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Benefit Overpayments Fall by £100m; Now Lowest Ever

Cash Flow_TaxAgility Accountants LondonDuring the last tax year overpayment error in the benefit system fell by £100 million, according to new figured released by the Government earlier this month.

The Government expects these errors to fall even further come tax year 2014-15 (and beyond) due to the introduction of Real Time Information (RTI) in August, a system (which we first covered back in December of last year) that allows all benefit claims to be cross-checked against earnings and pension income from HMRC the moment each benefit payment is made.

Benefit Overpayment Reductions

The reduction of £100 million in benefit overpayments between tax years 2012-13 and 2013-14 means benefit overpayment now sits at just 1.3% of all welfare expenditure, the lowest it’s ever been, according to the Government.

Of these numbers, benefit fraud currently accounts for 0.7% of all welfare expenditure (£1.2 billion), overpayment errors made due to the claimant (the person claiming benefits) accounts for 0.9% (£1.5 billion), and overpayment errors made due to the official (the person looking over the benefit claim) sits at 0.4% (£0.7 billion).

Speaking on the reduction in overpayment errors, Work and Pensions Minister Mark Harper said:

Too much money has been needlessly wasted in the past on fraud and error, so it’s good news that we’ve brought down claim errors to a record low. Now thanks to our new IT advances, we will be able to track both fraud and error in record time.

Mr. Harper continued:

But there’s more to do. We will use everything in our power to stop people who cheat the system stealing money from hardworking taxpayers, as part of our long-term economic plan to make a fairer welfare system.

Anti-Fraud Advertising Campaign

In October the Government launched a large-scale advertising campaign across almost 50 locations in the UK, with the intention of making potential fraudulent claimants (and those prone to making errors) think twice before submitting a fraudulent or error-laden claim.

The advertising campaign ran across billboards and posters, television and radio, and it even popped up as a Facebook ad here and there. The message of the campaign was clear; if you don’t report changes in your circumstances to HMRC, you risk serving a jail sentence.

To belabour the point further, the Government also announced new rules designed to deter fraudulent claimants even more. These rules include (among others):

  • An increase in the monetary penalty somebody committing fraud can receive without being taken to court; from £2,000 to £5,000.
  • The introduction of a rule stating that 40% of an individuals’ benefits can be automatically taken so to repay stolen cash.
  • The introduction of a £50 civil penalty for error-prone claimants who consistently give incorrect information on their benefits claim (or don’t report a change in circumstances).
  • The employment of bailiffs to remove high-value personal possessions from benefit frauds once convicted.

Experienced Tax Specialists

To speak with a professional to discuss any benefits you’re currently receiving, as well as your personal tax situation, contact us today on 020 7129 1199 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

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