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When you may get charged a penalty

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

• you've fraudulently given the wrong information on your tax credits claim - that is you deliberately gave the wrong information
• you've negligently given the wrong information on your tax credits claim - that is you didn't take enough care to make sure the information given was correct
• you didn't tell the Tax Credit Office about changes in your circumstances when you should do so
• you didn't give the Tax Credit Office the information or evidence they ask for

Giving the wrong information

If you've sent the Tax Credit Office wrong information - either fraudulently or negligently - they can charge you a penalty of up to £3,000 if it turns out that you have been paid too much tax credits.

If you realise you've made mistake with the information you've given, you should let the Tax Credit Office know straightaway. If you have already started to get tax credits payments, they will use the latest information you give to work out whether you should get more or less tax credits.

If you are entitled to less tax credits, you will have to pay the money back you should not have had. They may charge a penalty if you did not take enough care in filling out the form.

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

• Tax credit fraud

Not telling the Tax Credit Office of changes in your circumstances

The tax credits you get depend on your circumstances and income. Some changes in circumstance mean that your tax credit payments will go down, for example you stop working or your child leaves full time education.

You need to tell the Tax Credit Office about such changes within one month of the date they change. If you don't, they may charge you a penalty of up to £300.

• Find out which changes you need to report within one month

If you don't give information or evidence the Tax Credit Office ask for

If the Tax Credit Office ask for information or evidence - for example to help them with a tax credit enquiry - you must send it to them. If you don't, they may charge you a penalty of up to £300. They can charge you an extra penalty of up to £60 each day until you send them the information.

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

Paying your penalty

The Tax Credit Office 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

They'll consider lowering the penalty if there is reason to do so and they can talk about this with you.

The amount of your penalty

When the Tax Credit Office work out how much they'll reduce the 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 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, they'll send you a penalty notice.

You can then appeal or ask a representative to appeal for you. You can contact them by calling the Tax Credit Helpline on 0845 300 3900 or textphone 0845 300 3909.

• Appealing against a tax credit decision

Contact the Tax Credit Office

If you need more help you can call the Tax Credit Helpline on 0845 300 3900, or textphone 0845 300 3909 if you are deaf or have a hearing or speech impairment (open from 8.00 am to 8.00 pm every day except Christmas Day, Boxing Day and New Year's Day).

If you're calling from overseas you can also contact the Tax Credit Office on +44 289 053 8192.

• The cost of contacting 08 and 03 telephone numbers

More useful links

• Where to start if things go wrong with tax credits

• Tax credits - how to complain

• Download a leaflet 'Tax Credit Penalties' on HM Revenue & Customs (HMRC) website (PDF, 150K) Opens new window

• Help with PDF files