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DMG 33/12 DWP Memo - Overpayments - Civil Penalties of £50 for claimants from 1st October 2012

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The Department for Work and Pensions have published advice for Decision Makers on the new "Overpayments - Civil Penalties" in Memo DMG 33/12 to start 1st October 2012.

Civil Penalties are imposed where there is an amount recoverable of £65.01 or more.

Civil Penalties are applied where the claimant (& Joint claimants) "Negligently makes an incorrect statement or representation, or negligently gives incorrect information or evidence"

This covers "relevant change of circumstances" defined as "Relevant change of circumstances means a change of circumstances which affects any entitlement to any benefit, other payment or advantage under relevant social security legislation".

There is a Right of Appeal.

 

Contents Paragraphs

Introduction 1 The prescribed amount of a civil penalty 2 Definitions

Meaning of “appropriate authority” 3 Meaning of “overpayment” 4 Meaning of “relevant social security benefit” 5 Meaning of “relevant change of circumstances” 6

When to apply a civil penalty

Negligently makes an incorrect statement or representation, or 7 negligently gives incorrect information or evidence

Meaning of “negligently” 8

Meaning of “reasonable steps” 9

Fails to provide information 10

Meaning of “reasonable excuse” 11

Fails to notify a change of circumstances to the appropriate 12 authority

On whom to impose a civil penalty 13 Exception 14 Joint-claim couples 15 Recovery of a civil penalty 16 Right of appeal 17 Annotations

Contacts

1

This memo gives guidance on the introduction of civil penalties1. Civil penalties can be imposed from 01.10.122 and can only be imposed where there is a recoverable overpayment (£65.01 or more) for a period beginning on, or falling wholly after, that date.

Note: Civil penalties cannot be imposed in relation to overpayments arising solely from official error.

1 Welfare Reform Act 2012, s116; 2 Social Security (Civil Penalties) Regulations 2012, reg 1(1); SI Nos. 2012/1990

THE PRESCRIBED AMOUNT OF A CIVIL PENALTY

The prescribed amount of a civil penalty is £501.

2

3

1 Social Security (Civil Penalties) Regulations 2012, regs 2, 3 & 4

4

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DEFINITIONS

Meaning of “appropriate authority”

Appropriate authority means

  1. the Secretary of State or

  2. an authority which administers HB or CTB1.

Meaning of “overpayment”

Overpaymen1t is defined in specified legislation2.

Meaning of “relevant social security benefit”

1 SS A Act 92, s115C (6)

1 SS A Act 92, s115C (6); 2 s115A (8)

INTRODUCTION

Relevant social security benefi1t is defined in specified legislation2.

1 SS A Act 92, s115C (6); 2 s121DA (7)

6

Relevant change of circumstances1 means a change of circumstances which affects any entitlement to any benefit, other payment or advantage under relevant social security legislation2.

1 SS A Act 92, s115D(6); 2 s121DA(7)

WHEN TO APPLY A CIVIL PENALTY

Negligently makes an incorrect statement or representation, or negligently gives incorrect information or evidence

The DM may impose a civil penalty where they are satisfied that

1. a person has negligently made an incorrect statement or representation, or has negligently given incorrect information or evidence1

  1. 1.1  in, or in connection with a claim for a relevant social security benefit2 or

  2. 1.2  in connection with an award of a relevant social security benefit3 and

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Meaning of “relevant change of circumstances”

  1. the

  2. the

  3. the

person fails to take reasonable steps to correct the error4 and error results in an overpayment5 and
person has not, in respect of the overpayment, been6

  1. 4.1  charged with an offence or

  2. 4.2  cautioned or

  3. 4.3  given a notice under relevant legislation7.

1 SS A Act 92, s115C(1)(a); 2 s115C(1)(a)(i); 3 s115C(1)(a)(ii); 4 s115C(1)(b); 5 s115C(1)(c);6 s115C(1)(d); 7 s115A

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DMs should note that negligently should be taken to mean 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.

Meaning of “reasonable steps”

DMs should note that taking reasonable steps means taking sensible or practicable actions or interventions to correct an error.

Example 1

Lucy makes a claim to JSA(IB) on 03.12.12. She declares that she holds no capital when completing her claim form and signs it to confirm that the information she has given is complete and accurate. After being in receipt of JSA(IB) for 3 weeks, Lucy starts full time employment. Subsequently, the local office receives information to the effect that she actually had capital of £6,500 as a result of an inheritance received in October 2012. Lucy did not report this information before she started full time employment and has not responded to enquiries asking her to explain why she gave incorrect information. As the amount of capital Lucy affects her entitlement to JSA(IB), an overpayment occurs. The DM decides that the overpayment has arisen due to Lucy acting negligently at the time of making her claim and that she has not taken any reasonable steps to correct the error. A civil penalty is imposed on Lucy.

Example 2

Judith completed the IS claim form stating that no other adult lived with her. This meant she was awarded SDP on the grounds that she also had DLA (Higher Rate) and qualified for SDP premium because she lived alone. During a routine visiting check it is discovered that her adult son is resident in the property and has been since the start of the claim 6 weeks ago. This means an overpayment has occurred. During the visit, Judith explains that when she completed the form she had been very confused and upset and was not wholly in control of her actions. The error was due to the confusion caused from the shock of her husband recently dying. She did not think about her son living in the house as an adult as he had only very recently returned to the home from being away at University, following his father’s death. In this case, the DM decides that due to the distress of the bereavement, Judith was not negligent in making the error as the bereavement and stress had contributed to the making of the error which led to the overpayment. A civil penalty is not imposed on Judith.

Meaning of “negligently”

Example 3

Andy lives in Scotland and makes a claim to JSA(IB) on 26.11.12. He declares that he holds no capital when completing his claim form and signs it to confirm that the information he has given is complete and accurate. On 7.12.12, Andy sends a (recorded delivery) letter to the local office, explaining that he had incorrectly completed his claim form, omitting to declare that he holds £6,900 in capital. Before posting the letter, Andy speaks to Roger, a member of staff at the local office, explaining his error and advising that he would be sending in written details of the correct position. The local office receives Andy’s letter on 10.12.12 but an overpayment has already occurred. When the DM asks Andy to explain why he took until 7.12.12 to take action to correct his error, he explained that he had been in London attending a job fair and 3 interviews with potential employers. The DM decides that the overpayment has arisen due to Andy acting negligently at the time he made his claim, but that he has taken reasonable steps to correct his error. A civil penalty is not imposed on Andy.

Fails to provide information

10 A civil penalty1 may be imposed on a person by the DM where2

  1. the person, without reasonable excuse, fails to provide information or evidence in accordance with requirements imposed on the person by the appropriate authority in connection with a claim for, or an award of, a relevant social security benefit3 and

  2. the failure results in the making of an overpayment4 and

  3. the person has not, in respect of the overpayment, been5

    1. 3.1  charged with an offence or

    2. 3.2  cautioned or

    3. 3.3  given a notice under relevant legislation6.

1 Social Security (Civil Penalties) Regulations 2012, reg 3; 2 SS A Act 92, s115D(1); 3 s115D(1)(a); 4 s115D(1)(b); 5 s115D(1)(c); 6 s115A

11

DMs should note that having a reasonable excuse means where there is a credible reason or justification for the person failing to do what was required of them, or for doing it late.

Example 1

Gordon makes a claim for JSA(C) on a claim form dated 07.11.12 and declares that he receives a private pension amounting to £50 week. He provides further information that he expects to receive an increase in the amount of his private pension in the near future. Gordon is awarded JSA(C) from 10.11.12 at £71 per week. On 30.01.13 a routine check is performed and the local office staff member notices Gordon’s statement about his expected increase in his private pension. Gordon fails to respond, in time, to requests sent to him for information about his private pension. When he does finally respond, Gordon reveals that his private pension did in fact increase to £60 from 12.11.12 meaning that Gordon had been overpaid JSA(C). When asked why he did not provide information regarding the increase in his private pension payment, Gordon explained that he had simply forgotten and did not consider the matter urgent. The DM determines that without reasonable excuse, Gordon failed to provide information in connection with his claim. A civil penalty is imposed on Gordon.

Example 2

Elizabeth makes a claim for JSA(C) on a claim form dated 07.11.12 and declares that she receives a private pension amounting to £50 per week. She provides further information that she expects to receive an increase in the amount of her private pension in the near future. Elizabeth is awarded JSA(C) from 10.11.12 at £71 per week. She was asked to send in evidence of her new rate of private pension when it is received. However, she could not get the evidence as it was at her former marital home which she had fled from and it was unsafe for her to return to get the evidence. As a result, Elizabeth had to write to the pension company for copies of papers and this took longer than expected. By the time Elizabeth sent the evidence in, she had been overpaid benefit. The DM determined that Elizabeth had a reasonable excuse for not sending the paperwork in earlier. A civil penalty is not imposed on Elizabeth.

Fails to notify a change of circumstances to the appropriate authority

A civil penalty1 may be imposed on a person by the DM where2

12

Meaning of “reasonable excuse”

  1. the person, without reasonable excuse, fails to notify the appropriate authority of a relevant change of circumstances in accordance with requirements imposed on the person under relevant legislation3 and

  2. the failure results in the making of an overpayment4 and

  3. the person has not, in respect of the overpayment, been5

    1. 3.1  charged with an offence or

    2. 3.2  cautioned or

    3. 3.3  given a notice under relevant legislation6.

1 Social Security (Civil Penalties) Regulations 2012, reg 4; 2 SS A Act 92, s115D(2); 3 s115D(2)(a); SS (C&P) Regs, reg 32; JSA Regs, regs 24 & 24A ; 4 s115D(2)(b); 5 s115D(2)(c); 6 s115A

Example 1

Naveed claims ESA(IR) from 16.10.12. However, he is admitted to hospital on 22.01.13 when his health condition deteriorates. He recovers and is discharged from hospital on 01.04.13. On 02.04.13 Naveed is opening his post which has accumulated during his stay in hospital and he discovers that he has received an inheritance of £30,000 from 10.10.12. He contacts his local office on 03.04.13 to report the inheritance, explaining that he could not have reported sooner because he was in hospital and did not have access to his mail. An overpayment occurs. The DM considers that Naveed’s reason for not reporting sooner was a reasonable excuse for failing to notify the appropriate authority. A civil penalty is not imposed on Naveed.

Example 2

Pete is in receipt of ESA(IR) and has provided information about his bank account which holds savings of £3,200. Pete has severe learning difficulties and his brother Joe acts as his appointee. Pete has a lottery win of £10,000 on 13.10.12. Joe is under a duty to report the lottery win on Pete’s behalf. However, he does not report the lottery win until 30.11.12 and this results in an overpayment of ESA(IR). When asked to explain the reason for the delay, Joe says that he did not advise sooner as he did not think that it was an urgent matter. The DM determines that Joe does not have a reasonable excuse for the late notification of Pete’s lottery win. A civil penalty is imposed on Joe.

13

Unless paragraph 14 applies, a civil penalty1 may be imposed by the DM2

1. in any case, on the person3 or

2. in a case where person A is making, or has made, a claim for the benefit for a period jointly with person B, on B instead of A4.

1 Social Security (Civil Penalty) Regulations, reg 2; 2 SS A Act 92, s115C(2); 3 s115C(2)(a); 4 s115C(2)(b)

Example 1

Paul (person A) makes a claim to JSA(IB) for himself and his wife Linda (person B). Paul declares that they have 3 joint bank accounts with total capital of £6,000. Two months after payment of JSA(IB) commences, a further unused joint bank account surfaces in the house and which was not included in the original claim information. However, it means that they have been overpaid for 2 months, due to the additional saving held within the unused bank account. Linda notifies the local office of the error. Both Paul and Linda are considered to be jointly negligent for the wrong information, even though Paul (person A) completed the original claim form. This regulation allows for the civil penalty to be imposed upon either person A or person B, where the claim has been made jointly. In this case, the DM may impose the civil penalty on either Paul or Linda. In the event, the civil penalty is imposed on Paul as he is the current benefit payee.

EXCEPTION

Paragraph 13 above does not apply if person B was not, and could not reasonably be expected to have been, aware that person A had

  1. negligently made the incorrect statement or representation or

  2. given the incorrect information or evidence1.

    1 SS A Act 92, s115C(3)

Example

Philip (person A) makes a claim to JSA(IB) for himself and his wife Ann (person B). Philip declares Ann’s part time earnings of £40 per week from the outset of their claim. Although Ann told Peter that her earnings are £60 per week due to a recent pay rise, Philip forgets this and does not declare the correct amount, instead declaring the old amount of earnings of £40. Afterwards, Phillip realises his error and notifies the local

14

ON WHOM TO IMPOSE A CIVIL PENALTY

15

office of his error. Ann was completely unaware that Phillip had made this error due to him not paying sufficient attention to recording the correct amount. This regulation allows for a civil penalty not to be imposed upon person B (in this case, Ann) if they had not, and could not reasonably be expected to have been, aware that person A (in this case, Phillip) had been negligent. The DM considers that as Ann (person B) could not have reasonably been expected to know that Phillip (person A) had entered the wrong amount of (Ann’s) earnings, the civil penalty cannot be imposed on Ann. However, a civil penalty is imposed on Phillip.

JOINT-CLAIM COUPLES

Where a person has made a joint-claim for benefit, and either or both of them fail to disclose information1 or a relevant change of circumstances2, only one civil penalty may be imposed in respect of the same overpayment3.

1 SS A Act 92, s115D(1); 2 s115D(2); 3 s115D(3)

Example 1

George makes a claim to JSA(IB) for himself and his wife, Mavis. He declares that Mavis has part time earnings from the outset of his claim. Two months later, Mavis has an increase in her part time earnings of £10 per week. Mavis tells George about the increase. Both are aware of the need to notify the local office of this change, but each thought that the other was going to notify. By the time they had realised that neither had reported the change, an overpayment had arisen. The DM decides that both had failed to notify the relevant change in their circumstances, and both were aware of the need to notify the change and there was no reasonable excuse not to have done so earlier. A civil penalty is imposed jointly on George and Mavis.

Example 2

Mary makes a claim to JSA(IB) for herself and her partner, June. JSA(IB) is awarded from 23.10.12. June accepts an offer of employment abroad and leaves the country on 18.01.13. Mary does not report the change until 20.03.13, explaining that the reason for the delay was her anger at June accepting employment abroad. She also wrongly reports that June left the country on 18.03.13. Although June had left the country on 18.01.13 both members of the joint-claim had a duty to inform of the change. The DM determines that both are liable and the civil penalty is imposed jointly on Mary and June.

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17

A civil penalty imposed under specified legislation1 is recoverable by the appropriate authority from the person on whom it is imposed2 in the same way as an overpayment. Guidance on methods of recovery is available in the Overpayment Recovery Guide.

1 SS A Act 92, s115C(2); s115D(1) & (2); 2 s115C(4); s115D(4)

RIGHT OF APPEAL

The decision to impose a civil penalty will be made at the same time as the overpayment decision. The amount of the civil penalty will be added to the amount of the recoverable overpayment. This will produce an outcome decision and will give appeal rights to any part of that outcome decision including the overpayment, the civil penalty, or both.

ANNOTATIONS

Please annotate the number of this Memo (33/12) against DMG Chapter 09 Main Heading.

CONT ACTS

If you have any queries about this memo, please write to Feedback, Legislation and Decision Making (DMA) (part of Professional Services) Leeds, GS36, Quarry House, Leeds. Existing arrangements for such referrals should be followed, as set out in Memo DMG 14/11 - Obtaining legal advice and guidance on the Law.

DMA Leeds: September 2012

RECOVERY OF CIVIL PENALTY

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