart from this subsection).
(1) Where a person fails—
(a) to provide any information or evidence which he is required to provide by virtue of section 14(2), 15(2), 16(3), 18(10) or 19(2) or regulations under section 25, or
(b) to comply with a requirement imposed on him by a notice under section 17 by virtue of subsection (2)(a), (4)(a) or (6)(a) of that section,
the penalties specified in subsection (2) may be imposed on him.
(2) The penalties are—
(a) a penalty not exceeding £300, and
(b) if the failure continues after a penalty is imposed under paragraph (a), a further penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which the penalty under that paragraph was imposed (but excluding any day for which a penalty under this paragraph has already been imposed).
(3) Where a person fails to give a notification required by regulations under section 6(3), a penalty not exceeding £300 may be imposed on him.
(4) No penalty under subsection (2) may be imposed on a person in respect of a failure after the failure has been remedied.
(5) For the purposes of this section a person is to be taken not to have failed to provide information or evidence, comply with a requirement or give a notification which must be provided, complied with or given by a particular time—
(a) if he provided, complied with or gave it within such further time (if any) as the Board may have allowed,
(b) if he had a reasonable excuse for not providing, complying with or giving it by that time, or
(c) if, after having had such an excuse, he provided, complied with or gave it without unreasonable delay.
(6) Where the members of a married couple or an unmarried couple both fail as mentioned in subsection (1)(b), the aggregate amount of any penalties under subsection (2) imposed on them in relation to their failures must not exceed the amounts specified in that subsection; and where the members of a married couple or an unmarried couple both fail as mentioned in subsection (3), the aggregate amount of any penalties imposed on them in relation to their failures must not exceed £300.
(1) Where an employer refuses or repeatedly fails to make to an employee payments of tax credits which he is required to make to him by regulations under section 25 and, as a result, the Board make payments to the employee in accordance with regulations under subsection (2)(b) of that section, a penalty not exceeding £3,000 may be imposed on the employer.
(2) Where an employer has, by reason of his fraud or neglect, not paid to an employee for a tax year the correct amount of any tax credit which he is required by regulations under section 25 to pay to him for that tax year, a penalty not exceeding £3,000 may be imposed on the employer.
(3) But no penalty may be imposed on an employer under subsection (2) in respect of payments which are incorrect only because of a refusal or failure in respect of which a penalty is imposed on him under subsection (1).
Schedule 2 (penalties: supplementary) has effect.
(1) A person commits an offence if he is knowingly concerned in any fraudulent activity undertaken with a view to obtaining payments of a tax credit by him or any other person.
(2) A person who commits an offence under subsection (1) is liable—
(a) on summary conviction, to imprisonment for a term not exceeding six months, or a fine not exceeding the statutory maximum, or both, or
(b) on conviction on indictment, to imprisonment for a term not exceeding seven years, or a fine, or both.
(1) Section 20BA of the Taxes Management Act 1970 (c. 9) (orders for delivery of documents) applies (with Schedule 1AA and section 20BB) in relation to offences involving fraud in connection with, or in relation to, tax credits as in relation to offences involving serious fraud in connection with, or in relation to, tax.
(2) Section 20C (entry with warrant to obtain documents) of that Act applies (with section 20CC) in relation to offences involving serious fraud in connection with, or in relation to, tax credits as in relation to offences involving serious fraud in connection with, or in relation to, tax (but subject to the modification provided by subsection (3)).
(3) Subsection (1A) of section 20C applies by virtue of subsection (2) as if the references to the proper assessment or collection of tax were to the proper award or payment of a tax credit.
(4) Any regulations under Schedule 1AA to the Taxes Management Act 1970 which are in force immediately before the commencement of subsection (1) apply, subject to any necessary modifications, for the purposes of that Schedule as they apply by virtue of that subsection (until amended or revoked).
Tax Credits Act 2002