Tax Credits Act 2002 section 6

Time limits for penalties [TCA 2002 Sch 2 para 6]

Schedule 2, paragraph 6 sets out the time limits within which HMRC must impose or commence proceedings for penalties relating to tax credits under sections 31, 32 and 33 of the Act.

• Penalties for incorrect statements (section 31) must be determined by the latest of three possible deadlines, each being one year after a specified event connected with enquiry or discovery processes.
• Penalties for failure to comply with requirements (section 32) must be determined or proceedings commenced within one year of the completion of an enquiry, or one year after the enquiry window closes if no enquiry is made.
• Penalties relating to employer payment obligations under section 25 regulations, or penalties under section 33 for employer payment failures, are subject to a longer time limit of six years from when the penalty was incurred.
• In all cases, if HMRC does not act within the relevant time limit, it loses the ability to impose or pursue the penalty.