HMRC Launches Tax Credit Crackdown

by Jason Gorringe, Tax-News.com, London

20 October 2010

The UK tax authority, HM Revenue & Customs (HMRC) has warned tax credit claimants of their duty to immediately report a change in their entitlement if a partner moves in or out.

As part of a wider government crackdown on error and fraud in benefits and credits, HMRC has said letters will start landing on doorsteps this week asking claimants to contact HMRC if their personal circumstances have changed. Because tax credits are flexible, the amount claimants receive changes as their circumstances change.

Failing to notify the tax man of any change, which then leads to overpayments, can lead to the issuance of penalties, and repayment orders, and, in the case of deliberate fraud, imprisonment.

According to HMRC, some 150,000 or 2.5% of all tax credit claims in 2008/09 were incorrect single claims.

David Gauke, the Exchequer Secretary to the Treasury, said:

“There has been too much error and too much fraud for too long in our benefits and tax credits systems. It is unfair, unaffordable and unacceptable. Today we are shining a light on the problem across the system and setting out a radical, cross-government solution. We simply have to make every penny count, and that includes going after the cheats at every level.”

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