Housing Benefit and Council Tax Benefit Overpayment Recovery Policy

North Kesteven District Council

Housing Benefit and Council Tax Benefit overpayment recovery policy

Strategic Aims

North Kesteven District Council has adopted this policy to achieve the following aims;

• Ensure Housing Benefit and Council Tax Benefit overpayments are recovered promptly, effectively and efficiently for the benefit of all our taxpayers and residents.
• Encourage benefit claimants and others receiving benefit payments to prevent overpayments occurring.

The rest of this policy document sets out some of the key areas that are used to achieve these policy objectives. Benefit overpayment recovery requires officers to use discretion carefully to respond to the individual circumstances in every case and the policy is designed to show the facts and issues that will be taken into account when exercising that discretion. Every case will be considered on its own merits when discretion needs to be used.

What is an overpayment of benefit?

Housing Benefit and Council Tax Benefit is paid to residents of North Kesteven District Council who have low incomes to help them pay their rent, Council Tax or both. Around £10 million of benefit is paid each year but around £300,000 to £400,000 each year is overpaid for various reasons which need to be recovered. An overpayment occurs when more benefit has been paid for a period of time than the person is entitled to under benefit law.

Overpayments occur in the following circumstances

• Claimants, landlords and others may make deliberate or unintentional errors in the information and evidence they provide for benefit to be calculated.
• Claimants and people getting benefit may deliberately or unintentionally delay reporting a change in circumstances so benefit is paid at a higher rate for a longer period than it should be.
• Rent rebate, Council Tax Benefit and some rent allowance is paid in advance and may become an overpayment because a change in circumstances occurs in the period the benefit has been paid for.
• The Department for Work and Pensions, Inland Revenue and other organisations may make decisions about other income, which affects a period where benefit has already been paid, and the adjustment and notification is either delayed or retrospective, for example, they discover fraud or error for a past period.
• An error is discovered in previous decisions made by our benefit officers.

Many overpayments can be reduced if claimants and people receiving payments (for example, landlords or their agents) report changes promptly so benefit can be adjusted. Sometimes this is not possible due to the circumstances of the change but in the majority of cases it is possible to encourage early contact with the Council to alert us to a possible change so future payments can be suspended until the correct payment amount can be decided. We will encourage benefit claimants, landlords and other people involved to tell us about changes promptly and we will act on them promptly.

Recoverability of overpayments

The law states all benefit overpayments are recoverable unless they are caused by official error and it was not reasonable for the claimant to realise they were being overpaid. A benefit claimant or a person from whom recovery of an overpayment is sought has a statutory right of appeal against all benefit overpayment decisions and will be advised of these rights when an overpayment is created.

Although an overpayment may be recoverable we do not have to take steps to recover it or we may decide to abandon recovery of the overpaid benefit even if we have started recovery. There is no statutory right of appeal in benefit law against the exercise of this particular discretion except by judicial review.

In most cases we will seek repayment of the debt, particularly in cases where fraud has caused the overpayment, but we recognise that there may be situations or circumstances where it may not be in the public interest or may be unreasonable to pursue recovery.

We will consider exercising our discretion not to recover overpaid benefit in the following situations

• The size of the overpayment is small and it would be uneconomic to recover
• A suitable method of recovery is not available
• The person from whom recovery is being sought has insufficient resources to repay the debt now and for the foreseeable future
• The person from whom recovery is being sought has died and there is insufficient money or resources available in the estate.
• The debtor is untraceable after using reasonable methods of enquiry to determine their whereabouts
• Recovery of the overpaid benefit would cause undue suffering or hardship for the debtor
• The recovery of the debt would be unenforceable in law.

Even if a debt has been written-off if we, for instance, locate the debtor or due to a change in financial circumstances they can afford to repay the debt we may restart the recovery process.

The person from whom the overpaid benefit can be recovered

The law states that overpayments may usually be recovered from any of the following;

• The benefit claimant;
• A person appointed to act on behalf of the claimant where the claimant is incapable of acting for themselves;
• A person who deliberately misrepresents a material fact or provides false evidence;
• The person or organisation that was paid the benefit payments such as a landlord or agent.

We have discretion in deciding who has to repay the debt. In each case, we will decide who should repay the overpaid money and the person affected (as well as the claimant, if they are different) will be notified of that decision in accordance with the law. If a landlord or property managing agent has been overpaid and does not repay the overpayments recoverable from them we may use this information in deciding if they are a fit and proper person to receive future benefit payments.

The law states we cannot recover an overpayment from a landlord if they notify us in writing of a change in circumstances that results in an overpayment provided they are not acting in collusion with the tenant.

In using our discretion to decide who will repay the overpayment, we will take into account any or all of the following facts

• The cause of the overpayment;
• Who provided the original information and evidence causing the benefit to be overpaid and whether it was deliberate or unintentional;
• Who could reasonably have been expected to know that an overpayment was occurring or that a change in circumstances had occurred;
• To whom the benefit has been paid;
• What methods of recovery are available;
• Who notified us to stop the overpayment.

Methods of recovery

Council Tax Benefit overpayments will be recovered by adding the amount overpaid to the Council Tax account. In the event of non-payment the usual reminders, summons and liability order in the Magistrates Court will be obtained for non-payment of Council Tax.

Housing Benefit overpayments will be recovered in any of the following ways

• Deduction from ongoing weekly Housing Benefit entitlement;
• Deduction from any lump-sum arrears of Housing Benefit due to be paid;
• Deduction from ongoing social security benefits being paid by the Department for Work and Pensions or their agencies;
• Deduction from ongoing weekly Housing Benefit being paid by another local authority;
• Deduction from a credit balance on a council tenant’s rent account;
• Deduction from payments being made to landlords and agents in respect of other tenants;
• Immediate registration at County Court of the overpayment on creation;
• Where a Court order has been obtained we can also use

-A third party freezing order (recovery from bank accounts);

-Attachment of earnings and benefits;

-Action by Court bailiff to seize goods;

-Charging order on property and land;

• Sundry debtor invoice where no other methods are suitable. If a sundry debt invoice is not paid we may seek a Court order and enforce recovery of the debt.

(Note: If we use the County Court we will add Court fees and interest to the debt.)

In deciding the method of recovery, we will take into account the following factors

• The amount of the overpayment
• The length of time it will take to recover an overpayment if a particular method is used
• The cause of the overpayment
• The cause and number of previous overpayments
• The need to deter future overpayments
• The methods of recovery available to be used
• The person from whom the repayment will be sought
• The resources of the person from whom the repayment will be sought.

We will use the powers introduced in the Social Security Administration (Fraud) Act 1997 to register overpayment decisions at the County Court immediately on creation to help us recover money quickly using the widest possible range of methods and to deter people allowing overpayments to occur again in the future. A flat rate County Court fee will be added to the debt but this is lower than the fee would be if we had to take the debt to Court later for non-payment. As this might result in a County Court Judgement against the debtor we will generally use this where

• The debt exceeds £400, or
• The overpayment was caused by fraud or a deliberate failure to notify a change in circumstances, or
• There have been previous overpayments.

We will also take into account any or all of the following

• The debtor appears to have the means to repay the debt immediately or by instalment;
• The overpaid benefit amount is unlikely to be reduced further by any underlying entitlement;
• Any financial incentives offered by the Government to use this method;
• The likelihood of any appeal or dispute about the overpayment decision that could change the debt or its recovery.

Agreements to repay by instalments

Many debtors will seek to repay the overpaid benefit by instalments. It is our policy to seek sufficient information about the debtor’s means, health and household circumstances to reach a fair agreement with debtors on the amount they can afford to repay. We will also take into account our duty to the public to recover public funds as quickly as possible.

If we are recovering an overpayment by deduction from ongoing weekly Housing Benefit we are limited to the weekly amounts specified in law although the claimant may voluntarily offer to repay more than the specified amounts.

Instalment agreements will be subject to a review at least once a year and more often if a debtor’s circumstances change. If a debtor fails to keep to any instalment plan agreed with them then we may take action to seek repayment by another method of debt enforcement. We will always seek to maintain contact with a debtor about any repayment problems but if the debtor fails to co-operate or does not respond we may take whatever measures are reasonable to enforce recovery of the debt.

Where another organisation is responsible for collecting the debt on our behalf such as the Department for Work and Pensions, County Court, or another local authority the debtor will need to communicate with that organisation to agree repayment arrangements in accordance with their policies and procedures.

Notification of decisions

Benefit law specifies who we must notify and what we must notify people about if they are affected by our decisions.

We must notify our decisions in writing to the claimant or their appointed representative and the person from whom the repayment is being sought, if this person is different. We are required to notify them of

• The reason for the overpayment
• The fact the overpayment is recoverable
• Who the overpayment is being recovered from
• The amount of the overpayment and how it has been calculated
• The period of the overpayment
• How the overpayment will be recovered
• The right to dispute or appeal the decision

We will also notify them about any changes to our original decision if we amend it or if a dispute or appeal is made.

Advice and Support

People with debt may have other debt problems and may already have advisors or may be in need of debt advice. We will work with debtors and their advisors to put in place reasonable repayment plans.

We may also direct people to seek independent advice to exercise their statutory rights, maximise their income and manage their debts.

Monitoring of overpayments and overpayment recovery

We are required to produce regular performance information for budget monitoring, Best Value Performance Indicators, Department for Work and Pensions statistical and subsidy returns and our local performance monitoring. Key national and local indicators will be reported to Members as required.

Officers will review performance regularly and develop action plans to deal with any weaknesses found in the overpayment recovery process.

The law and future amendments

Where minor amendments to the law take place this policy will incorporate the required changes where we use discretion. If a major change in the law occurs the policy will be redrafted and submitted again to the Executive Board for approval.

This policy sets out the use of discretion allowed by law. Changes to statute and case law may result in changes to the way we apply this policy.