Tax Credits: Dealing with mistake and fraud

This section of the website provides information about HMRC’s various compliance powers. The material in this part of the website was written by the Low Incomes Tax Reform Group.

In October 2010, HMRC and DWP published a joint error and fraud strategy and since then there has been an increase in compliance activity making it increasingly important for advisers to understand the various powers HMRC have in this area. Changes have also been implemented by the Welfare Reform Act 2012.

Examinations: Checks made during the year, and immediately after the end of a year before finalisation are generally known as examinations. This section explains the legal powers for examinations and the suspension of payment powers HMRC can use alongside these.

Enquiries: Checks made after a claim has been finalised are generally called enquiries. They are subject to more legislative requirements than examinations and claimants have more rights. This part of the website explains the enquiry process.

Penalties and interest: This section of the website explains the various powers HMRC have to impose penalties and charge interest in tax credits cases.

Discovery process: The discovery process is used by HMRC once the window for opening an enquiry has passed and allows them to go back much further in time. This section explains the discovery process and the specific rules HMRC must follow.

Tax credits fraud: This section explains HMRC powers relating to tax credits fraud. The Welfare Reform Act 2012 introduced new provisions into the Tax Credits Act 2002 that mean claimants can lose working tax credit in certain circumstances. This section examinations the legislation in more detail. It also covers the other WRA 2012 provisions relating to fraud.

Updated 18 April 2016