Taxman onto the self-employed about dodgy claims

Thousands of self-employed people are receiving probing letters from HM Revenue & Customs, designed to weed out and penalise those whose tax credit claims are fraudulent.

Reflecting on the clampdown, the Revenue said it last week wrote to 12,000 self-employed taxpayers because it suspects their claims have not been accurate or genuine.

In the letter, the taxpayer is invited to contact the tax authority and supply evidence to support their claim, particularly if their earnings have changed in any way.

Such an income fluctuation can result in HMRC overpaying the claimant, assuming the department is not told of the change, which would mean the excess money should be repaid. 

Failure to do so could land the taxpayer with a penalty and, in the case of deliberate fraud, criminal prosecution and even a prison sentence, HMRC says in its letter.

Last year, the government launched proposals to reduce the billions lost to tax credit error and fraud every year, which the Treasury says is “unaffordable and unacceptable.”

Exchequer secretary David Gauke said the Revenue was determined to get even tougher on targeting “possible” fraud by self-employed tax credit claimants.

“HMRC will now use credit reference agencies and data-matching to spot patterns of fraud,” he said. “The department is also employing additional investigators and are examining each claim in high-fraud areas.”

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