33 Power to disqualify universal credit claimants from obtaining top-up
payments

(1) This section applies in relation to a person (“P”) if—

(a) P, or a person who is P’s partner, makes a claim (whether jointly or
5otherwise) that results in universal credit becoming payable for a
relevant assessment period (see subsection (2)),

(b) the claim is made during an entitlement period for which P or P’s
partner has made a valid declaration of eligibility,

(c) there has not been a change of circumstances in relation to P or P’s
10partner since the beginning of the entitlement period, and

(d) P, or a person who is P’s partner, makes a declaration of eligibility
within the period of 12 months beginning with the day on which the
claim was made.

(2) In subsection (1)(a) “relevant assessment period”, in relation to an entitlement
15period, means any assessment period (within the meaning of the relevant
legislation) that includes the whole or any part of the entitlement period.

(3) If this section applies in relation to a person, HMRC may give the person a
warning notice.

(4) A warning notice is a notice stating that, if this section or section 32 (power to
20disqualify tax credit claimants from obtaining top-up payments) applies in
relation to the person at any time during the period of 4 years beginning with
the day on which the notice is given, HMRC may give the person a
disqualification notice (see section 34).

(5) Regulations may make provision—

(a) 25about what is, or is not, to be regarded as a change of circumstances in
relation 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) 30Regulations may amend subsection (1)(d) so as to substitute a different period
for 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
35Part of that Act.

34 Disqualification notices

(1) If—

(a) a person has been given a warning notice under section 32(3) or 33(3),
and

(b) 40section 32 or 33 applies in relation to the person at any time during the
period 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
by 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) 5A 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
years.

(5) The period specified in a disqualification notice—

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

(b) 10may not begin before the start of the entitlement period for which the
declaration of eligibility that resulted in the giving of the notice was
made.

(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) 15HMRC may revoke a disqualification notice.

Recovery of top-up payments

35 Recovery 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
20of 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) the 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) 25any 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
for an entitlement period falling partly within the relevant period.

(3) The “relevant period” means the period in relation to which the following
30conditions 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,
as 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,
35the 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) begins with the day on which the decision was made, and

(b) ends with—

(i) 40the 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
made 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) In this section “joint claim” has the same meaning as in the Tax Credits Act
52002.

(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 30.

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

(1) This section applies where—

(a) 10a 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) the appeal is upheld.

(2) 15P 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
for an entitlement period falling partly within the relevant period.

(3) 20The “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,
as a result of the appeal being upheld, and

(c) 25where 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) begins with the day on which the decision was made, and

(b) 30ends 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
made a valid declaration of eligibility, the last day of the
35entitlement 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) In this section “joint claim” has the same meaning as in the Tax Credits Act
402002.

(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 30.

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

(1) This 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) 5a decision not to make an award of universal credit to a person (“P”) or
to P and P’s partner jointly;

(b) a 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
10wholly 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.

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

(a) 15it falls within the revision period (see subsection (4)),

(b) it is a period for which an award of universal credit is made, or
continues, 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
20throughout the period.

(4) The “revision 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 in relation to whom the decision
25was 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
entitlement period.

(5) In subsection (2)(b) the “relevant proportion”, in relation to top-up payments
30made 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 universal credit award made on appeal

(1) This section applies where—

(a) a person (“P”), or (in the case of a claim made jointly) P or P’s partner
35at 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) the appeal is upheld.

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

(a) 40the Social Security Act 1998;

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

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

(d) any provision made for Northern Ireland which corresponds to that
45Part 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
wholly within the relevant period, and

(b) the relevant proportion of the sum of any top-up payments made to P
5for 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) it falls within the appeal period (see subsection (5)),

(b) it is a period for which an award of universal credit is made, or
10continues, 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
throughout the period.

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

(a) 15begins 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
20made 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
made for an entitlement period, means a proportion equal to the proportion of
the entitlement period which falls within the relevant period.

39 25Recovery 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) on the day on which the person made the declaration, the person, or a
30person 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) In subsection (1)(c) “the relevant period” means—

(a) 35the 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) The person who made the declaration is liable to pay HMRC an amount equal
40to 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.

40 Recovery 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,

5the account-holder is liable to pay HMRC an amount equal to the amount of
the 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) 10at the time of the payment the person knew, or ought to have known,
that 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 person fails to make a payment in accordance with a requirement imposed
15by subsections (1) to (3) of section 23 (refunds of payments made from
childcare accounts), the person is liable to pay HMRC the top-up element of the
payment.

(4) If 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
20to 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
to HMRC, and

(b) the liability is attributable (wholly or partly) to the dishonesty of a
25person falling within subsection (6),

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

(6) The persons are—

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

(b) 30any 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
that management, as if the member were a director of the body corporate.

(8) Where—

(a) 35a 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
partner 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) 40For provision about calculating the top-up element of a payment, see section
21.

41 Assessment and enforcement of recoverable amounts

(1) Where a person is liable under any of sections 35 to 40 (“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) the end of the period specified in subsection (3), or

(b) 5if 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) The period referred to in subsection (2)(a) is—

(a) 10the 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
period of 20 years beginning with that day.

(4) 15Where two or more persons—

(a) are liable under section 40(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,

each of those persons is jointly and severally liable to pay the amount assessed
20under 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 57(2)(a), before the end of that
25period,

(b) in a case where the person applies for a review of the assessment but
does 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) 30in a case where notice of such an appeal has been given, on the day on
which the appeal is determined or withdrawn.

(6) A requirement to pay an amount to HMRC under any of sections 35 to 40 may
be enforced as if the amount were income tax charged in an assessment and
due and payable.

35See also sections 52 to 54 (which contain further powers to recover amounts
owed to HMRC).

See also sections 52 to 54 (which contain further powers to recover amounts
owed to HMRC).

Penalties

42 40Penalties 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) the person makes a declaration of eligibility that contains an
45inaccuracy, 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) Condition B is that—

(a) a declaration of eligibility containing an inaccuracy is made by or on
5behalf of a person,

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

(c) the 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%
10of 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
top-up payment for the entitlement period for which the declaration of
eligibility was made.

(6) 15“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
account in respect of which the declaration was made.

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

20(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
would be the amount specified in section 19(5), but

(b) 25the 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
entitlement period is to be taken to be that greater amount.

43 30Penalties 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
required to comply with it, and

(b) 35the 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
day on which the warning notice is given.

(3) 40If 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
for the amount for the time being specified there.

(6) 45An 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
57(2)(a), at the end of that period,

(b) in a case where—

(i) 5the 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
decision could have been given, or

(c) 10in 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) Accordingly—

(a) 15if 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) if a person is permitted to give notice of an appeal against an
20information 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.

44 Penalties for providing inaccurate information or documents

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

(a) 25in complying with a notice under section 26, the person provides
inaccurate information or provides a document that contains an
inaccuracy, and

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

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

30An inaccuracy is careless if it is due to a failure by the person to take reasonable
care.

An 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
35information or document is provided but does not inform HMRC at that time.

(4) Condition C is that the person—

(a) discovers 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) 40Regulations may amend subsection (5) so as to substitute a different amount
for the amount for the time being specified there.

45 Penalties 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
by the person, and

(c) the person is notified of an assessment under section 41 in respect of the
5prohibited 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
childcare account held by the person,

(b) the person is notified of an assessment under section 41 in respect of the
10prohibited payment, and

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

(3) A warning notice is a notice which—

(a) subject 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”),
15and

(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
a prohibited payment to be made from a childcare account held by the
person.

(4) 20If 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
warning notice as a result of the prohibited payment in respect of which the
person was notified of the penalty.

(6) 25Where 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 41 in respect of the prohibited payment.

(7) For the purposes of this section an assessment under section 41 becomes final—

(a) in a case where the person does not apply for a review of the assessment
30within the period specified in section 57(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) the assessment has not been cancelled,

35at 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) the assessment has not been quashed on appeal,

40on 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
the person in respect of the assessment before the application for the
45review is made is of no effect, and

(b) if a person is permitted to give notice of an appeal against an
assessment after the end of the period mentioned in subsection (7)(b),