Tax Credits Act 2002 section 5

Mitigation of penalties

Schedule 2, paragraph 5 gives HMRC the discretionary power to reduce, suspend, settle, or completely cancel penalties imposed under the tax credits penalty regime.

• HMRC has broad discretion to reduce (mitigate) any penalty imposed under the tax credits penalty provisions
• HMRC may pause (stay) or settle (compound) any proceedings brought to enforce such a penalty
• Even after a court judgment has been made, HMRC retains the power to further reduce the penalty amount
• HMRC may go as far as cancelling the penalty entirely, even after judgment