Is this fraud? Need help please!

AppleCore

My FIL has just been released from prison and is about to come into some money from the sale of a house he owned before he went into prison. He's decided to outright buy a house boat with the money. The problem is he wants this money paid to his son (my husband) and my husband to buy the boat for him and then rent it back to him. From what I understand this is so my FIL can claim housing benefit from which he can pay his son rent and his son will keep the money for his dad to be able to live on. My husband is thinking about doing this purely to help his father out - he stands to make no money at all.

From what I can see my husband will be helping his dad commit benefit fraud and I am very worried about this. I also presume that my husband will be liable for tax on the rent he receives as his father's landlord and will potentially end up losing money of his/our own.

Unfortunately it seems that my husband is a bit frightned of his father and is being bullied into helping him in this way. I am very worried about this situation and need to try and persuade my husband not to get involved in this but I don't have any hard facts on what could go wrong to put him off.

Please can someone in the know explain the legal and financial implications of getting involved, I would be very grateful for any help with this.

Many Thanks.

thegirlintheattic

From what you said it is benefit fraud. If caught both your husband and FIL could go to prison and be made to pay back all overpaid benefits. If your husband does not tell HMRC of income he may also be done for tax evasion.

rubys_mummy

i would say it was fraud

the DWP would find out that he HAD owned a house, and then would want to know what he had done with the money from the sale

i cant remember what its called, i think its called disposal of income, where someone gets rid of savings just so they can claim benefits, which the DWP will class as fraud

i really think your husband's better off saying no to his dad, or it could really cause problems for him

RAS

AppleCore wrote: »

My FIL has just been released from prison and is about to come into some money from the sale of a house he owned before he went into prison. He's decided to outright buy a house boat with the money.

if FIL sell a house to buy another home, then he is OK with the benefits people.

However, if that leaves him with more than £6K in "savings" it could affect his entitlement to benefits - some unavailable some reduced by an amount per £250.

AppleCore wrote: »

The problem is he wants this money paid to his son (my husband) and my husband to buy the boat for him and then rent it back to him.

Deprivation of assets - breaks benefit rules
Contrived tenancy - FIL will really struggle to even get HB if the Council have a modicum of brain because he is related to his LL and the property has not been rented out previously.

Therefore you hubbie has an asset but cannot get rent from FIL.

AppleCore wrote: »

From what I understand this is so my FIL can claim housing benefit from which he can pay his son rent and his son will keep the money for his dad to be able to live on. My husband is thinking about doing this purely to help his father out - he stands to make no money at all..

Even so, hubbie risks a criminal record; depending whether the judge decided on joint agency or accepted that FIL was the one responsible he could face a prison sentence.

AppleCore wrote: »

From what I can see my husband will be helping his dad commit benefit fraud and I am very worried about this.

Since hubbie colluded with the tenant, he would have to return the LHA received.

AppleCore wrote: »

I also presume that my husband will be liable for tax on the rent he receives as his father's landlord and will potentially end up losing money of his/our own.

He has to declare it and pay the tax. With few deductions (no mortgage interest) he will only be able to give FIl 80% of the LHA anyway.

AppleCore wrote: »

Unfortunately it seems that my husband is a bit frightened of his father and is being bullied into helping him in this way.

perhaps explain to hubbie that apart from the risk to his own finances and criminal record, FIl needs to be helped to live a decent honest life, not one that leads to another prison sentence?

AppleCore

Thank you for all the advice, very helpful.

Am I right in saying that there are tax implications from his father just 'giving' my husband all this money? Doesn't that have to be declared for a start? Surely that in itself would make it a bad idea if a chunk of the money was going to be taken by the tax man before anything else had been done?

Mojisola

AppleCore wrote: »

Am I right in saying that there are tax implications from his father just 'giving' my husband all this money? Doesn't that have to be declared for a start? Surely that in itself would make it a bad idea if a chunk of the money was going to be taken by the tax man before anything else had been done?

There's no tax on the initial gift. An inheritance tax liability might arise if your FIL died within seven years but it's not likely if this is his only capital.

Your FIL will be seen as having deliberately deprived himself of capital and will be assessed as if he still has it.

AppleCore

Thanks again.

I just had a brief chat with my husband, outlining all the facts from the above posts - it seems to have done the trick. I really don't think he was aware of all the implications of getting involved in this mess and he's agreed that he'll rethink and more than likely refuse to help his father with this. I think it would be sensible not to get involved with any of this and hopefully now he has some facts to go on he'll keep well away.

poppasmurf_bewdley

Don't think you can get Housing Benefit for a houseboat, can you?

The only help from HB would be for mooring fees, so maybe the potential fraudster will find himself up the creek without the proverbial paddle.

I do know that in this area, the council will not allow either them or caravans.

Oldernotwiser

poppasmurf_bewdley wrote: »

Don't think you can get Housing Benefit for a houseboat, can you?

I'm pretty sure you can - you can certainly get it for a caravan.

poppasmurf_bewdley

Oldernotwiser wrote: »

I'm pretty sure you can - you can certainly get it for a caravan.

From DWP website:

Houseboats

You may be able to get help through HB for your mooring fees or river license fee where this has to be paid for the boat to be in the water, but not for other costs associated with houseboats.

Mobile homes and caravans

You may be able to get help from HB to meet any site fees you have to pay in order to live in your caravan. If you have to pay interest on a loan to buy your caravan you can claim help from Pension Credit, Income Support or Jobseeker’s Allowance.

So you can get HB for fees but not for actual rent.

Oldernotwiser

poppasmurf_bewdley wrote: »

From DWP website:

Houseboats

You may be able to get help through HB for your mooring fees or river license fee where this has to be paid for the boat to be in the water, but not for other costs associated with houseboats.

Mobile homes and caravans

You may be able to get help from HB to meet any site fees you have to pay in order to live in your caravan. If you have to pay interest on a loan to buy your caravan you can claim help from Pension Credit, Income Support or Jobseeker’s Allowance.

So you can get HB for fees but not for actual rent.

Are you sure that doesn't just relate to a caravan or houseboat that you actually own?

ETA. From Shelter's website;

"Can I claim Housing Benefit?
Yes, you can claim housing benefit to help pay:

rent for your houseboat
rent for your mooring
your boat licence."

From Canterbury's website;

"Housing Benefit is paid as follows:

if you are a council housing tenant we will pay benefit direct to your rent account reducing the amount you have to pay;
if you pay rent to a private landlord and live in a caravan, mobile home or house boat, or your tenancy began before 1989, your benefit may be paid directly into your bank account, or directly to your landlord into their bank account;"