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Fraud Investigations - Civil penalty or prosecution?

Benefit or Tax Credit fraud is an offence which may be committed by making: a) False representation for claiming benefits or tax credits, or b) Dishonest representation for claiming benefits or tax credits Special rules allow for investigation and prosecution where you are suspected of benefit or tax credit fraud.

Civil penalty or prosecution?

Civil penalties

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.

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?

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 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.

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