You are now leaving the Turn2us site. Turn2us is not responsible for content on third party sites.


Fraud Investigations

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.

1. What is Benefit or Tax Credit fraud?

Benefit or Tax Credit fraud is an offence which may be committed 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.

or

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.

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:

It is very important that you seek advice before responding to an allegation of fraud. You can use our Find an Adviser tool to find a local advice service.

2. How do fraud investigations work?

The Department for Work and Pensions, local authorities and HM Revenue and Customs 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.

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.

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

3. What happens if I am found to have committed fraud?

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

The maximum penalty if convicted for dishonest representation is a £5,000 fine, six months imprisonment (12 months in Scotland) or both.

If you are convicted in a higher court you can receive an unlimited fine or seven years in prison 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 civil penalty as an alternative to prosecution or the proceedings may be dropped. You should 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.  

Overpayments

If the act which led to the fraud investigation also resulted in a recoverable overpayment, the overpayment is still recoverable from you even after you serve a prison sentence or pay a fine.

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

4. 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.

5. Will I lose my benefit or tax credit?

You may lose your benefit or tax credit if:

  • you are convicted of an offence, or 

  • you agree to pay a penalty as an 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 if you pay a penalty as an alternative to prosecution, but may be increased to 13 or 26 weeks for repeated offences or to three years in cases of serious fraud.