The Tax Credit Fraud Problem

How much of a price can you put on freedom? This is the fundamental question that anyone contemplating intentional fraud should be asking, because essentially their freedom is what they are staking in a high-risk gamble against being caught.

As we have explored in previous blog posts here on the Hylton-Potts website, government statistics show that intentional fraud by benefits claimants is exceptionally rare. Many of those who get “caught” are not actually guilty of fraud; yet innocent people may be prosecuted and sometimes even convicted.

This tragic injustice usually occurs because the accused person often does not know what to do when they are accused, and sometimes because they are simply too trusting that the system will treat them fairly. The reasoning is that if you have done nothing wrong, you should have nothing to fear, but unfortunately this is not really how things work any more.

Some of the ways you can end up being overpaid include:

• Intentional deception
• Forgetting to advise of a change in circumstances
• Not being aware that you need to report a particular change of circumstance
• Not being aware that a change of circumstance has occurred
• Accidentally filling out a form incorrectly
• Lodging the wrong form, or lodging it incorrectly
• Being physically prevented from reporting something you are supposed to report
• Being a victim of someone else’s fraud, which in some way implicates you
• Administrative errors by DWP, HMRC or other authority.

Only the first item on the above list is actually fraud, but any of these items (and possibly a few more) could result in you being accused of fraud and, in the worst-case scenario, you could be sent to prison for something you did not really do. But you don’t really have to go to prison for any of these things, and that is, of course, where we can help you.

Now, if you have not yet done anything wrong, but you are tempted to do so, we have some really good advice to share with you: Don’t do it!

The chances of being caught are too high and the potential consequences are too damaging. With the amount of technology being deployed against you and the increased number of investigators being hired, it is not a matter of if they catch you, but when!

A classic example of a bona fide benefit fraud case can be demonstrated from this report of a woman from Dundee who is now at risk of going to prison for a fairly blatant intentional deception of the working and child tax credit systems.

Let me make it clear that she is not in her current predicament solely because of the crime she committed. Obviously, if she had never committed a crime then she would not have gotten into trouble, but that is not really the point. It is in fact what she and her partner did after she was caught that has led to the situation where she has been prosecuted and convicted and is now awaiting sentencing.

Some – or even all – of these consequences could have been avoided if the pair had acted differently from the first moment that they knew they were under investigation. It may have been the case that having perpetrated such an extensive fraud for such a long period of time, perhaps worrying constantly that she would be caught, it was even a relief when it finally happened.

Certainly most people who make extensive and detailed confessions of this nature indicated in the news story often do so because they feel a sense of relief in being caught, and see the confession as a chance to unburden themselves of the worry and guilt that they have been living with for so long.

Such confessions may grant some temporary gratification, but you have to think of the bigger picture. Are you going to come to regret your candidness in the months and years ahead? There’s quite a strong chance that you will, because your money, your reputation, and maybe even your freedom will all come under attack as a result.

We’re not condoning fraud, of course, but not everyone who is guilty of fraud is necessarily a sinister and evil person. Harsh punishments won’t help to rectify the wrong that was done, won’t act as a deterrent to others, and won’t benefit society in any way. In fact, quite the opposite – harsh punishments are a detriment to society.

I have another case I want to share with you that I believe provides some useful food-for-thought. In this report from the Northampton Chronicle, we learn of a 72 year old woman who fraudulently claimed £26,682 in pension credits, housing benefits, and council tax relief over a period of almost five years.

What makes this case so tragic is the absolute foolishness of the crime itself, because if she had honestly informed DWP of her circumstances she would have been legally entitled to claim an almost equivalent amount in working tax credits. It is also somewhat tragic that she will have to repay all the money defrauded from the council, yet the council contributed to the problem by ignoring her pleas for help.

What is the purpose of welfare if it is not to help those in need of assistance? Here the situation is an elderly woman struggling to make payments on a house that was not suited to her financial state, and a council that allegedly ignored repeated requests for assistance to ease the burden placed upon her.

And if she claimed £20,000 on the wrong type of benefit, why is it so terribly hard for DWP to simply transfer the £20,000 that she could have legally claimed over to the fund that it was illegally claimed from, thereby reducing her total debt to just £6,682? The answer of course is that this has nothing to do with justice in the true sense of the word, and nothing to do with righting wrongs, but simply retribution.

The message that DWP wants to send is that if you do the wrong thing, they will get you and they will make you sorry. But instead the message they are actually sending is that if you make a mistake and claim the wrong type of benefit, you’ll be branded as a criminal, even if you were otherwise entitled to a very similar amount.

Now, in both of the cases I have presented in this article it seems pretty clear that there was at least some awareness that the conduct was wrong, and that there was intent to obtain funds to which they were either not entitled or believed they were not entitled to. That definitely fits the textbook definition of fraud, and it is not really a mistake that either of the defendants were found guilty.

What I can faithfully predict based on the available information about these cases is that if either of these defendants had come to Hylton-Potts for advice, we could have helped them to get vastly more favourable results. There is always something there to be discovered that will help put you in a better position, but you have to take the first step by contacting us.

The government recently published some statistics that you can look at via this link, showing facts and figures for overpayments and underpayments in the child tax credits and working tax credits schemes.

A very interesting statistic to take note of, especially if you have been inclined to believe the media reports indicating that the UK is filled with wicked fraudsters intent on bankrupting the nation, is that around 66% of overpayments were for total amounts of less than £1,000 and 97% of all overpayments were for amounts of less than £5,000.

This seems to indicate that most overpayments are due to errors, forgetfulness, and uncertainty rather than fraudulent intent. Now I am going to give you some advice about what to do if you happen to become aware that you have been overpaid.

The best thing to do is to deal with the matter as quickly as possible, and be totally honest and forthright. The sooner you advise the relevant authority of your situation, the less chance there is that they will take any action against you, and it will probably count well in your favour that you took active steps to correct the problem. However, if the person you are dealing with makes any mention of applying a penalty, you should immediately stop discussing the case with them and contact us.

If, on the other hand it is too late for that, and you are being investigated, then you need to adopt the exact opposite approach. You should not contact anyone other than Hylton-Potts in this situation. We would take care of all the necessary responding for you. If you respond directly, you can get yourself into more trouble, even if you are innocent.

Many people coming to Hylton-Potts have explained very similar stories in which they simply were unaware that what they were doing was wrong, or they knew they would find it difficult to get by without the topped up benefits.

There are helpful organisations that can assist with dealing with debt and other financial issues that can occur. One of the first places you should enquire is HMRC if you do find yourself getting into difficulty as they may have other sources of funding to help you.

Although we’re not taking the moral high ground here, every situation is different and every case has its own background story. We have heard of many reasons for people falling into difficulty over the years and helped many thousands of these people to reach agreement with HMRC where it has been found they have been wrongly overpaid.

Hylton-Potts has extensive experience with benefit fraud cases of all kinds and no matter what your story is; we will find the best way to help you. For a free and confidential discussion of the problem you are facing, you can call us on 020 7381 8111 or send an email to [email protected] and we will advise you of how to proceed further.

We would be interested in your comments, please leave them by clicking on the title to this blog above.