Reports suggest that criminal gangs and fraudsters have swooped in to take advantage of the pandemic turmoil, resulting in a steep rise in Covid-related unemployment benefit fraud (Universal Credit).
Although war and pestilence have been the curse of humanity since time began, the Western world has remained relatively free of both since the end of the Second World War. Therefore, when the anticipated but ill-prepared for pandemic finally hit our shores in the form of Covid-19, the UK Government had to rush to ensure benefits and loans were quickly made available to people and businesses who found that their income vanished overnight. This type of chaotic situation naturally resulted in significant slackening of checks and balances within the Department of Work and Pensions (DWP).
How much has been overpaid in benefits following the Coronavirus pandemic?
In May 2021, the DWP confirmed it had overpaid benefits by an estimated £8.4bn in 2020-21, representing 3.9% of total spending. The underpayment rate, 1.2%, was also the highest ever, amounting to £2.5bn. In contrast, overpayments in 2019-20 were estimated to be 2.4% and underpayments 1.1%.
The DWP stated that the usual administrative checks applied to benefit applications were eased to ensure those who needed help received it quickly. This included relaxed verification of identity, household circumstances, and tenancy agreements.
Although many who desperately needed financial assistance received it, fraud, specifically that related to Universal Credit, more than doubled from 1.4% in 2019-20 to 3% in 2020-21. Therefore, Universal Credit fraud substantially contributed to the overpayments, a good portion of which will never be recovered.
What is benefit fraud?
If you receive any type of benefit, you must tell the truth when making your application and inform the relevant authorities of any change of circumstances. Failure to do so could result in you being investigated by the DWP, HM Revenue and Customs (HMRC), the Service and Personnel and Veterans Agency, or your local authority.
Examples of benefit fraud include:
- Claiming full Universal Credit when you are employed either part-time or full-time.
- Faking an illness to claim a disability benefit.
- Not declaring income from investments or other assets.
- Falsifying accounts to make it look like you receive less income than you actually do.
To establish whether you have provided false information or not reported a change in your circumstances that could affect your benefit entitlement, you may be asked to attend an ‘interview under caution’. The interview will be conducted by Fraud Investigation Officers, and you are allowed to have a Benefit Fraud Solicitor Present.
If you are found guilty of benefit fraud you can be fined or sent to prison. Your assets can also be confiscated, and your benefits stopped for up to three years. In addition, you will probably have to pay back all the money you fraudulently claimed plus administrative penalties.
Benefit fraud carried out by organised crime operations is often connected to other types of fraud and financial crime such as money laundering, conspiracy, and false accounting. Therefore, substantial evidence is required to prove benefit fraud.
What evidence is used to prove benefit fraud?
Authorities have wide-ranging powers to investigate benefit fraud. In cases where organised criminal gangs are committing high-value fraud, specialist units such as the Dedicated Card and Payment Crime Unit (DCPCU) will work with banks who report any suspicious activity regarding the opening of bank accounts using fraudulent documents such as fake utility bills.
In 2020, an Organised Criminal Gang was convicted of exploiting the Covid-19 pandemic by fraudulently opening Universal Credit accounts in the names of Polish Nationals, in order to obtain cash from the government. The DCPUC, which is funded by the banking and credit card industry was alerted by a major high street bank after the unit identified that a bank employee was opening sham bank accounts to deposit fraudulently obtained Universal Credit funds.
When investigating smaller criminal units or individuals, authorities have the power to examine bank accounts, social media accounts, and testimonies from family, friends, and neighbours, as well as put you under surveillance.
What are the defences available for benefit fraud?
A large number of benefit fraud cases comprise of false and malicious allegations. In such cases, a Benefit Fraud Solicitor can quickly show the investigators that there is no evidence available to substantiate the assertions.
Investigators must also conduct their investigation within the boundaries of the law. Your Solicitor will examine the methods they used to gather evidence that you committed benefit fraud and swiftly identify any instances where correct procedures were not followed or legal boundaries were overstepped.
You may also be able to argue that you committed unemployment benefit fraud under duress or were genuinely mistaken concerning the false information you provided to the DWP. If you are convicted, your Solicitor can highlight any mitigating circumstances to the Court to ensure you receive the most lenient sentence possible. They can also advise and represent you in any confiscation proceedings under the Proceeds of Crime Act 2002 (POCA) which may be brought by the Prosecution in order to recover any fraudulently obtained funds.
If you are facing investigation or prosecution for unemployment fraud or benefit fraud, our Criminal Law Barristers and Solicitors can help. Contact us now to discuss your situation.