For many claimants, the Tax Credit confusion continues

The tax credit system continues to be a major source of confusion in the UK, and as Shehab Khan reported in the Independent earlier today, hundreds of thousands of people have been unsuccessfully calling HMRC for information. The phone system is apparently overwhelmed by the sheer volume of people seeking assistance with understanding their tax credit problems.

It is a concern because when people make mistakes with regard to their tax credit claims they are usually on the receiving end of some very harsh accusations, and can even find they are harassed and intimidated into serious confessions that they may not feel are an accurate reflection of the truth.

Unfortunately, many of the most vulnerable people in society feel quite powerless when faced by what are regarded as the authorities, and so they may accept unfair conditions or treatment in order to avoid further trouble. This can be a problem because there are some people that get caught in fraud investigations who are not actually guilty, or they may indeed be guilty but their guilt may be far less serious or intentional than how the investigators try to portray it.

So it is important for those who are accused of any wrong-doing to ensure they avail themselves of legal protection and advice as soon as possible, without making a direct response to the accusations even if they believe they are innocent. And I would like to add that this still applies – especially if they believe themselves to be guilty as well, because you could end up much worse off as a result if you confess to more than you should, or if you allow yourself to be bamboozled by the complex legal jargon that might be used on documents you are asked to sign.

We don’t suggest that people should lie. In fact, if you tell lies, that can significantly harm your position later, even perhaps years later if you’re ever in trouble for something completely unrelated to your present troubles. What we do suggest is that you should make no comment whatsoever, other than that you have no comment and that you would like to seek legal advice.

People sometimes worry that consulting with a legal adviser will make them seem guilty or that they have something to hide. Investigators are aware of this and may attempt to exploit it, and will sometimes suggest that you will feel better if you get everything off your chest, and that if you have nothing to hide, it is better to get everything over and done with “here and now”. You should not fall for these deceptions. The investigator does not ever have your best interests at heart.

When you work with a legal consultant your position changes 180 degrees from disadvantaged to advantaged. That feeling of powerlessness in the face of authority will disappear. Even if you are guilty, you still have rights, and we will help you protect them. We ensure your rights are honoured and that you are treated fairly and within the bounds of the law.

Those who do not obtain legal advice often are left regretting their decision because the system is not designed to favour them. It is important to be always mindful of the fact that nobody on the opposing side has the slightest care for you. Their concern is with ensuring that you pay as much as possible. If they are not satisfied with merely getting your cash, they will also try to take their pound of flesh, which in this case is in the form of trying to get a conviction against you, possibly resulting in your imprisonment.

Perhaps it seems fair if you have really claimed money you were not entitled to that you have to pay it all back, but this thought will not be much comfort while you are starving and freezing with reduced income, possibly also living in fear for weeks on end that you may also end up in prison.

A possibility that is rarely considered is that if you are a member of the “working poor”, any income cuts that you receive can have an extremely negative impact on your ability to continue working and earning an income. If you become homeless as a result, for example, you would have such difficulties that it may be impossible for you to present yourself in a reasonable condition for work, and you may then also lose your job. These problems are avoidable, but unfortunately many people do not how.

A good example of the tax credit confusion problem can be found in the story of Ms U, a single mother of three children, the eldest being 17. Her partner left her seven years ago and has refused to see his children. Her eldest left school at 16 and went to college, so she continued to claim tax credits for him.

In his second year of college, he was offered a job and dropped out of his courses, accepting a position working 30 hours per week. This meant that Ms U was no longer entitled to claim for all three children, but she did not inform the authorities as she should have done.

The government response to this situation is very predictable and most likely inflexible. But there are plenty of factors that could be in play here, including whether Ms U was aware of her son’s change of circumstances, whether she knew that she was obligated to report the change of circumstances, whether she understood that it was her responsibility to notify HMRC of the change of circumstances or if she thought that it was her son’s responsibility, and so on.

You could argue that she should have known what to do, but perhaps she tried to contact HMRC for clarification on what to do, but found herself to be one of the many thousands of people whose call went unanswered.

How we help in situations like this is that we can look at all of the circumstances and we will listen to your story. We do care about what you have to say, and unlike the other side, we are not just listening in order to find some technicality with which to trap you. By giving our full attention to your story, we can discover all the various circumstances that may help to excuse you or at least mitigate the severity of the accusations against you.

Mrs M had a similar situation. When her eldest daughter from a previous marriage went to stay with her father over the summer holidays, Mrs M continued to claim child tax credits for her, as it wasn’t a permanent arrangement. At the end of the summer holidays, her daughter told her that she wanted to stay and live with her father. This was agreed to on a temporary basis in the hope that she would change her mind. Mrs M continued to claim child tax credits for the daughter who was no longer living under her care.

The authorities discovered the new living arrangements, and they commenced action against Mrs M. It is easy to see how somebody in this situation could be uncertain as to what their exact obligation is, because as far as Mrs M was concerned, there was no permanency to the arrangement. She anticipated that her daughter would return to her permanent care.

Council taxes can be equally confusing. Mr A was living in his privately rented property, for which he had been claiming the single occupancy discount on council tax. After some time, Mr A’s girlfriend moved in with him, and actually stayed for two entire years, during which time Mr A never notified the council of his change of circumstances, and continued to receive the discount. When the council became aware that he was not living in the property alone, they accused him of fraud.

Mr A certainly should have informed the council of his change of circumstances but whether he actually was guilty of fraud depended to some extent upon his intentions. One possibility, for example, is that Mr A was not aware that he was receiving the discount, and therefore would not have been aware of his obligation to inform the council that he was no longer eligible for it.

Another possibility, and one that we see often, is that Mr A may have believed that if he was not eligible to receive a discount then he would not receive it. In other words, he had faith in the system that it would do the right thing, and not credit him with a discount to which he was not entitled, certainly not an unreasonable expectation to hold.

Don’t be a victim of tax credit confusion. If you are accused of fraud or are notified that you are under investigation, call us on 020 7381 8111 or send an email to [email protected] for a confidential discussion. Do not allow yourself to be interviewed or otherwise questioned until we have had a chance to speak with you.

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