the day on which the notice is given, HMRC may give the person a
disqualification notice (see section 33).

(5) Regulations may make provision—

(a) about what is, or is not, to be regarded as a change of circumstances in
5relation to a person for the purposes of this section;

(b) specifying cases in which something which would otherwise be a
change of circumstances is not to be treated as such for the purposes of
this section.

(6) Regulations may amend subsection (1)(d) so as to substitute a different period
10for the period for the time being specified there.

(7) In this section “the relevant legislation” means—

(a) Part 1 of the Welfare Reform Act 2012, or

(b) any provision made for Northern Ireland which corresponds to that
Part of that Act.

33 15Disqualification notices

(1) If—

(a) a person has been given a warning notice under section 31(3) or 32(3),
and

(b) section 31 or 32 applies in relation to the person at any time during the
20period of 4 years beginning with the day on which the notice is given,

HMRC may give the person a disqualification notice under this section.

(2) Where a person has been given a disqualification notice—

(a) the person may not open a childcare account,

(b) no qualifying payments may be made into any childcare account held
25by the person, and

(c) any declaration of eligibility made by the person for an entitlement
period for which the notice has effect is not valid.

(3) A disqualification notice has effect for the period specified in the notice.

(4) But a disqualification notice may not have effect for a period longer than 3
30years.

(5) The period specified in a disqualification notice—

(a) may begin before the day on which the notice is given, but

(b) may not begin before the start of the entitlement period for which the
declaration of eligibility that resulted in the giving of the notice was
35made.

(6) If HMRC give a person a disqualification notice, HMRC must give a copy of
the notice to any person or body which provides childcare accounts.

(7) HMRC may revoke a disqualification notice.

Recovery of top-up payments

34 40Recovery of top-up payments where tax credits award made on a review

(1) This section applies where—

(a) a person (“P”), or (in the case of a joint claim) P or P’s partner at the time
of the claim, applies for a review under section 21A of the Tax Credits
Act 2002 of a decision not to make an award of a tax credit or to
terminate such an award, and

(b) 5the conclusion on the review is that the decision is varied or cancelled.

(2) P is liable to pay HMRC an amount equal to the sum of—

(a) any top-up payments made to P for an entitlement period falling
wholly within the relevant period, and

(b) the relevant proportion of the sum of any top-up payments made to P
10for an entitlement period falling partly within the relevant period.

(3) The “relevant period” means the period in relation to which the following
conditions are met—

(a) it falls within the review period (see subsection (4)),

(b) it is a period for which an award of a tax credit is made, or continues,
15as a result of the variation or cancellation of the decision, and

(c) where the award has been made to P and P’s partner on a joint claim,
the person who was P’s partner at the time of the claim has been P’s
partner throughout the period.

(4) The “review period” means the period which—

(a) 20begins with the day on which the decision was made, and

(b) ends with—

(i) the day on which the person who applied for the review is
notified of its conclusions, or

(ii) if that day falls within an entitlement period for which P has
25made a valid declaration of eligibility, the last day of the
entitlement period.

(5) In subsection (2)(b) the “relevant proportion”, in relation to top-up payments
made for an entitlement period, means a proportion equal to the proportion of
the entitlement period which falls within the relevant period.

(6) 30In this section “joint claim” has the same meaning as in the Tax Credits Act
2002.

(7) For provision about terminating an award of a tax credit when a declaration of
eligibility is made for a subsequent entitlement period, see section 29.

35 Recovery of top-up payments where tax credits award made on appeal

(1) 35This section applies where—

(a) a person (“P”), or (in the case of a joint claim) P or P’s partner at the time
of the claim, has brought an appeal under section 38 of the Tax Credits
Act 2002 against a decision not to make an award of a tax credit or to
terminate such an award, and

(b) 40the appeal is upheld.

(2) P is liable to pay HMRC an amount equal to the sum of—

(a) any top-up payments made to P for an entitlement period falling
wholly within the relevant period, and

(b) the relevant proportion of the sum of any top-up payments made to P
45for an entitlement period falling partly within the relevant period.

(3) The “relevant period” means the period in relation to which the following
conditions are met—

(a) it falls within the appeal period (see subsection (4)),

(b) it is a period for which an award of a tax credit is made, or continues,
5as a result of the appeal being upheld, and

(c) where the award has been made to P and P’s partner on a joint claim,
the person who was P’s partner at the time of the claim has been P’s
partner throughout the period.

(4) The “appeal period” means the period which—

(a) 10begins with the day on which the decision was made, and

(b) ends with—

(i) the day on which the person who brought the appeal is notified
of the decision on the appeal, or

(ii) if that day falls within an entitlement period for which P has
15made a valid declaration of eligibility, the last day of the
entitlement period.

(5) In subsection (2)(b) the “relevant proportion”, in relation to top-up payments
made for an entitlement period, means a proportion equal to the proportion of
the entitlement period which falls within the relevant period.

(6) 20In this section “joint claim” has the same meaning as in the Tax Credits Act
2002.

(7) For provision about terminating an award of a tax credit when a declaration of
eligibility is made for a subsequent entitlement period, see section 29.

36 Recovery of top-up payments where universal credit award made on revision

(1) 25This section applies where any of the following decisions has been revised
under section 9 of the Social Security Act 1998 or Article 10 of the Social
Security (Northern Ireland) Order 1998 (S.I. 1998/1506 (N.I. 10)S.I. 1998/1506 (N.I. 10))—

(a) a decision not to make an award of universal credit to a person (“P”) or
to P and P’s partner jointly;

(b) 30a decision to terminate such an award.

(2) P is liable to pay HMRC an amount equal to the sum of—

(a) any top-up payments made to P for an entitlement period falling
wholly within the relevant period, and

(b) the relevant proportion of the sum of any top-up payments made to P
35for an entitlement period falling partly within the relevant period.

(3) The “relevant period” means the period in relation to which the following
conditions are met—

(a) it falls within the revision period (see subsection (4)),

(b) it is a period for which an award of universal credit is made, or
40continues, as a result of the revision of the decision, and

(c) where the award has been made to P and P’s partner jointly, the person
who was P’s partner at the time of the decision has been P’s partner
throughout the period.

(4) The “revision period” means the period which—

(a) 45begins with the day on which the decision was made, and

(b) ends with—

(i) the day on which the person in relation to whom the decision
was made is notified that the decision has been revised, or

(ii) if that day falls within an entitlement period for which P has
made a valid declaration of eligibility, the last day of the
5entitlement period.

(5) In subsection (2)(b) the “relevant proportion”, in relation to top-up payments
made for an entitlement period, means a proportion equal to the proportion of
the entitlement period which falls within the relevant period.

37 Recovery of top-up payments where universal credit award made on appeal

(1) 10This section applies where—

(a) a person (“P”), or (in the case of a claim made jointly) P or P’s partner
at the time of the claim, has brought an appeal under the appropriate
legislation against a decision not to make an award of universal credit
or to terminate such an award, and

(b) 15the appeal is upheld.

(2) In subsection (1) “the appropriate legislation” means any of the following—

(a) the Social Security Act 1998;

(b) the Social Security (Northern Ireland) Order 1998 (S.I. 1998/1506S.I. 1998/1506 (N.I.
10));

(c) 20Part 1 of the Welfare Reform Act 2012;

(d) any provision made for Northern Ireland which corresponds to that
Part of that Act.

(3) P is liable to pay HMRC an amount equal to the sum of—

(a) any top-up payments made to P for an entitlement period falling
25wholly within the relevant period, and

(b) the relevant proportion of the sum of any top-up payments made to P
for an entitlement period falling partly within the relevant period.

(4) The “relevant period” means the period in relation to which the following
conditions are met—

(a) 30it falls within the appeal period (see subsection (5)),

(b) it is a period for which an award of universal credit is made, or
continues, as a result of the appeal being upheld, and

(c) where the award has been made to P and P’s partner jointly, the person
who was P’s partner at the time of the claim has been P’s partner
35throughout the period.

(5) The “appeal period” means the period which—

(a) begins with the day on which the decision was made, and

(b) ends with—

(i) the day on which the person who brought the appeal is notified
40of the decision on the appeal, or

(ii) if that day falls within an entitlement period for which P has
made a valid declaration of eligibility, the last day of the
entitlement period.

(6) In subsection (3)(b) the “relevant proportion”, in relation to top-up payments
45made for an entitlement period, means a proportion equal to the proportion of
the entitlement period which falls within the relevant period.

38 Recovery of top-up payments where person fails to give childcare account
notice

(1) This section applies where—

(a) a person has made a declaration of eligibility for an entitlement period,

(b) 5on the day on which the person made the declaration, the person, or a
person who was the person’s partner at that time, (“E”) was an eligible
employee in relation to a relevant childcare scheme, and

(c) E has failed to give E’s employer a childcare account notice before the
end of the relevant period (see subsection (2)).

(2) 10In subsection (1)(c) “the relevant period” means—

(a) the entitlement period for which the declaration was made, or

(b) where the declaration was made for the purposes of opening a
childcare account, the period of 3 months beginning with the day on
which it was made.

(3) 15The person who made the declaration is liable to pay HMRC an amount equal
to the sum of any top-up payments made to the person for the entitlement
period.

(4) Expressions used in this section and in section 12 have the same meaning in
this section as they have in that section.

39 20Recovery of top-up payments in other cases

(1) If—

(a) a top-up payment is made into a childcare account, and

(b) the account-holder is not entitled to the top-up payment,

the account-holder is liable to pay HMRC an amount equal to the amount of
25the top-up payment.

(2) If—

(a) a person who holds a childcare account causes or permits a prohibited
payment to be made from the account, and

(b) at the time of the payment the person knew, or ought to have known,
30that the payment was a prohibited payment,

the person is liable to pay HMRC an amount not exceeding the top-up element
of the prohibited payment.

(3) If—

(a) a person is required by section 23 (refunds of payments made from
35childcare accounts) to make a repayment of an amount into a childcare
account, and

(b) the repayment is not made into the account in accordance with that
section,

the person is liable to pay HMRC the top-up element of the repayment.

(4) 40If a prohibited payment is made to a person from a childcare account as a result
of the dishonesty of that or some other person, each of those persons is liable
to pay HMRC the top-up element of the prohibited payment.

(5) Where—

(a) a body corporate is liable under subsection (3) or (4) to pay an amount
45to HMRC, and

(b) the liability is attributable (wholly or partly) to the dishonesty of a
person falling within subsection (6),

that person (as well as the body corporate) is liable to pay that amount to
HMRC.

(6) 5The persons are—

(a) a director, manager, secretary or similar officer of the body corporate;

(b) any person who was purporting to act in such a capacity.

(7) Where the affairs of a body corporate are managed by its members, subsection
(5) applies in relation to the acts and defaults of a member, in connection with
10that management, as if the member were a director of the body corporate.

(8) Where—

(a) a Scottish firm is liable under subsection (3) or (4) to pay an amount to
HMRC, and

(b) the liability is attributable (wholly or partly) to the dishonesty of a
15partner of the firm or a person purporting to act as such a partner,

that person (as well as the firm) is liable to pay that amount to HMRC.

(9) For provision about calculating the top-up element of a payment, see section
21.

40 Assessment and enforcement of recoverable amounts

(1) 20Where a person is liable under any of sections 34 to 39 (“the relevant section”)
to pay an amount to HMRC—

(a) HMRC may assess the amount, and

(b) if they do so, they must notify the person.

(2) No assessment may be made under this section after—

(a) 25the end of the period specified in subsection (3), or

(b) if earlier, the end of the period of 12 months beginning with the day on
which HMRC first believed, or had reasonable grounds for believing,
that the person was liable under the relevant section to pay an amount
to HMRC.

(3) 30The period referred to in subsection (2)(a) is—

(a) the period of 4 years beginning with the day on which the person
became liable under the relevant section to pay an amount to HMRC, or

(b) in a case where the person became liable under the relevant section to
pay an amount to HMRC as a result of the person’s dishonesty, the
35period of 20 years beginning with that day.

(4) Where two or more persons—

(a) are liable under section 39(3) or (4) to pay an amount to HMRC, and

(b) have each been notified of an assessment under this section in respect
of the amount,

40each of those persons is jointly and severally liable to pay the amount assessed
under this section.

(5) Where a person is notified of an assessment under this section, the amount
payable as a result of the assessment must be paid—

(a) in a case where the person does not apply for a review of the assessment
within the period specified in section 56(2)(a), before the end of that
period,

(b) in a case where the person applies for a review of the assessment but
5does not give notice of an appeal against the assessment, before the end
of the period in which notice of such an appeal could have been given,
or

(c) in a case where notice of such an appeal has been given, on the day on
which the appeal is determined or withdrawn.

(6) 10A requirement to pay an amount to HMRC under any of sections 34 to 39 may
be enforced as if the amount were income tax charged in an assessment and
due and payable.

See also sections 51 to 53 (which contain further powers to recover amounts
owed to HMRC).

15Penalties

41 Penalties for inaccurate declarations of eligibility

(1) A person is liable to a penalty under this section if the person meets condition
A or B.

(2) Condition A is that—

(a) 20the person makes a declaration of eligibility that contains an
inaccuracy, and

(b) the inaccuracy is careless or deliberate.

An inaccuracy is careless if it is due to a failure by the person to take reasonable
care.

(3) 25Condition B is that—

(a) a declaration of eligibility containing an inaccuracy is made by or on
behalf of a person,

(b) the person discovers the inaccuracy after the declaration of eligibility
has been made, and

(c) 30the person fails to take reasonable steps to inform HMRC.

(4) In a case where the inaccuracy is deliberate, the amount of the penalty is 50%
of the maximum available top-up payment for the entitlement period for
which the declaration of eligibility was made.

(5) In any other case, the amount of the penalty is 25% of the maximum available
35top-up payment for the entitlement period for which the declaration of
eligibility was made.

(6) “The maximum available top-up payment” for an entitlement period is the
amount that would be payable by HMRC if qualifying payments equal to the
relevant maximum for the entitlement period were made into the childcare
40account in respect of which the declaration was made.

(For the relevant maximum for an entitlement period, see section 19(5) and (6).)

(7) If—

(a) in the absence of this subsection, the relevant maximum for the
entitlement period for which the declaration of eligibility was made
45would be the amount specified in section 19(5), but

(b) the person made representations to HMRC that the relevant maximum
for the entitlement period should be a greater amount determined by or
under regulations under section 19(6),

then for the purposes of subsection (6) above the relevant maximum for the
5entitlement period is to be taken to be that greater amount.

42 Penalties for failure to comply with information notice

(1) If—

(a) a person fails to comply with a notice under section 26 (an “information
notice”) before the end of the period within which the person was
10required to comply with it, and

(b) the information notice has become final (see subsection (6)),

HMRC may give the person a warning notice.

(2) A “warning notice” is a notice requiring the person to comply with the
information notice before the end of the period of 30 days beginning with the
15day on which the warning notice is given.

(3) If a person fails to comply with a warning notice given under this section, the
person is liable to a penalty under this section.

(4) The amount of the penalty may not exceed £300.

(5) Regulations may amend subsection (4) so as to substitute a different amount
20for the amount for the time being specified there.

(6) An information notice becomes final—

(a) in a case where the person does not apply for a review of the decision
to give the information notice within the period specified in section
56(2)(a), at the end of that period,

(b) 25in a case where—

(i) the person applies for a review of the decision but does not give
notice of an appeal against the decision, and

(ii) the decision has not been cancelled,

at the end of the period in which notice of an appeal against the
30decision could have been given, or

(c) in a case where—

(i) notice of such an appeal has been given, and

(ii) the decision has not been quashed on appeal,

on the day on which the appeal is determined or withdrawn.

(7) 35Accordingly—

(a) if a person is granted an extension of the period for making an
application for a review of a decision to give an information notice, any
warning notice given to the person in respect of the information notice
before the application for the review is made is of no effect, and

(b) 40if a person is granted permission to give notice of an appeal against an
information notice after the end of the period mentioned in subsection
(6)(b), any warning notice given to the person in respect of the
information notice before the notice of appeal is given is of no effect.

43 Penalties for providing inaccurate information or documents

(1) A person is liable to a penalty under this section if—

(a) in complying with a notice under section 26, the person provides
inaccurate information or provides a document that contains an
5inaccuracy, and

(b) condition A, B or C is met.

(2) Condition A is that the inaccuracy is careless or deliberate.

An inaccuracy is careless if it is due to a failure by the person to take reasonable
care.

10An inaccuracy is careless if it is due to a failure by the person to take reasonable
care.

(3) Condition B is that the person knows of the inaccuracy at the time the
information or document is provided but does not inform HMRC at that time.

(4) Condition C is that the person—

(a) 15discovers the inaccuracy some time later, and

(b) fails to take reasonable steps to inform HMRC.

(5) The amount of a penalty under this section may not exceed £3,000.

(6) Regulations may amend subsection (5) so as to substitute a different amount
for the amount for the time being specified there.

44 20Penalties for making prohibited payments

(1) A person is liable to a penalty under this section if—

(a) HMRC has given the person a warning notice under this section,

(b) at any time when the warning notice has effect, the person causes or
permits a prohibited payment to be made from a childcare account held
25by the person, and

(c) the person is notified of an assessment under section 40 in respect of the
prohibited payment.

(2) HMRC may give a person a warning notice under this section if—

(a) the person causes or permits a prohibited payment to be made from a
30childcare account held by the person,

(b) the person is notified of an assessment under section 40 in respect of the
prohibited payment, and

(c) the assessment has become final (see subsection (7)).

(3) A warning notice is a notice which—

(a) 35subject to subsection (4), has effect for a period of 4 years beginning
with the day on which the notice is given (“the relevant 4-year period”),
and

(b) states that the person will be liable to a penalty under this section if at
any time during the relevant 4-year period the person causes or permits
40a prohibited payment to be made from a childcare account held by the
person.

(4) If a person is notified of a penalty under this section, the warning notice given
to the person under this section ceases to have effect.

(5) But subsection (4) does not prevent HMRC from giving the person a fresh
45warning notice as a result of the prohibited payment in respect of which the
person was notified of the penalty.

(6) Where a person is liable to a penalty under this section for causing or
permitting a prohibited payment to be made, the amount of the penalty is 25%
of the amount assessed under section 40 in respect of the prohibited payment.

(7) For the purposes of this section an assessment under section 40 becomes final—

(a) 5in a case where the person does not apply for a review of the assessment
within the period specified in section 56(2)(a), at the end of that period,

(b) in a case where—

(i) the person applies for a review of the assessment but does not
give notice of an appeal against the assessment, and

(ii) 10the assessment has not been cancelled,

at the end of the period in which notice of an appeal against the
assessment could have been given, or

(c) in a case where—

(i) notice of such an appeal has been given, and

(ii) 15the assessment has not been quashed on appeal,

on the day on which the appeal is determined or withdrawn.

(8) Accordingly—

(a) if a person is granted an extension of the period for making an
application for a review of an assessment, any warning notice given to
20the person in respect of the assessment before the application for the
review is made is of no effect, and

(b) if a person is granted permission to give notice of an appeal against an
assessment after the end of the period mentioned in subsection (7)(b),
any warning notice given to the person in respect of the assessment
25before the notice of appeal is given is of no effect.

45 Penalties for dishonestly obtaining top-up payments, etc

(1) A person (“P”) is liable to a penalty under this section if—

(a) for the purpose of obtaining a relevant payment for P or another (see
subsection (2)), P does, or omits to do, any act, and

(b) 30P’s conduct involves dishonesty.

(2) The following payments are “relevant payments”—

(a) a top-up payment;

(b) a payment from a childcare account.

(3) The amount of the penalty may not exceed—

(a) 35£3,000, or

(b) the sum of any relevant amounts obtained as mentioned in subsection
(1),

whichever is greater.

(4) In subsection (3) “relevant amount” means—

(a) 40in the case of a top-up payment, the amount of the payment, and

(b) in the case of a payment from a childcare account, an amount equal to
the top-up element of the payment.

(For provision about calculating the top-up element of a payment, see section
21.)