Fraud investigations: benefits and tax credits

Key information

This section contains information about the procedures around investigations of alleged benefits or tax credit fraud.

Applies to: England, Wales, Scotland and Northern Ireland

Please note: If you are facing an allegation of benefits or tax credit fraud, we strongly recommend that you seek advice from a benefits or legal adviser. See Getting advice for more information.

Index

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Investigations for benefits or tax credit fraud

You may commit fraud if you:

Give false or dishonest information to gain benefits or tax credits, or
Fail to report a change which you knew affected your benefit or tax credits.

Special rules allow for investigation and prosecution where you are suspected of benefit or tax credit fraud. They apply to any benefit or tax credit that you receive from:

The Department for Work and Pensions (DWP), which pays most benefits through either Jobcentre Plus or the Pension, Disability and Carers Service
HM Revenue and Customs (HMRC), which pays tax credits and Child Benefit
Local authorities/councils, which pay Housing Benefit and Council Tax Benefit.

It is very important that you seek advice before responding to an allegation of fraud. See Getting advice for more information.

How do benefit and tax credit fraud investigations work?

The DWP, local authorities and HMRC have powers to make investigations in order to detect and prevent fraud.

These authorities may share information about you with each other. They may also have the right to gain access to your place of business or employment as part of an investigation.

Many people are investigated for fraud, but never prosecuted. However, you cannot be sure that you will not be prosecuted, so always seek advice at the earliest possible stage.

You may be able to avoid formal investigation by talking to the benefit or tax credit office - but be cautious! Think carefully and check your facts before giving information to avoid making mistakes.

As part of the investigation, you may be ‘interviewed under caution’. You can take someone with you, and, if possible, seek advice or representation from a solicitor who deals with criminal law. See Getting advice

If you live in England or Wales, see the Advice Now guide to benefit fraud (link opens in a new window).

Following an interview under caution, in some cases you may be offered a formal caution as an alternative to prosecution. You should seek specialist advice before accepting a caution.

What penalties might be incurred if I am found to have committed fraud?

You may be prosecuted if you commit an offence by either making:

a) False representation for claiming benefits or tax credits

This means that you give information or evidence which you know to be false, or
Fail to notify a change in your circumstances which you know affects your benefit or tax credit, or
Cause or allow another person to fail to notify a change which you know affects their benefit or tax credit.

b) Dishonest representation for claiming benefits or tax credits

This means that you knew that you were acting dishonestly when you gave incorrect information or evidence, or failed to report a change.

The maximum penalty for false representation is a £5,000 fine, three months imprisonment or both.

The maximum penalty for dishonest representation is a £5,000 fine, six months imprisonment or both.

Prosecution must begin within three months of the date from which there was sufficient evidence to prosecute or twelve months from the date of your offence, whichever is later.

You may be invited to pay a penalty as alternative to prosecution or the proceedings may be dropped. Seek advice before agreeing to pay any penalty as alternative to prosecution.

If you are faced with prosecution, you should seek legal advice as a matter of urgency.

Any recoverable overpayment is still recoverable from you even after you serve a prison sentence or pay a fine.

Make sure any possible benefit appeal about accuracy of overpayment or its recoverability has been made and heard before any prosecution action is begun.

Penalty as alternative to prosecution

You may be invited to pay a civil penalty as an alternative to criminal prosecution.

This may apply if:

you have been overpaid benefit and this is recoverable from you, and
you caused the overpayment, and
there are grounds for prosecuting you for the offence.

How much is the penalty?

From 8 May 2012, the minimum penalty is the greater of 50% of the amount overpaid or £350, with a maximum penalty of £2,000.

If I agree to the penalty, can I still be prosecuted?

No. The penalty is an alternative to prosecution. If you agree to the penalty, you must be allowed a short ‘cooling-off’ period to change your mind. You cannot avoid the penalty after that time. The cooling-off period is to be reduced from 28 to 14 days.

If I pay the penalty, do I still have to repay the overpayment?

Yes. If the overpayment was recoverable, it remains recoverable from you even if you pay the penalty.

If I do not agree to the penalty, will I be prosecuted?

Not necessarily. Although there must be grounds to prosecute before you can be offered a penalty, you will not necessarily be prosecuted if you do not agree. You should always seek specialist advice.

Civil penalties

From October 2012, a civil penalty may apply if you are overpaid a benefit and:

you have negligently given incorrect information or evidence, and
you fail to take steps to rectify the error, and
the error causes an overpayment, or
you fail to provide information or evidence or fail to notify a change in your circumstances without a reasonable excuse.

Will I lose my benefit or tax credits?

You may lose your benefit or tax credits if:

you are convicted of an offence, or
you agree to pay a benefit penalty as alternative to prosecution, or
you accept a formal caution instead of being prosecuted.

This is known as a benefit sanction. Your sanctionable benefit is either not paid or paid at a reduced rate during the sanction period. The sanction period is four weeks for the first offence but may be increased to 13 or 26 weeks for repeated offences or to three years in cases of serious fraud.

Getting advice

You should seek advice from a benefits or legal adviser if you have been told that you have an overpayment on benefits or tax credits and also before responding to an allegation of fraud.

The following resources can help you locate one:

You can use our Find an Adviser tool to find a local benefit adviser who may refer you to a legal adviser
You can find a local solicitor using the Law Society’s Find a Solicitor search tool (link opens in a new window). Please note that you will have to pay for their services unless you qualify for legal aid (link opens in a new window)
Community Legal Advice (CLA) (link opens in a new window) is a free and confidential advice service in England and Wales paid for by legal aid. If you are living on a low income or benefits, you may be eligible for free specialist advice from legal advisers.

Further information

General

England and Wales

Northern Ireland

NI Direct information on how your benefit claim is checked for benefit theft (link opens in a new window)

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Frequently asked questions

Frequently asked questions

1. My partner has been living with me for the past three months. I am claiming Income Support as a lone parent but I haven’t told Jobcentre Plus yet because I wanted to be sure it would work out. Is this fraud? What should I do?

This may be fraud if you knew that your partner living with you affected your entitlement to benefit.

You should notify the Income Support office straight away. You should also check what benefits you are entitled to. You can use our Benefits Calculator to do this.

We would suggest that you seek advice from a benefits adviser as a matter of urgency. See Getting Advice for more information.

3. I have been invited to attend an interview relating to benefit fraud. Do I have to go? Can I take someone with me?

You cannot be forced to attend at this stage. However, if you do not attend, this may lead to more concern about your claim and it may be in your best interest to attend.

You are allowed to take someone with you to the interview but they will not be allowed to answer questions for you.

You should seek advice before attending the interview. See Getting Advice for more information.

If you live in England or Wales, see the Advice Now guide to benefit fraud (link opens in a new window)

4. I am being prosecuted for benefit fraud. Do I still have to repay the overpayment?

Yes, but only if the overpayment is recoverable from you. If it is, it is still recoverable from you even after you have been prosecuted for fraud. See Benefit and tax credit fraud for more information.

If you have not already done so, seek advice from a benefits or legal adviser. See Getting advice for more information.