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Being Investigated for Benefit Fraud


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Bit of a strange one , but I will try and keep it as brief as possible.......

 

Received a letter requesting my attendance at a benefit fraud investigation, and that it would be under caution (and taped).

 

Went today, and not sure what to make of it to be honest.

 

They claim I did not report a change in circumstances 4 weeks after making the claim in 2009.

 

In 2009 I lost a business, was left jobless, and instead of claiming dole, went self employed to make a fresh start. I informed the local council I had no income, and as such, received full council tax benefit (now called council tax reduction ).

 

As with many businesses, I started off making a loss, and continued to do so for 3 years (albeit improving over the three years).

 

Approximately 6 weeks after starting self employment, I did start to make regular DRAWINGS out of the business, even though there was no profit to support it. I was simply taking money to pay bills, out of the business. I was able to do so, and keep trading, due to a combination of the overdraft facility, favourable credit terms from suppliers, and eventually a full factoring facility.

 

I had also declared Child & Working Tax Credit.

 

The local council claim that these DRAWINGS were to be classed as income, and as I had not informed them, they believe fraud has taken place.

 

I argued that my INCOME was classed as my share of the PROFITS, and if i had drawn more than the profits supported, then in effect this was a loan that was repayable on demand, and therefore no income.

 

They argued I was wrong, but every time I stated that if I have made a loss, then I have had NO income, they replied, your income is your DRAWINGS.

 

I then suggested, in theory, if my share of the profit was £100k, but I chose only to draw £20 per week, would I receive CTR, as I was drawing only £20 per week, and therefore that was my income? They declined to answer....

 

After 45 minutes, the interview was ended as we both agreed that the conversation was going around in circles, and it all hinged on what is classed as income. They are sending the evidence to some assessor, and along with the councils solicitors, they will decide whether to prosecute.

 

I have since spoken to my accountant, who categorically states that incomes is defined by your share of the profits, and drawings are immaterial, whatever the amount. If I overdraw, then the excess is classed as a loan, as it is payable on demand!

 

I genuinely believe I have done nothing wrong, but felt I could not get my point across, and that they did not understand. One of the interviewers claimed that she had a degree in accountancy practices, and that she knew what she was talking about, but when asked, she would or could not define the difference between drawing and profit.

 

The question is does anyone know where I stand in all of this? I will be seeking the advice of a solicitor later next week, but based on my accountants point of view, he believes I am right

 

Any advice would be grateful

 

Cheers

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https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/296092/dmgch15.pdf

 

You need to read the above - I think that the paragraph relating to business accounts was 155234 onwards (I tried to remember the number and might have got it mixed up) It continues into personal drawings from the business.

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Loans are often taken as income for benefits purposes, even if they have to be paid back at a later date. Student loans being a case in point. The duty is to declare any income while claiming benefits, and it is up to the agency (LA or DWP) to decide whether that income affects your eligibility or not.

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I understand where you are coming from with taking advice from your accountant but he is viewing it from the accountancy/taxation point of view. What's relevant in your case is how the benefit regulations treat income.

 

I hope you resolve your problems soon

Please do not ask me for advice via PM as I will not reply.

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this case may be useful to you

 

 

 

Many thanks for this, looks a little promising!!!

Edited by antone
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  • 2 months later...

Result!!

 

Finally received a letter confirming that they agree with me! They cant class drawings as income, and income (self employed) is purely based on share of profit.

 

Many thanks for peoples suggestions and input, gave me a bit of comfort, but never knew for certain until today....

 

Cheers

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Quick qustion

 

Do you have to inform the DWP as to any student loan??

 

In general, yes, you should inform them. It may or may not affect your benefits (depends on which benefits and your specific situation) but if you're ever in doubt, let them know.

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The idea that all politicians lie is music to the ears of the most egregious liars.

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Result!!

 

Finally received a letter confirming that they agree with me! They cant class drawings as income, and income (self employed) is purely based on share of profit.

 

Many thanks for peoples suggestions and input, gave me a bit of comfort, but never knew for certain until today....

 

Cheers

 

Thanks for letting us know the outcome - it helps others who might have the same issue.

PLEASE HELP US TO KEEP THIS SITE RUNNING. EVERY POUND DONATED WILL HELP US TO KEEP HELPING OTHERS

 

 

The idea that all politicians lie is music to the ears of the most egregious liars.

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Quick qustion

 

Do you have to inform the DWP as to any student loan??

In short yes.... It might not count but best to report all changes and let the benefit office tell you if it affects your benefit

Please do not ask me for advice via PM as I will not reply.

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