How do HMRC Approach Compliance Checks for Tax Credits?
HMRC is growing increasingly vigilant about enforcing tax compliance, and particularly around tax credits. HMRC has declared a zero-tolerance approach to benefit fraud, having strengthened its number of anti-fraud officers, as well as launching a free helpline where members of the public can report those suspected.
How does HMRC find Tax Credit Inconsistencies?
One of the way’s HMRC flags up cases worthy of deeper compliance checks is its defence-built supercomputer known as ‘Connect.’ In the first year of its launch, HMRC’s super computer ‘Connect’ delivered the government £1.4bn of additional revenue, a testament to its extraordinary efficacy in discovering tax inconsistencies. This computer’s formidable arsenal of tools includes that of social network monitoring, which essentially means it has the power to scrutinise someone’s Facebook feed to look for behaviour that might be at odds with whatever financial situation has been declared.
What kind of things are they looking for?
- False Representation of Any Kind, including a failure to notify a change in circumstances
- Dishonest Representation for the purpose of claiming increased benefits or tax credits
How long do tax Credit Compliance checks take?
When HM and Revenue finds a potential area of concern, they will send the individual a compliance check letter asking for whatever information they feel will clarify the issue. This is known as an ‘information notice.’ There will be a deadline on the letter which you should keep. After submitting the information, HMRC will send you another letter informing you of their decision which will be that your credits will either be reduced, maintained, or stopped. In terms of overall time frame, this will be up to HMRC but you should expect it to take months, not weeks to fully resolve the issue.
When does HMRC charge penalties?
If you either refuse or fail to send HMRC the information they’ve asked for, or if they discover you have deliberately falsified a return, penalties may apply. This includes failing to notify HMRC a change of circumstances.
If you’re accused of tax fraud, seek professional advice
If HMRC suggests that you have committed fraud of any kind, you should seek professional advice immediately. We are some of the UK’s most experienced mediators with HMRC so you can call us on 08000 746 757 or email on firstname.lastname@example.org for a free impartial consultation.