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Why you may get charged a penalty

The reasons that the Tax Credit Office may charge a penalty are:

• you've given them the wrong information - either deliberately or because you didn’t take enough care
• you didn't tell them about changes in your circumstances when you should have done
• you didn't give them the information or evidence they asked for

Giving the wrong information

If you've given the Tax Credit Office wrong information and you've been paid too much tax credits, they can charge you a penalty of up to £3,000.

The Tax Credit Office may charge a penalty if you gave wrong information:

• deliberately - 'fraudulently' giving wrong information
• because you didn't take enough care - 'negligently' giving wrong information

If you realise you've made a mistake with information you've given, you should let the Tax Credit Office know straightaway. If you're already getting tax credits, they will use the latest information you give to work out whether you should be getting more or less. If you are entitled to less tax credits, you will have to pay the money you shouldn’t have had back.

The Tax Credit Office won't charge a penalty if you took reasonable care, but still made a mistake and claimed too much tax credits.

• Putting mistakes right once you've sent in your tax credits claim

• Tax credit fraud

Not telling the Tax Credit Office about changes

The tax credits you get depend on your circumstances and income.

You need to report some changes in your circumstances within one month - for example stopping working or your child leaving full time education.

If you don't report a change on time, you could get paid too much in tax credits. If this happens, the Tax Credit Office may charge you a penalty of up to £300.

• Find out which changes you need to report and when

Not giving information or evidence

If the Tax Credit Office asks you for information or evidence you must send it to them. They might need the information for example to help them with a tax credit check (an 'enquiry' or 'examination').

If you don't give the information or evidence, the Tax Credit Office may charge you a penalty of up to £300. They can charge you an extra penalty of up to £60 each day until you provide it.

Let them know if you've got a good reason for not giving them the information. For example your documents may have been destroyed or you've been ill.

• Tax credit checks

Joint claims

If you've made a joint claim with your partner, you're both responsible for the information you give. The Tax Credit Office can charge you a penalty as a couple if:

• either of you could have told the Tax Credit Office about a change in circumstance
• you were both responsible for giving wrong information

If you give wrong information about yourself and your partner couldn't have known the information was wrong, the Tax Credit Office only charge you with the penalty.

• When to make a joint or single tax credits claim

The amount of your penalty

The Tax Credit Office will let you know if they think you should pay a penalty. They'll tell you:

• why they're charging it
• the maximum amount they may charge you

The Tax Credit Office will consider lowering the maximum penalty if there is reason to do so - they can talk to you about this.

When the Tax Credit Office work out how much they'll reduce the maximum penalty by, they always take into account:

• how helpful you've been
• if you've freely given them information to work out how much tax credits they should have paid you
• the amount of tax credits you over-claimed
• if they've charged you a penalty before

How to pay your penalty

Depending on your situation, you can pay all in one go, or in instalments. Once the Tax Credit Office has agreed the arrangement they'll ask you to sign a letter that sets out:

• the total amount you have to pay
• the final date you have to pay by, or the number of instalments and when you have to make them

They'll send you a final letter to accept the arrangement. This exchange of letters is a contract. If you refuse to pay, they'll take legal action to get back the money you owe.

Paying interest

You may be charged interest if one of the following applies:

• you've had too much tax credits because you 'negligently' gave wrong information (you did not take enough care)
• you pay a penalty late

If you disagree with the penalty

Please contact the Tax Credit Office if you disagree with the penalty they've charged you. If they can't agree with you, they'll send you a penalty notice.

You can then appeal or ask a representative to appeal for you. You can contact the Tax Credit Office by calling the Tax Credit Helpline.

• Appealing against a tax credit decision

• Contact details for the Tax Credit Helpline

More useful links

• Where to start if things go wrong with tax credits

• Tax credits - how to complain

• Download 'Tax Credit Penalties' (PDF, 109K) Opens new window

• Help with PDF files

Useful contacts

• Tax Credit Helpline - contact details