Reporting self employed income as £0 on UC

[Borisbollocks]

I know I should mind my own business but my friend thinks she's worked her way around the system and that there will be no comebacks.

So, my friend applied for UC. Her partner is self-employed earning roughly £35k per year steadily for the last few years. Her maternity leave ended in April and she decided not to go back to work. She made an application to UC to see what she's entitled to. I did tell her it wouldn't be much, if anything, given her OH's income.

Each month they report her OH's income as £0. This obviously gives them full entitlement to UC. His self employment has not been affected by Coronavirus.

I'm worried that somewhere down the line, they may be caught out.

I know it's none of my business and I would never even think of reporting them.

My AIBU is, is this even possible?

To me, it doesn't make sense but when we spoke about it I couldn't give her a reasonable answer. I did tell her it wasn't a good idea. Her argument was that a lot of self employed people got the grants whilst still working full time so why shouldn't they get more money too?

I really do lovey friend but I can't find anything online to prove she may be found out.

If you claim UC aren't you supposed to be actively seeking work and attend interviews at the Job Centre to prove that you are?
If you are self employed and earning 35000 per year don't you have to do a yearly tax return?
I think your friend and her partner may find they they may find themselves in trouble as cheating the system doesn't always work out well.

Presumably HMRC will find out sooner or later. They may inform the DWP. It's not a risk I'd take.

If you claim UC aren't you supposed to be actively seeking work and attend interviews at the Job Centre to prove that you are?

UC can also be claimed by people who are in work and so long as they are meeting the minimum income requirements, they don't need to attend interviews or seek work/additional work. The minimum income floor requirements have been altered at the moment due to covid but declaring a nil income will catch up with them eventually, if the DWP don't figure it out then HMRC will.

This sounds shifty . It's one if the reasons that the taxpayer has to bail out the feckless. If what you say us true.

They will be caught if he fills his tax returns in and declares his earnings. If it's cash in hand and he lies then they'll probably get a away with it.

No job centre interviews at the moment and you dont need to prove anything but you do need to be honest.

I hope they are this is fraud and should be reported. Sorry but it makes my blood boil when we have thousand of people homeless and children starving and others are taking money from the tax payer that they aren’t entitled to.

Thanks @Gancanny I honestly didn't realise that about UC.

They are getting away with it because the minimum income floor is temporarily suspended due to covid. When it is re-instated they will be treated as if he earns at east 35 x nmw each week even if he is trying to deceptively say he isn't. They are committing fraud and will get caught.

I know the minimum income floor has been suspended but even when it's reinstated, they've still committed fraud until now. How exactly will HMRC find out? How do they know how much he's earned even if he reports his income to HMRC as £0? I'm not sure if he has or hasn't. I just can't help but feel like there's a gap here that hasn't been closed.

I really want to tell my friend that they WILL DEFINITELY be found out but I've got no proof as to how. It's so frustrating.

I don't want them to end up in debt but according to her, many of their self-employed friends on decent money are doing the same thing.

How exactly will HMRC find out?

You seem to want to know a lot, and how it'll affect your "friend"

I don't want them to end up in debt

What about jail time? Knowingly defrauding the Crown certainly carries the possibility for both of them.

@SimplySteveRedux this is the reason I've name changed and changed a few details. Had I posted under my usual username where I've probably mentioned in several posts that I and DP are employees, you wouldn't have sent this message.

I'm honestly just trying to get some advice. Thank you for your concern.

@SimplySteveRedux I don't want either for them but they are quite clueless, as am I, to the potential penalties.

If they are defrauding the country (it's not the government, and HMRC, it is everyone) then they won't necessarily get found out - if his tax return reflects an income which is lower than reality and that ties in with their UC claim then it won't raise any red flags on a straight comparison. It might get picked up through other HMRC channels but there is no guarantee of that.

As PP says, it depends if he files a tax return. DWP & HMRC are working a LOT more closely together these days than they used to, and they will ask for proof of earnings/non-earnings to verify his claim. Even if he doesn't supply the information, DWP can check with HMRC.

It's fraud, and it makes me sick. Going through the UC process pre-covid was absolute hell. I was lucky, my jobcentre coach took one look at me and said 'there is no way on earth you should ever be put through this' and gave me every type of help imaginable. At one point he even said 'how the hell have you been living on £x a month? and refused to let me leave until I'd agreed to a UC advance. I know I was lucky. But it's people like your friend that meant I had to prove just how ill I was, over and over and over again.

@sadeyedladyofthelowlandsea your story is one I've heard many a time. I'm sorry. So many people aren't aware of what they can claim and it's a huge set back both financially and mentally. I hope you're ok now x

Not a risk I would take!

If this year has shown anything it's that honesty is the best policy!

Those who falsely reported lower self employed incomes to hmrc then needed help due to corona were caught out.

Plus I think it's highly likely given the resulting recession/depression that clamping down on uc fraud/tax fraud (which this is) will be the next thing and they'll likely be found out.

And if he's ALSO defrauding hmrc they'll get doubly hit!

Are they aware that at any time dwp can check their bank accounts? I very much doubt they're SPENDING all in cash that's virtually impossible these days.

@Borisbollocks it's ok, as I said my work coach was incredibly kind & helpful. The last interview I had with him he gave me a massive hug and said some lovely things. I don't know what I'd have done without his support. But thank you. The thing he kept emphasising was 'the reason there are horror stories are because people are too scared to deal with UC - because of the horror stories.' I'm doing pretty much ok now.

As Graphista says, not declaring income can come back to bite you massively on the arse later on. Plus it will catch up with them at some point. The longer they claim money they're not entitled to, the worse it's going to be for them. ExP claimed working tax credits for years that he wasn't entitled to, and is still paying off that debt years later. It's just not worth it.

@Graphista that was one of my concerns. Her DP is paid monthly into his bank and he needs to sort out his own tax etc. They live in a council flat and it's below the LHA. I'm not even sure if he knows she's claiming UC on top!

I'm not jealous at all before anybody asks. I am EXTREMELY close to this woman and I'm genuinely worried about their future. Her DP was almost sent to prison for a drug related offence just a couple of months ago. Instead he got a fine and community service which is not possible at the moment.

I really do love this woman. I'm so worried. She's not long had a baby and I think she's got too used to spending money she's not entitled to.

I even sent her money last week to pay for something she needed. I know I shouldn't have but again, were extremely close.

If they're declaring £0 for UC and £35K on the tax return - HMRC & DWP will catch up with them eventually, they will be made to pay the penalty, and given his previous brush with the law - I doubt they'll be too lenient.

If they're declaring £0 for UC and £0 on the tax return - Again, they will get found out sooner or later and will face the full wrath of the authorities.

PLUS if he's declaring £0 on his tax return - he can kiss goodbye to any chance of getting any sort of credit any time soon - loans, mortgages, car finance, etc. as the lender will want to see tax returns as proof of earnings eligibility.

@Borisbollocks Just remembered, I had to supply six months worth of bank statements to prove my (lack of) income to both DWP & my local council to prove eligibility for the housing benefit element of UC. Curiously, I then had a tenancy inspection from the council about two weeks later. Almost as though they were checking that it was just the DC & I living here, and I wasn't claiming whilst having an earning DP live here too. I got questioned too about why I was getting odd one off payments from a friend that varied from £10 to £400 (volunteering expenses I was reimbursed for) - and had to provide copies of the receipts for things I'd bought to prove I wasn't receiving money dodgily.

I do feel for you. It's so hard when you can see someone you care about make the wrong decisions for a short term gain. She doesn't sound like she's in a great place. I really hope she listens to you