Benefit and Tax Credit Overpayments -
Recoverability and Criminal Prosecution
Overpayments – Not Your fault
With benefit overpayments, if the overpayment is not your fault you should seek advice before agreeing to pay it back. In some circumstances the DWP or a Local Authority cannot recover overpayments. If they decide you do need to repay an overpayment and you do not agree, you have a right to ask them to review their decision and if they still insist on repayment, you can appeal to an independent First Tier Tribunal. You can ask the DWP or Local Authority not to start recovery whilst you appeal is ongoing. T.A. Law can advise you whether it is worth challenging the recovery of an alleged overpayment.
HMRC overpayments such as Tax Credit overpayments are always recoverable in theory, but even with Tax Credit overpayments, you can ask HMRC to use their discretion not to recover an overpayment. HMRC have published a code of guidance about when they will recover overpayments. This code is called Code of Practice 26 see the link: http://www.gov.uk/government/publications/tax-credits-what-happens-if-youve-been-paid-too-much-cop26
Overpayments –Your fault
If you have been overpaid benefits or Tax Credits because you made a mistake, then you usually have to repay the money, but you should still seek advice before paying the money back. In some cases if your overpayment is due to you failing to notify a change in your circumstances, you may be able to argue that the information that you were given about what you were supposed to tell the agency you were claiming from, was not made clear to you.
Also on some occasions the DWP, Local Authorities and HMRC can miscalculate how much you have been overpaid.
Will I be Prosecuted?
Even if it is your fault that you have been overpaid this does not mean that you should be prosecuted. You may have made an innocent or an understandable mistake. Also even if you did negligently or deliberately mislead the DWP /Local Authority or HMRC, this may not have caused all of the overpayment that you are now being asked to pay back.
If the DWP do not feel there are grounds to prosecute you they can apply a £50 civil benefit penalty where:
- you have been overpaid more that £65 and
- the amount is recoverable and
- you made an incorrect statement or negligently gave incorrect information and did not take reasonable steps to correct your error.
If you disagree with the civil penalty, which is payable on top of the overpayment, you have a right of appeal
If the DWP /Local Authority or HMRC are thinking of prosecuting you they may decide to offer you a civil penalty as an alternative to prosecution. The penalty in these circumstances will be the greater of either 50% of the over payment or £350 rising to a maximum of £2000 which is payable on top of the overpayment. Such a penalty will be offered where you have been overpaid benefit and the amount is recoverable and you caused the overpayment and there are grounds for prosecuting you for the offence.
If you agree to pay the civil penalty as an alternative to prosecution you will not be prosecuted for the offence. You may however have your benefits “sanctioned” (stopped) for up to 4 weeks.
What if I am prosecuted?
If you believe you may be prosecuted by the DWP/Local Authority or HMRC you should seek the advice of a Criminal Solicitor. There is legal aid available if you need advice about a possible criminal charge or an interview under caution. Remember however that not all criminal solicitors are expert in Social Security Law. It is always worth getting a solicitor who is expert in social security law to check the circumstances of your alleged overpayment. It is not uncommon for agencies to over estimate the alleged overpayment by a substantial amount – this can mean that if you are prosecuted, the court may sentence you for a much worse offense that your case deserves.
In addition social security law is very complicated and some common causes of overpayment, such as being allegedly cohabiting or having too much capital are subject to very complex rules and case law. It is not uncommon for some criminal solicitors to accept DWP/HMRC assertions of guilt when, in fact, there are aspects of the criminal case which are challengeable.
If you qualify for Legal Aid your Criminal Solicitor is allowed to claim Legal Aid funding in order to instruct a Benefits expert, if they feel it is reasonably required in order to assist you with your case. You should discuss this with your Criminal Solicitor. TA Law are able to take instructions from Criminal solicitors with a view to advising on any challengeable aspects of any potential conviction for social security fraud.