Appendix B: Payslips analysis
Introduction
We selected 20 random HB and CTB claims with declared employment income from a schedule of claimants in receipt of benefit since 1 January 1999 to test:
- whether information declared on the claim form was checked for consistency with the payslips
- the level of understanding and knowledge of assessment staff
- whether appropriate action was taken when conflicts were identified.
Conclusions
The results of the sample clearly identified:
- conflicts between information in claim forms and payslips
- that benefit processors lack understanding, knowledge and fraud awareness
- a complete absence of follow-up action.
Findings
Sample analysis
A breakdown of our sample by income type and type of claim is shown at
Figure B.1.
|
Description |
RA |
RR |
CTB |
Total |
||||
Number |
% |
Number |
% |
Number |
% |
Number |
% |
|
Self-employed |
2 |
11 |
0 |
0 |
0 |
0 |
2 |
10 |
Working |
13 |
72 |
1 |
100 |
1 |
100 |
15 |
75 |
Unsuccessful claim |
1 |
6 |
0 |
0 |
0 |
0 |
1 |
5 |
No evidence of income |
2 |
11 |
0 |
0 |
0 |
0 |
2 |
10 |
Total |
18 |
100 |
1 |
100 |
1 |
100 |
20 |
100 |
Source: BFI sample analysis
Tax codes
A tax code can provide a lot of information about a claimant that could conflict with information on their claim form and indicate a fraudulent claim, or a need for more information.
Our sample included 15 cases relating to claimants that had declared income from employment. Analysis identified the following issues:
- no tax code recorded on the payslip and no action taken to follow this up
- tax code shown as BR, which is an instruction to the employer to tax the whole earnings at the basic rate. This could indicate that the claimant has other earnings that use up the entire tax allowance. This issue was not followed up.
- a married couple who were both working and both receiving the single person’s tax allowance were not informed about the married person’s allowance
- single parent claimants with tax code L (single person’s allowance) were not informed of their potential entitlement to an Additional Personal Allowance.
These issues indicate a lack of understanding about the information available from payslips and consequently a lack of fraud awareness. There was potential for a revised award in each of the cases described above, and the failure to act in the latter 2 did not support Barnet’s anti-poverty strategy.
VF also fails to highlight the importance of examining tax codes and of taking action when conflicts are identified with information declared on the claim form.
Payment method
Payslips often give the method of payment. BACS, CT, CTR or Auto shows that it is made into a bank or building society account. The sample results identified:
- there was no record of method of payment in 3 cases. No follow-up action was taken to establish the method of payment and confirm both that the payslips were genuine and that no undeclared accounts existed.
- in one case, the claimant’s payslip stated that payment was made by cheque. No bank or building society accounts had been declared on the claim form, but no action was taken to follow up this issue.
- in another case the payslip stated that payment was by BACS, but the claimant had failed to declare any bank or building society accounts. This issue was not followed up.
Clearly, an opportunity to confirm the claimant’s true income and capital is lost by not looking into discrepancies between payment methods recorded on payslips and information declared in the claim form.
Non-declaration of accounts was followed up in some cases, and the claimant presented records. However, examination of these documents raised the following issues:
- a bank transfer was recorded, but no follow-up action had been taken to establish details of the account, and to confirm whether there was other income or capital that had not previously been declared.
- bank statements showed past salary payments from an LA and monthly payments to Alliance and Leicester. No follow-up action was taken to find out whether the claimant was no longer working for the LA and had just changed payment to another account, or whether the payments to Alliance & Leicester related to a mortgage or lease on a property.
- bank and building society statements gave details of deposits that had not been explained. The claimant also received Child Benefit and One Parent Benefit. Her son attended a private boarding school. The claimant said that her mother paid the school fees. Although it was stated that the child had an assisted place at the school, no confirmation of this had been requested.
Deductions
The operation of the PAYE system produces slight variations in the tax and National Insurance deductions. VF highlights the need for evidence to show tax and National Insurance deductions. Analysis of the sample revealed the following:
- in 3 cases, there were no deductions shown on the payslips supplied
- one case was supported by only one payslip
- one case involved both the claimant and partner working. Both sets of payslips showed identical deductions for 5 consecutive weeks. The claimant’s payslip did not show a NINO. This case was not followed up by independent verification with the employer nor was it referred to BAFIS
- one case, where a letter from the employer was the only supporting evidence, did not include details of tax deductions or National Insurance contributions. This issue was not pursued at the time of application (January 1999) and, although the claimant had stated that he was trying to get private work, by July 1999 no enquiries had been made about any changes to his declared income.
Clearly, deductions that did not apply at the time of claim could subsequently do so, reducing the claimant’s income and increasing entitlement to benefit. Failure to follow up this issue does not support Barnet’s anti-poverty strategy. Absence of deduction details could indicate false payslips and any such discrepancy should be pursued.
General issues
The following general issues were identified during our examination of cases:
- XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXX
- in cases where 2 claim forms had been completed with differing dates of birth, the matter had not been followed up or referred to BAFIS
- XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX X
- XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX XXXXX XXXXX XXX
- the verification team made 2 visits to a claimant but did not make contact on either occasion. Despite this, payment of benefit continued and no referral was made to BAFIS
- the sample cases contained numerous photocopies of supporting documents, but none were marked ‘a true and fair copy of original’ and initialled. Furthermore, copies of supporting documents are not date-stamped on receipt
- XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XX