Tax Credits Act 2002 section 7

Recovery of penalties

Section 7 of Schedule 2 explains how HMRC can collect and recover penalties imposed under the tax credits penalty regime.

• Penalties under the tax credits regime are treated as if they were tax charged in an assessment for collection and recovery purposes.
• HMRC can use the full range of debt collection and recovery powers available under Part 6 of the Taxes Management Act 1970.
• Penalties can also be recovered through the PAYE system, being treated as an underpayment of tax from a previous year of assessment.
• This means penalties may be collected by adjusting an individual's tax code, spreading the recovery through their regular pay.