Tax credit fraud so frightened

[CDJ755]

Hello Im knew to this board and im writing today as I am so very frightened.

 

 

Ive been extremely stupid and I know deserve everything thats coming to me but Im hoping someone can ease my worry as I cant carry on like this.

I am Disabled and my partner works full time. I have 3 children all aged under aged 7.

 

 

My partner became unemployed between March 2009 to Oct 2009 at which time he returned to full time work. I am eligible to claim tax credit for childcare due to my disability so I dont have to manage alone with the children when my partner is at work. So when he returned to work in Oct 2009 I made an estimated claim for childcare at £325 per week for the 3 children. So £240 was paid to me towards me childcare costs to initially to pay for childcare in the Half term week of October 2009. Well it turned out I didnt need the cildcare costs as my mum helped me with the children during that week and I didnt put them into childcare.

 

 

I then attempted to contact the HMRC to inform them that I didnt need or want childcare anymore as my Mum said she would help me during school Holidays etc. I tried telephoning and couldnt get through. It was permanently engaged. Everytime I called it said all lines were busy.

 

 

The money for childcare was still being paid into my bank and we were in a lot of financial diffuculty at this time. I had debts and Loans coming out of my ears. My partner returned to work at at a much less payrate that before and stupidly I stared to spend the Childcare costs on living expenses. I began to rely heavily on it.

 

 

So stupidly I hve been claming childcare costs since then and I have now received a letter from HMRC saying they have selected my claim for review and they would like me to send in details of my childcare but only from April 2010 - April 2011. They have asked for any official contract with my Chilcare Provider and any invoices or receipts showing actual payments i have made.Of course I dont have any of this as I havnt been using the money for childcare.

Oh I am so very frightened and dont know where to turn or what to do.

 

I just keep envisiging going to prison and my children being taken away form me which is more that I can bear to think about. I know I have been so stupid and I feel sick to my stomach to think I have done this to my family.

 

Although I am so petrified though half of me is so relieved that this has come to an end now as I have been so terrified to come clean or even to amend the childcare costs incase It brought my case to the forefront to be investigated.

 

 

I have literaly lived in fear of the postman waiting for this invesigation to happen. Please can someone give me some advice as to what you think will happen to me. I have every intention of ringing HMRC on Tuesday ater this Easter Bank Holiday and telling the the truth but I am so petrified that I am going to prison. Do you think they will just make me repay it back or do you think they will prosecute me?

 

Im making myself ill with worry but I knon Ive brought this all on myself. Any advice would be appreciated.

 

Thank You.

Edited April 23, 2011 by CDJ755

[dx100uk]

please edit your post and insert blank lines and sentences

 

dx

[citizenB]

CDJ, have put some spacing in your post to make it easier to read. Will try and find some help for you.

[CDJ755]

Thank you. Can you help with advice today as I am ill will worry? I dont mean to be pushy Im so sorry but im desperate. Thanks

[citizenB]

I have alerted the site team to your problem. However, it is the Easter weekend and I imagine some of them will be on holiday. We will certainly do our best to get back to you as soon as possible.

[padja]

I would suggest you go to local CAB before contacting HMRC, the reason I'm saying this they can act as go between, I would expect with their help you should avoid criminal proceedings however you will have to pay all the money back. You may also have all benefits you receive looked into. You should definitely get professional advice before contacting HMRC. You can pay relatives to look after child if the child leaves your property to stay at relatives house and they are registered child minder.

[dx100uk]

well you won't enf up in prison or anything like that so's put it out of your mind.

 

it's not my area of expertise either, but you'll certainly get help here.

 

have a nice holiday and stop worrying, the troops are on their way

 

good luck

 

dx

[CDJ755]

Thank You for your replies they are very much appreciated. I will contact the CAB and see what they say. Do you think I need to go to a solicitor also? I cant beleive I have put my self in this situation. Im so stupid.

[jadeybags]

There were a few Tax credit threads about the exact same thing, in march I think they were. They enlisted the help of CAB & someone from there contacted Tax credits on their behalf & were told not to panic, no criminal proceedings, but obviously had to pay it back. In installments.

Easy for other peope to say I know, but really dont panic. Tax credits are the most forgiving of the 3 'benefit' depts it seems.

[Nystagmite]

If you see CAB, it may help you to write down everything like you've done on here/

[ErikaPNP]

Hi CJD755. I've been asked to look in here and provide some advice to you. I can advise you but I regret that I cannot be as specific as you might like with regard to what the outcome will be.

 

It's not possible to say with any degree of certainty what will happen. This appears to be a general review rather than them saying that they already know the situation and offering you an opportunity to set the record straight. It's more complicated than a failure to update them in a reasonable time because each tax year a tax credit claim requires renewal to continue and in renewing you are asked to tell them of any changes or to confirm there are no changes. In not declaring there was no childcare at renewal you have made a false declaration. In order to receive the childcare element in the first instance, you need to provide the childcare providers' details such as name, address and registration number as well as the average costs. The initial claim of childcare costs will also be viewed as a false declaration unless you are able to demonstrate that there was a contract for childcare services at the time you made the claim.

 

What they will do (whether or not you contact them) is that they will make enquiries with the childminder whose details you gave when you claimed to find out if at any point there was a childminding arrangement. If there was, the childminder is required to provide further details such as dates and average costs.

 

For damage limitation, what I advise you do is contact them at the earliest available opportunity and disclose everything correctly. They may send you some paperwork to complete. You can ask a free organisation such as CAB for assistance with this. This is known as providing a full disclosure. When people provide a full disclosire to tax credits, they are more likely to perform a civil investigation rather than a criminal one. The difference between the two is that a civil investigation means that they will recover the overpayment (along with any interest) from you and may visit a financial penalty on top. (A full disclosure can significantly reduce any financial penalty and in some cases result in no penalty). A criminal investigation means recovery and potentially a prosecution. It is very rare that tax credits undertake criminal investigations, and you may have heard that they will do so where false statements have been made. They can, although usually this pertains to false statements made during the course of a civil investigation.

 

At an estimate given your figures and rough dates, your overpayment will be in the region of £18,720 not including interest. It may be slightly higher or slightly lower. I'm basing it on the 78 weeks (A year and a half) from October 09 to now and the weekly costs of £240 that you have quoted they awarded for childcare.

 

For this type of fraud, they can charge a penalty of up to £3,000. How much they will charge depends on specific factors, I've outlined these below, as well as estimated amounts based on the estimated overpayment figure I've given you above:

 

Mistake or misunderstanding: no penalty

Failure to take reasonable care: penalty of 15% of overpayment (approx £2808 )

Serious or deliberate errors: penalty of 25% of overpayment (approx £4680 but the maximum is £3000 so it would be £3000 if this was the case)

Deliberate or systematic overclaims: penalty of 50% of overpayment (approx £9360 but the maximum is £3000 so it would be £3000 if this was the case).

 

A full disclosure can result in a penalty not being charged for failure to take reasonable care, and can result in a reduction of the penalty by up to 50% for serious or deliberate errord or deliberate/systematic overclaims.

If you choose not to respond to this letter within the date they have given you, they can also charge you up to £300 and an extra £60 per day until you get in touch with them.

 

You will not need a solicitor unless they commence criminal proceedings - they will tell you if they are going to do this. CAB or any welfare rights organisation (which are free services) will probably be able to assist you with any civil investigation and the outcome, including any follow up action that you may wish to take - for example if you disagree with the overpayment figure they arrive at or wish to appeal against a penalty. You can of course use a solicitor if you prefer but may not be able to get a solicitor for free - you would need to check with the legal services commision whether you would be eligible to apply for legal aid, based upon your financial means and the legal merits tests. There is an eligibility checker here but bear in mind that they will need to consider when inputting figures that what you are currently getting in tax credit is not correct.

 

You can also check what you should be getting (approximately) in benefit/tax credits by using a benefit calculator.

[jadeybags]

Geez, 18k & just have to repay it? That's a good thing of course OP. But what about the people that claim other benefits & have over payments of that amount, they are innevitably going to end up in court aren't they. It's an unfair world we live in isn't it.

[CDJ755]

Thank you so much for you reply. So do you think they take honesty into consideration more than than the amount of tax credit overpaid when deciding whether or not to prosecute or go down the criminal investigation route?? In other words the fact that i be completly honest in a full declaration will stop them going down the criminal investigation route even though my overpayment is so high? I know ive done wrong and im so very sorry for ewhat ive done. My biggest fear is what will happen to my children as this is a joint tax credit claim with my partner and so if they send me to prison then he will surely go to prison aswell (as surely if a judge decides prison is the appropriate punishment for us then he we have to sentence both of us to the same punishment). I fear so much for my children as who will look after them?

[jadeybags]

I have only ever read about one person going to court for tax credit fraud, & I am pretty sure she didn't go to prison. But I personally think the honest approach is best, because if there is any small possibility they do take you to court, co operating with them honestly can help the outcome it seems.

[Nystagmite]

Being honest at the earliest opportunity (IE, phone them Tuesday) does help. Prison (from what I've read on here) is very unlikely. It seems that many have the money recovered from future payments.

[ErikaPNP]

I can't say that a full disclosure will prevent a criminal investigation in every circumstance because I'd be lying to you if I said that. But in the vast majority of cases I've come across, a full disclosure before tax credit complete a review or compliance check has led to no more than overpayment recovery and civil penalty, where it would almost certainly have gone for criminal investigation followed by prosecution if it hadn't been declared. The risk of prosecution in my experience is significantly lower where a full disclosure is given.

 

Although you are being asked about the period from April 2010, I would advise you declare everything. The reason I advise this is that they will make contact with the childcare provider at some point and his or her response will be that he or she has never minded the children. This will then prompt HMRC to look into previous years where childcare was claimed using her details. If you have only declared one tax year but have been incorrectly claiming in other tax years, this is not a 'full disclosure' and they will take the view that you have not co-operated as fully as you could have - this can result in what may have been a civil investigation being transferred to a criminal investigation.

 

I have come across many cases of childcare fraud being prosecuted but most stem from a few years ago where a childminder used to have to complete and sign a part of the claim in order for costs to be paid. People would falsify a childminder's signature on the form and falsify childcare contracts. Forging a signature and falsifying a document is viewed more serious than a false delcaration over the phone. Even in those cases, the most that was handed out by the courts were usually suspended sentences, where people don't go to prison but can be sent if they break the law within a specific time period. Recent cases I've come across which have resulted in prosecution involve a whole lot more than a false declaration.

 

HMRC are not as quick as DWP and LA's to prosecute fraudulent claims - they have completely different policies. If you had been claiming a DWP benefit then inevitably your case would be referred for prosecution action but this is rarely the case with HMRC unless there is more to it than one false claim, or a couple of false declarations.

 

Even this couple who claimed more than £83,000 were only given suspended sentences and community service - they not only claimed ficticious childcare costs but claimed as single people when they were married and living together, and understated their income. So their fraud was far worse and for far more money but still, they didn't go to prison.

 

This man had an overpayment of £18486.48 and was jailed for 15 months. However, he was part of a much larger [problem] involving organised fraud with other individuals and also created four ficticious children, one of whom was disabled. No such children existed.

 

What you have done, though wrong (which you accept), and though some will be shocked at it, is compatively little when I consider some of the things I've seen in fraudulent cases. You've claimed for childcare you have never used and provided a false declaration on renewal. If you provide a full disclosure before the date tax credits have given you to respond by, the liklihood of being prosecuted is significantly reduced. It would be great if I could say for definite whether or not you would be prosecuted but to place a guarantee either way would be extremely irresponsible of me, and I won't place a guarantee on something that I cannot guarantee. What I can say is that prosecution would be far less likely if you do as advised.

 

Even if you were prosecuted, unless you have done a whole lot more than what you have said here or have a string of previous convictions, prison is very unlikely. They don't just consider the offence, they consider the severity of it, mitigating factors and your circumstances. It is very, very rare that they imprison people who are disabled and have young children if they have made one false claim - despite the media reports there is always far more to it than that when it's a tax credit claim. The links of other cases I've put up show that.

 

If you don't declare it and they discover it on their own (and with false childcare costs they more than likely will because they will make enquiries with the childcare provider at some point) the chances of a prosecution will rise.

[onlyme79]

Hi Erika,

 

When you say 'a full disclosure before tax credit complete a review or compliance check has led to no more than overpayment recovery and civil penalty' do you mean give a full disclosure prior to any compliance letter or phone call. Or do you mean, a full disclosure once they get in touch and start running checks.

 

Thanks.

[ErikaPNP]

Ideally it should be before any compliance/review or phone call. But if they have sent you a letter stating that they are carrying out a compliance check or review, if you disclose fully before the date they give you to respond by, civil recovery with or without penalty is much more likely than criminal investigation/prosecution. The compliance/reviews in my experience are usually random. But they are designed to provide those who are or may be claiming falsely with an opportunity to disclose anything they might be hiding, before they commence more in depth checks and find out themselves.

[onlyme79]

Hi,

 

Also, is it true that if you give a voluntary partial disclosure umprompted, but then they find another mistake,

they treat the whole lot as unprompted?

 

Thanks

[ErikaPNP]

In the manner that they can refer the lot for criminal investigation, yes. A partial disclosure is not a full disclosure thus cannot be treated as such.

[Sezzy08]

I've had that letter aswell and I didn't declare a change in childcare and I'm worried sick I've called them and told them I've been overpayed 7,000 pound they said not to worry that I will just have to pay it back but I can't sleep or settle I'm past my self I've sent my receipts to them and a covering letter saying I've been overpaid I'm so worried that I'm now not going to have money to live on

[ProblemsProblems]

Hi

 

I am in the same position. My letter arrived on Tuesday and i have been beside myself. I think i owe between 8-10k. I went to the CAB office on Wednesday and they said to provide the Tax credit with the receipts for childcare. Thats the easy part. But the discrepancy is going to be the hard part. I plucked up the courage to speak to Tax credit office this morning and they said to give all the info i can with a covering letter. How on earth am i going to pay them back? I am going back to the CAB office once i hear back from the Tax Credit Office. I am petrified that it will go to criminal court and i will lose my home and children.

 

I am in a terrible mess. I have suffered close breavements in my family in the last 3 years and my little boy died in Dec 2010. I think i am on the point of a nervous breakdown.

[Sezzy08]

I really don't no what we are going to do can't believe I've been so stupid mine was just that my little girl was in accident and was in wheel chair for 5 months and she missed alot of childcare and I just kept meaning to declare it and never did, suppose the reasons don't matter now it's done, im in a bad way so no how u feel

[ProblemsProblems]

I pray that they accept that i can pay the overpayment, rather than go down the criminal proceeding route. I am absolutely beside myself. I need to see the GP as i cant sleep nor eat. I feel so tense and agitated. I hope for all those in the same situation that its sorted out so all parties are ok.

[Sezzy08]

Ive been to my gp today as I was starting to think very bad things.it's ok saying pay it back but that will take years don't no about you but ive learnt a very big lesson, I've been adviced they will contact childcare and go threw all previous claims so this probaly will take some time