Tax Credit Fraud
Tax credits were introduced to provide support for families and tackle child poverty. The take up of tax credits has been a significant success with 93% of those earning less than £10,000 claiming their entitlement.
However, every system is open to abuse and the tax credits system is no exception. HMRC published a report on 11 July 2006 outlining their awareness of tax credit fraud in the system and how they were actively tackling the problem with every resource available to them.
HMRC have new and wide ranging powers under the Tax Credits Act to pursue and prosecute individuals who they believe have made a fraudulent claim to tax credits. They have also been working closely with other Government Departments and the private sector which has resulted in a significant number of referrals under the Proceeds of Crime Act.
Year on year, the number of successful prosecutions brought by HMRC and later the Revenue and Customs Prosecution Office (RCPO), has steadily increased. In the year 2005 2006, 254 individuals were prosecuted and 2,241 financial penalties were imposed - this represents a 32% increase over the previous year.
These figures are set to increase. HMRC are very clear in their resolution to 'provide vigorous and robust law enforcement support to bolster [the] improved system and frustrate, disrupt and stop organised criminal attacks on the system'. To date, they have proved to be increasingly effective in their prosecutions.
Sarah Wallace of Irwin Mitchell said "Employers and employees are under increasing risk of investigation or prosecution for tax credit fraud. Employers need to ensure that they have robust systems and controls in place to ensure that they are not unwittingly assisting employees to make fraudulent claims".
The fraud and regulatory team at Irwin Mitchell can provide advice and representation to any individual or company who believes they may be at risk of investigation by HMRC for tax credit fraud.
Call Sarah Wallace now on 0370 1500 100 to arrange a consultation or use the links above to drop us a line.