Letters have started to land on the doorsteps of 12,000 self-employed people who are claiming tax credits according to HMRC.
HMRC's latest campaign is aimed at reducing tax credit fraud.
Failure to notify promptly of any changes in income can result in overpayment. Claimants could also face a penalty and, in the case of deliberate fraud, criminal prosecution and imprisonment.
As part of a wider government crackdown, HMRC and the Department for Work and Pensions (DWP) have published a strategy designed to tackle error and fraud in benefits and credits.
Exchequer Secretary to the Treasury David Gauke said:
“HMRC is determined to take a tough approach to targeting possible fraud among tax credit claimants. Last year the Government launched radical proposals to reduce the billions lost to tax credit error and fraud every year. These losses are unaffordable and unacceptable.”
HMRC will now use credit reference agencies and data-matching to spot patterns of fraud. The department is also employing additional investigators and are examining each claim in high-fraud areas.
Some may have thought that the three line declaration in the short tax return makes it easy for many self-employed claimants to under declare income and over claim expenses. HMRC's figures reveal that there is an 8.9% error rate in tax credits claims too.
