Concerned my friend is committing benefit fraud

brightonelizabeth

Hi,

Apologies in advance for the patchy details and the fact that I have no idea how claiming benefits works or tax implications for running your own business.

I am very concerned that what my friend has been doing is benefits fraud and I would like advice on how to handle it. I understand my friend is not going to get any sympathy here but I am very concerned about what might happen to her child if she gets found out.

My friend has been claiming universal credit for about a year. I think she gets about £1.6k a month.

In January she set up a business. I don't know exactly how much she makes but my conservative estimate is about £2,500 a month after expenses but could well be much higher.

After a couple of months I mentioned she needed to inform DWP about her new business so they could calculate whether she was still entitled to UC. 

She told me she would. 

Today she called me and said HMRC had sent her a letter saying her tax returns were late. 

Apparently, she hasn't declared any income from her business nor has she contacted DWP/UC people to tell them she has a business that she is getting income from!

I have done a bit of research and so far I can only see 3 options.

1. Call DWP explain, agree to pay back the over payments and arrange a payment plan.

2. Lie on tax return which could well be found out. Possibly prosecuted for tax evasion resulting in a £5k fine and/or 6 months prison + criminal record. Banned from travel America + Australia where she has family.

3. Truthful on tax return and wait to see what happens. I am not sure what would happen here. What are the chances someone will notice she is on UC that she is not entitled to? From my research she could be investigated for benefit fraud, which, while not as bad as tax evasion, she could still get a criminal record, have her benefits stopped for up to 3 years and receive up to £5k fine and be forced to pay back all the overpayments. 

Am I right in thinking these are the only options?

I am going to advise her she has to call DWP to explain and maybe set up a payment plan to pay back the over payments. The problem is I know she will likely not do this as she has problems facing up to her mistake. I worry she will just try to sweep it under the rug, and possibly lie on her tax return in the hope of not getting caught.

Any advice would be appreciated.

Thank you

calcotti

If she has a self employed business she should have informed UC and should be reporting all business income and expenditure on a monthly basis. Lots of information avaialble
https://www.gov.uk/self-employment-and-universal-credit
https://www.gov.uk/government/publications/universal-credit-and-self-employment-quick-guide

Obviously she needs to tell the truth and fully disclose all material facts in all her dealings with UC and HMRC.

All you can do is point her in the right direction. it is up to her how she responds.

brightonelizabeth

calcotti said:

If she has a self employed business she should have informed UC and should be reporting all business income and expenditure on a monthly basis. Lots of information avaialble

Obviously she needs to tell the truth and fully disclose all material facts in all her dealings with UC and HMRC.

All you can do is point her in the right direction. it is up to her how she responds.

Thank you for your reply. I will try my best but I worry she will not listen! 

NedS

She needs to notify HMRC and UC, ASAP. The critical thing in her favour is that she has notified them. Obviously she will be required to repay any amount she has been overpaid.

If she fails to notify them, she will eventually be found out. The longer it goes on, and the greater the amount of the fraud, the higher the penalty. Over a certain level, jail time is increasingly likely. The longer it goes on, the deeper the hole she is digging for herself.

brightonelizabeth

NedS said:

She needs to notify HMRC and UC, ASAP. The critical thing in her favour is that she has notified them. Obviously she will be required to repay any amount she has been overpaid.

If she fails to notify them, she will eventually be found out. The longer it goes on, and the greater the amount of the fraud, the higher the penalty. Over a certain level, jail time is increasingly likely. The longer it goes on, the deeper the hole she is digging for herself.

Thank you. I will tell her this. I love her lots (childhood best friend) but this kind of behaviour is typical of her. 

poppy12345

2 & 3 aren't even an option here. Her only choice is tell the truth.

brightonelizabeth

poppy12345 said:

2 & 3 aren't even an option here. Her only choice is tell the truth.

Thanks for your reply. From my point of view they are not options either, but I worry she will see them that way.

Its_not_paranoia

Option 1: Keep your nose out of other people's business. She might not be doing anything wrong, but just not giving you a complete picture which might be leading you to the wrong conclusion.
Option 2: Head over to the GOV UK website and fill in the report benefit fraud form.

brightonelizabeth

Its_not_paranoia said:

Option 1: Keep your nose out of other people's business. She might not be doing anything wrong, but just not giving you a complete picture which might be leading you to the wrong conclusion.
Option 2: Head over to the GOV UK website and fill in the report benefit fraud form.

Thanks for replying.

1) We have been best friends since we were very little and on occasion we discuss money very openly between each other. She was the one who spoke to me in a panic this afternoon about it and since then I have been researching for her as she is at work at the moment. 

2) I really hate benefit cheats. I have worked for all my money but I can't and won't report her for fraud. I will however advise her about what she needs to do and the consequences if she does not listen. 

I am extremely worried if she does get prosecuted, about what will happen to her child. I know the father won't help and her disabled mother cannot help. 

calcotti

brightonelizabeth said:.. I worry she will not listen! 

Which is not your responsibility.

You are being a supportive friend by helping her find the information she should be aware of.

anmarj

Hmrc and Dwp do matches, so at some point, it would be directed to fraud and they have powers to obtain details. First your friend could find out about is being called into an interview under caution and dwp could consider prosecuting her for UC. She has to decide if she can live with looking over her shoulder or come clean now