Claimants lose on penalties
Alison Gilles explains the rules concerning the new civil penalties than can be applied to some benefit overpayments.
From 1 October 2012, a civil penalty of £50 can be added to the amount of a recoverable overpayment of benefit of more than £65 where the claimant is viewed as being at fault.1 The Social Security (Civil Penalty) Regulations 2012 SI No.1990 and ss115C & 115D Social Security Administration Act 1992
This new penalty applies to overpayments wholly arising on or after 1 October 2012. The DWP, or local authority where the overpayment is of housing benefit or council tax benefit, can add the £50 penalty to an overpayment in three different circumstances:
where a person has been overpaid as a result of negligently making an incorrect statement or representation, or negligently giving incorrect information or evidence. In this situation the penalty should only be applied if the person also fails to take reasonable steps to correct the error. The DWP says that ‘negligently’ means ‘acting carelessly, not paying sufficient attention to the task in hand, or disregarding the importance of what is required to be done in relation to the claim or an award.’;2 Memo DMG 33/12
where a person has been overpaid as a result of failing, without reasonable excuse, to provide information or evidence required in connection with a claim for or award of benefit. The DWP says that ‘reasonable excuse’ means a ‘credible reason or justification’3 Memo DMG 33/12
and might include being in a situation of significant stress or suffering ill health;
•where a person has been overpaid as a result of failing, without reasonable excuse (see above), to notify a relevant change of circumstances.
A civil penalty cannot be applied where the claimant has, in respect of the overpayment, been charged with an offence, been cautioned or been subject to a penalty as an alternative to prosecution under section 115A of the Social Security Administration Act 1992.
While it is clear that the government’s intention is to punish claimants ‘who don’t take sufficient care of their claim’,4 HMRC/DWP, Tackling Fraud And Error in the Benefit and Tax Credit Systems, October 2010
it is important to note that not every recoverable overpayment should attract a civil penalty. For example, the DWP may decide that an overpayment has resulted from the claimant’s failing to disclose a material fact, and that the overpayment is therefore recoverable. However, it may further find that the claimant had ‘reasonable excuse’ for the failure and therefore not apply a civil penalty.
Where a civil penalty is applied, the claimant has a right of appeal against the decision. This is in addition to the right of appeal against the decision that the overpayment is recoverable.
The civil penalty is recovered from the claimant by the same means as the overpayment – in other words, it is added to the amount of the overpayment and will most commonly be recovered through deductions from ongoing benefit entitlement. If the overpayment and civil penalty arise in a joint claim for benefit, the penalty will usually be recoverable from both members of the couple. The exception to this is where one member of a couple could not reasonably be expected to have been aware that their partner had acted negligently.
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