Feasibility Study on Allowance and Affair Research

https://www.cbs.nl/nl-nl/reeksen/redactioneel/toeslagenaffaire

Allowance affair

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Publication date: 15-3-2024 11:00 Feasibility Study on Allowance Affairs Research

2. The benefits affair

2.1 Childcare allowance

In the Netherlands, parents have the option to apply for childcare allowance (KOT) from the Tax Administration/Surcharges. This allowance is intended to cover registered childcare costs. There are different conditions⁵⁾ that must be paid to qualify for this allowance. For example, the applicant (and any partner) must work, attend a training or integration course, or participate in a journey to work. In addition, the applicant and the child for whom the allowance is requested must be registered with the municipality at the same address.⁶⁾ Finally, there is a mandatory personal contribution. This means that parents have to pay part of the childcare costs themselves. This personal contribution is income-related: parents with less income receive more childcare allowance than parents with a higher income. It is possible that an applicant has received too much childcare allowance. This can happen, for example, if an applicant's income or household situation changes. The excess childcare allowance paid out will then be recovered by the Tax Authority/Surcharges.

2.2 Origin of the benefits affair

The Tax Administration/Surcharges carries out checks to determine whether applicants are entitled to a KOT and whether the correct amount has been awarded. Due to the processes and practices that the Tax Authority/Surcharges has worked with in the past to detect fraud with KOT, applicants were wrongly classified as fraudsters. The handling of fraud risk signals was also careless and not always lawful.⁷⁾ Between 2013 and 2019, the tax authorities used a model that, based on predefined indicators⁸⁾, determined the risk of inaccuracies in decisions. The decisions with the highest risk of error were selected monthly for manual treatment. This manual treatment then used an “all-or-nothing” approach, where, after identifying imperfections (such as a personal contribution not fully paid or a missing signature), the allowance was recovered for the entire year. A group approach was also used, allowing (innocent) parents to be exposed to intensive controls. Finally, there could be an “Intention/Gross Debt” approach⁹⁾. About two-thirds of the people with this stamp refused a request for a personal payment arrangement with the Tax Administration/Surcharges, with the result that the debt had to be repaid in its entirety. If this was not enforceable, coercive recoveries could follow, such as the seizure of cars and the forced sale of homes.¹⁰⁾. In many cases, this strict recovery policy proved unjustified and could have major financial consequences for parents. In general, large amounts were often recovered and for many parents, there was uncertainty about the right to a supplement and future recoveries. This problem is referred to as the benefits affair.¹¹⁾ and played from around 2005.

2.3 Victims of the benefits affair

In 2020, Implementation Organization for the Recovery of Surcharges (UHT) was established to repair what did not go well in the past. Potential victims were able to report to UHT until December 2023. To be registered as a victim, KOT applicants must either have received a formal order from the tax authorities stating that they have been duped or have received an amount of 30 thousand euros as part of the Catshuis Childcare Allowance Scheme.¹²⁾. To qualify for this amount, the following conditions must be met:

The applicant reported as a victim;
The KOT was unfairly stopped between 2005 and 2019 or the applicant wrongly had to repay KOT during that period;
And the applicant was duped for at least 1,500 euros.

2.4 First test and comprehensive assessment

Until April 2023, more than 62 thousand applications were made to UHT.¹³⁾ A first test or a comprehensive assessment shows that more than 29 thousand of these applicants were affected by the benefits affair.¹⁴⁾ (See Table 2.4.1). In an integrated assessment, UHT investigates exactly what went wrong with the KOT. If you have actually been duped, the comprehensive assessment leads to a date that indicates the start of duping.¹⁵⁾ For victims whose files have not been fully assessed, but for whom only a 1st test showed that they were duped, no reliable information is available about when duping occurred. In order to be able to compare parents who have been victims of the benefits affair after duping with a comparable group of non-victims, the moment of duping is crucial. That is why this feasibility study only focuses on the integrally assessed victims.

2.4.1 Applications and applicants found to be affected as published by UHT in the 14th recovery surgery surcharges progress report (2023) Applications 1st test completed (both duped applicants and non-affected applicants) Integral Assessment (IB) completed (both duped applicants and non-affected applicants) Found duped after 1st test or after 1st test + IB62 30058 84023 95029 470 Source: 14th progress report on recovery surgery surcharges.

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2.5 Data about integral assessments

UHT provided a file to CBS containing nearly 7 thousand people who were registered with UHT as victims after a comprehensive assessment at the beginning of August 2023. This concerns unique applicants for whom the integral assessment (IB) for all years involved has been fully completed. Among the more than 29 thousand victims (last column of Table 2.4.1), there are also integrally assessed victims whose comprehensive assessment has not yet been fully completed, but for whom it is already known that they have actually been duped. The integrally assessed affected applicants who have not yet fully completed the IB are not eligible for this feasibility study because they do not know the amount of recovery and information about the Intent/Gross Debt Stamp. Among the more than 29 thousand victims, there are also applicants who were found to be affected from the 1^e test, but for which no date of the start of duping is known (because their files have not been fully reviewed). As a result, they are also losing weight for this feasibility study. Of these nearly 7 thousand integrally assessed victims, 4.5 thousand ultimately remain for this feasibility study (see Section 5.2). This is mainly due to the fact that victims were duped outside the analysis period of this feasibility study, or did not receive KOT within five years prior to duping. For more information about this, see Section 3.2.1 and Chapter 5. This feasibility study could not determine to what extent the 4.5 thousand victims are representative of the entire group of victims out of more than 29 thousand, as CBS only received data out of almost 7 thousand integrally assessed. In subsequent research, CBS recommends checking whether the group of victims to be analyzed is representative of the entire group (see also Section 7.2 Methodological recommendations). The privacy of the victims has been carefully safeguarded (see Appendix 2 for more information about how CBS deals with privacy). In addition to an indicator for the start of duping, CBS has also received data concerning the amount of the recovery. The CBS has also received information about whether parents have received the Willing/Gross Debt stamp from the tax authorities. This information can help to more accurately identify the possible consequences of duplication in future research.⁵⁾Can I get a childcare allowance? (belastingdienst.nl).⁶⁾ With the exception of co-parenting situations. This is the case when the child lives with an applicant for at least three full days per week and three full days per week with the other parent, or if the child lives with the applicant and the other parent every other week.⁷⁾Onderzoek-pwc-effecten-fsv-toeslagen.pdf (overheid.nl).⁸⁾Parliamentary Paper 31066, No. 923 | Overheid.nl > Official announcements (officielebekendmakingen.nl).⁹⁾ If the tax authorities considered it plausible that the citizen had deliberately provided incorrect information, the stamp Intention/Gross Debt could be awarded. However, a 2016 memo states that parents who had to repay more than 3,000 euros in childcare allowance should automatically be labeled “Intentional Gross Debt” (New child allowance memo surfaced: automatic fraudster with 3,000 euro debt (nos.nl)). The extent to which this memo was actually carried out is unclear. However, the Unprecedented Injustice report showed that in 94% of the cases where the stamp Intention/Gross Debt was issued, this qualification can be considered unjustified because the reason has not been properly established, there is no obvious intent or gross negligence, or because the qualification is not properly motivated towards the parents involved. (20201217_eindverslag_parlementaire_ondervragingscommissie_kinderopvangtoeslag.pdf (tweedekamer.nl)).¹⁰⁾20201217_eindverslag_parlementaire_ondervragingscommissie_kinderopvangtoeslag.pdf (tweedekamer.nl).¹¹⁾ This report uses the common term allowance affair. Other names include the childcare allowance affair and the benefits scandal.¹²⁾ For more information, see: Catshuis Scheme | Reimbursement and Recovery.¹³⁾ More recent figures have now been published: 68 thousand applications and more than 33 thousand found to be affected out of 1^e key or IB: Facts and figures | Allowances Recovery.¹⁴⁾14th progress report on recovery surgery surcharges.¹⁵⁾ This is an indication of the start of duping and concerns the first moment in which a correction was found in the Tax Authority/Surcharges system that needs compensation. For victims themselves, duping potentially starts after the first letter hits the mat, after multiple (rejected) appeals, or when the “debts” are actually recovered. In other words, it is impossible to determine the exact moment of duping per victim based on administrative data. This date provided by UHT is the best available indicator that CBS has available for this study.