Tax credit overpayment revealed by R2R evidence

We have a client who has had her claim for UC declined because they said her work is not genuine and effective, and she therefore has no Right to Reside (she is a Spanish citizen, resident in the UK since December 2014, so can’t get settled status just yet). We have submitted an appeal and advised her to make a new claim.

In order to support her appeal and new claim, I looked through her payslips and bank statements, which show that she has been working part time since she arrived in the country, apart from a period of 6 months on maternity leave, just after the birth of her son in February 2016. I think I can make a good case for her R2R, but the process of putting together this evidence has revealed another problem.

Her hours of work fluctuate a lot. In the tax year 2018-19, my best estimate is that she worked an average of 10 hours a week, and in 2017-18, only around 7 hours a week. However, she has been claiming Working Tax Credit since she went back to work after the birth of her son in September 2016. I think it’s possible that she was working more like 16 hours (but only just) when she first claimed, but I think she has not been eligible for WTC for at least the last two years.

If she submits this evidence to the tribunal, I assume the DWP will also discover the overpayment, and may well start a fraud investigation. If I explain the problem to her, I assume she will be obliged to tell tax credits herself that she has been overpaid, in order to pre-empt a fraud investigation when/if the overpayment comes to light.

Does anyone know how likely it is that they will look at this as fraud, rather than an ordinary overpayment? If we were going to try and work out her notional entitlement (to income support and child tax credits), could we average her earnings over the tax year, or would we need to work out each week individually?

Thanks for any advice or tips.

Firstly Dani I would not assume the DWP will join these dots together - I have had a similar case in the past and nothing came of it; Tax Credit is after all administered by HMRC and the issue of WTC entitlement is not relevant to the appeal.

Even if the DWP did notify HMRC of the low hours, I would have thought a civil investigation procedure would be much more likely that a fraud prosecution.