Tax Credit Fraud

What is tax credit fraud?

Tax credit fraud is another name for benefit fraud and is the act of claiming benefits that you’re not entitled to.

Tax credit fraud is committed by:

  • Not reporting a change in your circumstances
  • Providing false information

What happens when you’re suspected of tax credit fraud?

Tax credit fraud is taken very seriously by the authorities, and if you’re suspected of committing this crime, you will be contacted by the one of the following:

  • The Department for Work and Pensions (DWP)
  • HMRC
  • The Service and Personnel and Veterans Agency
  • Your local authority

During the investigation, your benefits may be stopped – this will be outlined in the letter you receive.

You may also be visited by Fraud Investigation Officers (FIOs). An interview may also take place to talk about the matter, this will be referred to as an “interview under caution”.

After the interview or visit, the FIOs will make a decision on whether or not they should take your case any further.

If you’re summoned to an interview, it is well advised to seek legal help. The interview is recorded and could form part of the criminal investigation against you.

Legal advice will help you prepare for the interview.

What happens after a tax credit fraud investigation?

If you have been found to have committed or attempted tax credit fraud, you may have to do one or more of the following:

Pay back the overpaid money

Appear in court or pay a penalty between £300 and £5,000

Have your benefits reduced or stopped

Losing tax credits

You may have your tax credits stopped for up to three years in certain situations, depending on the severity of the fraud and how often you have committed it.

Some tax credits can be stopped, others cannot. Those that can be stopped are called ‘sanctionable tax credits’ or ‘sanctionable benefits’. Some examples of sanctionable tax credits include:

  • Carer’s Allowance
  • Employment and Support Allowance
  • Housing Benefit
  • Incapacity Benefit
  • Income Support
  • Industrial Death Benefit
  • Industrial Injuries Disablement Benefit
  • Industrial Injuries Reduced Earnings Allowance
  • Industrial Injuries Retirement Allowance
  • Industrial Injuries Unemployability Supplement
  • Jobseeker’s Allowance
  • Severe Disablement Allowance
  • Pension Credit
  • Universal Credit
  • War Disablement Pension
  • War Widow’s Pension 

  • War Pension Unemployability Supplement 

  • War Pension Allowance for Lower Standard of Occupation 

  • Widowed Mother’s/Parent’s Allowance
  • Widow’s Pension/Bereavement Allowance
  • Working Tax Credit

Tax credits that cannot be stopped include:

  • Attendance Allowance
  • Bereavement Payment
  • Bereavement Support Payment
  • Child Benefit
  • Child Tax Credit
  • Christmas Bonus
  • Disability Living Allowance
  • Graduated Retirement Benefit
  • Guardian’s Allowance
  • Industrial Injuries Constant Attendance Allowance (where a Disablement Pension is payable) 

  • Industrial Injuries Exceptionally Severe Disablement Allowance (where a Disablement Pension is payable)
  • Personal Independence Payment
  • State Pension
  • Social Fund Payments
  • War Pension Constant Attendance Allowance 

  • War Pension Exceptionally Severe Disablement Allowance 

  • War Pension Mobility Supplement

If you commit fraud against these benefits, other benefits will be reduced or stopped instead.

There are also situations where, if you’re found to have committed tax credit fraud and you’re on one of the following benefits, none of your credit payments can be stopped. These include:

  • Maternity Allowance
  • Statutory Adoption Pay
  • Statutory Maternity Pay
  • Statutory Paternity Pay
  • Statutory Sick Pay

Contact a member of our friendly tax solicitors team to discuss your case in more detail. We will then be able to advise you what to do next.

Tax Services

When it comes to tax services, our solicitors have a reassuring amount of experience. We’ve been defending fraud cases for more than twenty years.

Read More
Business Services

Additional resources are now being directed by HMRC to identify and tackle tax avoidance, tax evasion and organised criminal attacks on the system.

Read More