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Is anyone in the know about tax credit investigations who could advise me please?

(7 Posts)
MadreInglese Thu 09-Jul-09 09:13:00

Went to see a friend last night who has found out she is being investigated by tax credit bods (she found out as her boss told her he had received a letter about her asking for information - before he realised it said at the bottom of the letter not to tell her she was being investigated!)

I shrugged it off and said maybe they do spot checks and knowing she's honest she would have nothing to worry about.

She then confessed that a few years ago she inherited quite a chunk of money and did not declare it, so she is worried that they might find out. I think the money was in a separate account to her current account, but she has transferred it in dribbles to her current account to subside her earnings and tax credit over the years.

Can anyone advise what might happen? Do they do spot checks or will something have flagged this? What are the consequences for her if it is discovered? She is crapping herself about a prison sentence.

MadreInglese Thu 09-Jul-09 10:22:44

subsidise not subside

coppertop Thu 09-Jul-09 10:33:26

When I declared some money that I had inherited I was told that it would only affect our tax credits in terms of how much interest I received from it. The interest would be classed as income. It wasn't a huge amount though so I don't know if this makes a difference?

They do carry out spot checks sometimes though. Last year I had to send in proof that I was receiving DLA for 2 of our children.

MadreInglese Thu 09-Jul-09 11:11:07

Thanks coppertop. I wonder how far back they check on spot checks.

I don't how much much you are allowed to inherit, or indeed how much she inherited but it's obviously enough to get her worried.

She seemed to think you're allowed up to £6K in savings before declaring it so I'm guessing it's more than that.

MadreInglese Thu 09-Jul-09 12:08:50

bump for the lunchtimers...

zippys Thu 09-Jul-09 14:19:41

Hi, they can go back upto 6 years or 20 if there has been any fraud.

If you inherit money then there is no effect on your child tax credit claim other than the income from the inheritance (as said above). If she has not declared the interest on the account then they could revise the claim.

I am not sure where she is getting the 6k from. I think it is only £300!! Your income can however vary by upto £25,000 before your tax credit claim alters (only for the year after the increase).

I would suggest that she sees an accountant or tax advisor who deals with this kind of thing regulary as if the revenue raise an assessment she will need it checking as they often make error. (I am a chartered accountant and tax advisor by the way

MadreInglese Thu 09-Jul-09 16:15:21

Thanks zippys, interesting about only the interest affecting the claim

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