Care Home Fraud Soaring As Families Attempt to Hide Assets from HMRC

The Audit Commission has claimed that fraud in the care system has almost doubled in a year as middle-class families attempt to hide their assets from HMRC. The watchdog recorded an 82% rise in the amount lost to councils last year as families avoided nursing-home fees or failed to report the death of a loved-one in order to keep receiving payments of up to £60,000 a year. The Audit Commission said that the ageing population and government policies was responsible for the sharp increase.

A drop in the ocean

At present, anyone with savings over £23,000 has to pay for residential care, which can cost £200,000 a year, until their assets fall below that threshold. However, the Commission believes that some families are trying to hide their savings by transferring money out of their accounts, while others are falling foul of obscure rules when the transfers are legitimate.

Alan Bryce, the Audit Commission’s head of counter-fraud, revealed that the 82% rise in losses meant that £4m had been defrauded from the care system in 2012-13. He also said there had been a 64% rise in the number of cases of fraud detected over the same period. However, Mr Bryce added that the figures were a “drop in the ocean compared with the scale of fraud and few cases were pursued“.

“The potential for fraud in residential care could be the greatest, as once a person gets into the system they could be there for years. Inspectors are telling us that this is one of the areas of most concern. Even two cases a year could result in losses of £350,000 to £400,000 for one local authority,” he stated.

Direct payments blamed

The Audit Commission believes that one of the main factors behind the increase is the government’s decision to give money to families to buy their own care support rather than relying on councils. Under the policy, now being extended across the country, payments for services such as bathing, dressing and cooking go directly into bank accounts of relatives or friends who can then arrange and pay for services — or fraudulently take the cash.

“There are increasing numbers of cases coming through where people have been dead for several years and the families are still receiving the monies. Care workers do not have the same level of awareness as general investigators and there has been far less reporting than there should have been,” Mr Bryce comments.

Inheritances lost

The findings come as research found that three out of four people whose parents go into a care home lose all or most of their inheritance. The study also revealed that as many as two million elderly have had to use their savings to pay for care over the past five years, and that over the same period over a million homes were sold to cover care home bills.

In response to the findings, a spokesman for the Department of Health said: “Local authorities are responsible for monitoring how direct payments are spent, and have strong safeguards in place to check they are used to meet care needs. Our evidence suggests that levels of abuse with direct payments are very low, while satisfaction levels are high. If fraud is discovered, councils are able to stop the payments, and reclaim the money spent.”

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