QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
B e f o r e :
|THE QUEEN ON THE APPLICATION OF ENZI LARUSAI||(CLAIMANT)|
|THE SECRETARY OF STATE FOR WORKS AND PENSIONS||(DEFENDANT)|
Smith Bernal Wordwave Limited
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
MR M CHAMBERLAIN (instructed by The Secretary of State for Works and Pensions Litigation Division, Carey Street, London, WC2A 2LS) appeared on behalf of the DEFENDANT
Crown Copyright ©
"Where it is determined that, whether fraudulently or otherwise, any person has misrepresented, or failed to disclose, any material fact and in consequence of the misrepresentation or failure-
(a) a payment has been made in respect of a benefit to which this section applies; or
(b) any sum recoverable by or on behalf of the Secretary of State in connection with any such payment has not been recovered
the Secretary of State shall be entitled to recover the amount of any payment which he would not have made or any sum which he would have received but for the misrepresentation or failure to disclose."
Subsection (6) in its material part provides:
"Regulations may provide-
(a) that amounts recoverable under subsection (1) above or regulations under subsection (4) above shall be calculated or estimated in such manner and on such basis as may be prescribed;
(b) for treating any amount paid to any person under an award which it is subsequently determined was not payable-
(i) as properly paid; or
(ii) as paid on account of a payment which it is determined should be or should have been made,
and for reducing or withholding any arrears payable by virtue of the subsequent determination."
"(1) Subject to paragraph (2), in calculating the amounts recoverable under section 53(1) [for that one reads section 71(1) of the Act] or regulation 11, where there has been an overpayment of benefit, adjudicating authority shall deduct-
(a) any amount which has been offset under Part III;
(b) any additional amount of income support, or state pension credit, or income-based jobseeker's allowance which was not payable under the original, or any other, determination, but which should have been determined to be payable-
(i) on the basis of the claim as presented to the adjudicating authority, or
(ii) on the basis of the claim as it would have appeared had the misrepresentation or non-disclosure been remedied before the determination;
but no other deduction shall be made in respect of any other entitlement to benefit which may be, or might have been, determined to exist.
(2) Paragraph (1) shall apply to tax credit only where both-
(a) the overpayment of benefit referred to in that paragraph, and
(b) the amount referred to in sub-paragraph (a) of that paragraph
are tax credit, and with the modification that sub-paragraph (b) of that paragraph is omitted."
"... no other deduction shall be made in respect of any other entitlement to benefit which may be, or might have been, determined to exist."
Further, regulation 13(2) expressly provides that offsetting in tax credits should be confined to tax against tax, and not tax matters against benefits of another kind.
"As explained in the Budget 98 document, the Modernisation of Britain's Tax and Benefit System, Number Three, the reasons for replacing family credit with working families tax credit and transferring responsibility for administration to the Inland Revenue were to encourage higher take-up, because of less stigma being attached to claiming tax credits than benefits, and as a step towards greater integration of the tax and social security systems, thus reducing wasteful overlap between them."
At paragraph 3 he states:
"Regulation 13(2) of the SS(Payments on account, Overpayments and Recovery) Regulations 1988 prohibits the reduction of overpayments of benefit by offsetting an amount of tax credit which might have been payable had it been claimed. This is part of the distinction between benefits and tax. WFTC is only payable by the Inland Revenue, not by the Department for Work and Pensions."
"The Department's policy on waiver of recovery of sums to which it is entitled was framed in the context of Government Accounting 2000, a document issued by HM Treasury, which contains guidance to be followed by all Government departments in managing the recovery of debts."
"That waiver is 'normally only considered where there is reasonable evidence that the recovery of an overpayment would be detrimental to the health and/or welfare or their family'."
"The Department does not as a matter of policy consider a claimant's notional entitlement to WFTC in deciding whether to waive overpayment of income support. This policy, which was set out in a finance directorate circular issued on 13th September 1999 to staff involved with overpayment recovery, was adopted for two distinct but related reasons. First, for reasons which are explained in the statement of Keith Rogers [I have referred to that], it has been Government policy to separate the administration of tax credits from that of benefits."
"Repayment may be waived if it would cause hardship, but hardship must not be confused with inconvenience. To be required to pay back money to which there was no entitlement does not in itself represent hardship, especially if the overpayment was discovered quickly. The test of hardship should therefore be real. To be acceptable, a plea of hardship should be supported by reasonable evidence that the recovery action proposed by the department would be detrimental to the welfare of the debtor or the debtor's family."
"This is a more subjective application of discretion. It is normally only considered where there is reasonable evidence available that the recovery of an overpayment would be detrimental to the health and/or welfare of the debtor or their family."
"To ensure that the application of this discretion adheres to Government Accounting Guidelines, and is applied in a consistent manner, the authority to waive recovery is only delegated to ARC [an acronym which means 'head office']."
"It is also unlikely that general reasons such as
(a) being currently in receipt of benefit;
(b) age and/or mild age-related ailments;
(c) unspecified illness/disability or the receipt of certain disability benefits
would succeed without additional grounds."
"One of the main intentions behind the development and administration of WFTC was to provide a palpable split between benefits and tax credits. The clear link with employment demonstrates the rewards of work over welfare. Regardless of the legal basis, there is no policy to extend the arrangement of offsetting against potential entitlement to WFTC. Even where other benefits are involved, there are no statutory requirements to offset potential entitlement when another benefit has been overpaid."
"It is a long-standing principle that the responsibility to claim benefit lies ultimately with the customer or someone who is acting on their behalf, and the onus must be on customers to ensure they continue to fulfil the conditions of entitlement to the claimed benefit."
"You may know, however, that the Secretary of State does have the power to waive the repayment of all or part of a recoverable overpayment where exceptional circumstances warrant it. An officer acting on behalf of the Secretary of State has considered the matter carefully and has decided that in the particular circumstances of this case that there are no grounds to exercise discretion."
I have outlined enough for the moment to set out the range of material before the court which pertains to the policy.
"3 times 5 per cent of the personal allowance for a single claimant aged not less than 25, that 5 per cent being, where it is not a multiple of 5 pence, rounded to the next higher such multiple."