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Civil penalties can now be imposed for benefit overpayments - Turn2us

Department_for_Work_and_Pensions_Guidance_on_how_to_decide_when_it_may_be_appropriate_to_impose_a_civil_penalty_(link_opens_in_a_new_window_PDF_file_size_145kb)

From 1 October 2012, the Department for Work and Pensions (DWP) and local councils have the power to impose a fixed rate civil penalty on some claimants who have been overpaid a social security benefit.

The penalty will be £50. It will be added to the total amount of the overpayment and will be recovered by the same method.

Different rules apply to overpayments of tax credits.

When can a civil penalty be applied?

For a civil penalty to apply the overpayment must:

  • have occurred wholly after 1 October 2012, and
  • be an amount of £65.01 or more, and
  • must be recoverable.

The overpayment of benefit must have been caused by a person:

  • making an incorrect statement, or
  • negligently giving incorrect information,

and

  • that person not taking ‘reasonable steps’ to correct the error.

A fixed penalty will not be applied if the DWP or local authority decides to take action under benefit fraud provisions. Possible actions under these rules can include:

  • prosecution
  • a formal caution
  • and/or a benefit penalty.

How many civil penalties can be imposed?

For each overpayment, only one civil penalty can be applied.

What circumstances may lead to a benefit decision maker considering a civil penalty?

DWP decision makers have issued guidance on how to decide when it may be appropriate to impose a civil penalty. This gives examples of the sorts of factors a DWP decision maker should consider when deciding whether to impose a civil penalty.

These include:

  • A decision maker should only apply a penalty when they are satisfied that a person has ‘negligently’ given incorrect information or failed to disclose information that they are aware of. The guidance defines 'acting negligently' as “acting carelessly, not paying sufficient attention to the task in hand, or disregarding the importance of what is required to be done ... “
  • The person must have failed to take ‘reasonable steps’ to correct the error. The guidance advises this means “sensible or practicable actions or interventions to correct the error”. What is considered to be reasonable will depend a great deal on the specific circumstances of each case. It will be important to make sure that the decision maker is aware of all the relevant factors which may have resulted in an incorrect statement being made. Also, that they know of any reasons why that person may not have been aware it was incorrect or been able to obtain any more up-to-date information.
  • A penalty should not be applied if the person has a ‘reasonable excuse’ for their failure to provide the correct information or for providing it late. The guidance gives the example of a person who has not been able to obtain up-to-date confirmation of the amount of their occupational pension from their pension provider.

Making a decision

The decision to impose a civil penalty will be made at the same as the overpayment decision. When the DWP realise you may have been overpaid benefit, they will look again at your award and make a decision with the corrected award of benefit for the period that the overpayment applies. At the same time they will decide whether the overpayment should be recoverable from you. Only if the overpayment is recoverable will they go on to consider whether a civil penalty should be applied.

You will get a decision letter that states:

  • that you have been overpaid an amount of benefit and explains the period of the overpayment, the weekly amount of the incorrect payment and the total amount overpaid
  • whether the overpayment is considered recoverable from you,
  • if a civil penalty will be applied.

If you disagree with any [or all] of these aspects of the decision you can appeal. If you appeal against the decision to apply a civil penalty you will not to show that your actions were reasonable in your specific circumstances.

Couples

Where benefit is paid jointly to a couple, a civil penalty can be imposed on either partner or on both partners jointly. However only one penalty can be imposed for each overpayment.

If one partner was unaware, and could not reasonably be expected to be aware, that their partner had made a negligently incorrect statement, then no penalty can be applied to that person, but a penalty may be applied to their partner.

Appointees and other people who help with claims

A civil penalty can be imposed on any person who has made a negligently incorrect statement in connection with a claim for benefit. If you have helped another person make a claim, or if you are an appointee for them, it is possible that you may be responsible for the civil penalty, even if the actual overpayment of benefit is the responsibility of the benefit claimant

Further information

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