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Forum Home  →  Discussion  →  Benefits for older people  →  Thread

Pension Credit - Failure to report a change of circumstances - criminal

Oldestrocker
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Principal - Forensic Accountants, Canterbury

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I have a long standing cl who is extremely ‘anti’ the DWP. Back story, he admitted to benefit fraud in 1985 claiming unemployment benefit/supplementary benefit for 2 years. Whilst he reported at the time to the DHSS that he was starting up a new business and his income was minimal (disclosed every two weeks his net income). However he failed to report that he was spending 95% of his week looking for business. So whilst only ‘working’ for 3 hours a week he was spending another 25 hours ‘on the road’ which was unpaid.
He pleaded guilty to the charge at Crown Court and received a 6 month prison sentence 5 months of which was suspended for two years. He spent his time in Strangeways Prison Manchester.  He was 36 at the time and of previous good character.
Since then he has felt that he was persecuted rightly or wrongly.

In August 2019 he received two letters from the Pension Service advising him that he had once again failed to report a change of circumstances to his Pension Credit claim - some extremely small increases to 3 of his 7 pensions/annuities.
The PC claim was made in 2013 and he was on an AIP until 2016.
In 2016 he advised the Pension Service of the then current payments. Since 2016 he failed to keep the Pension Service aware on the annual increases, net of tax, for the following 3 years.
The Pension Service have picked up on this via HMRC.

The Pension Service initially wanted an explanation from him as to why he had not told them of the annual increases and were offering on a worst case scenario a civil penalty of £50 + repayment of the overpaid benefit.
The Pension Service have not indicated what their figures show but reading between the lines the overpayment for the 3 years will not be any greater that £165.

Unfortunately because of his attitude with the Pension Service he replied to their request for his explanation as to - ‘It is not for me to prove my innocence it is for you to prove my guilt in that I set out intentionally to obtain more Pension Credit to which I was not entitled - good luck and see you in court again!!’

The knock on effect to that statement that he made, signed and sent back to the Pension Service is that they are now taking the view that it is now a criminal matter and that he is to be interviewed shortly. His attitude is that it will be ‘no comment’ to all questions asked.

Given the real truth in what happened it should never have been moved into the criminal aspect. The overpayment is extremely small and it was never intentional - he just forgot to tell them about the amount of tax deductions and small annual rises. This can be explained due to his medical and mental health issues. He also receives PIP EM & EC plus IIDB for a brain injury.

My job, hopefully, is to have it returned to a civil penalty (even if that applies) and repay the debt. He sees the matter progressing towards another Magistrates/Crown Court hearing.
Any ideas are welcome as to how can I ‘shut down’ the criminal investigation with an uncooperative and difficult cl who does not deserve another criminal prosecution.

Brian JB
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Advisor - Wirral Welfare Rights Unit, Birkenhead

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I do not think there is even a remote possibility of DWP Solicitors Branch (or whatever they are called now) considering a prosecution for £165 - the costs of court action far outweigh the loss to public funds and I doubt this would be seen as a “pour encourager les autres” case where public reporting on any conviction may / would deter others. Interviewing someone under caution is one thing, actually prosecuting them quite another

Mike Hughes
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Senior welfare rights officer - Salford City Council Welfare Rights Service

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I’ll take some convincing that any of the back story is relevant. The Pension Service will not have taken any view because of what the claimant allegedly wrote. They will investigate because that’s their role and, as regards a small overpayment, they may set up an interview or even an interview under caution as a means of gathering evidence. Routine stuff. An IUC can’t be taken as evidence that they have taken a view as to criminality. That’s simply part of the investigative process. Any decision on criminality comes after that.

In this case, as Brian has already observed, there isn’t a cat in hells chance of this proceeding beyond IUC and I certainly wouldn’t be accepting an Admin penalty either.

All that aside, one is intrigued as to how such a matter makes its way to a forensic accountants?

Gareth Morgan
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Managing director - Ferret, Cardiff

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During the AIP, the DWP should have automatically been increasing his private pensions, and SRP, automatically each year.  He may wish to argue that he understood that would continue to be their practice.

Oldestrocker
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Principal - Forensic Accountants, Canterbury

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Many thanks everyone - it was also my thoughts that the amount lost would be far too low to warrant a prosecution.
An IUC is set to happen next week which will be a waste of time as he will refuse to answer any of their questions.
I do feel that they will eventually want to settle with a civil penalty of £50 which obviously will be challenged on two fronts. The first as you confirm that under the AIP they increased his pension income annually and therefore understood that this practice would continue and in the second I am aware that when he confirmed and listed his income upon the AIP ceasing but also made reference to the percentage each pension increases by year on year.
I note Mike’s comments. I was involved with this client following the 1985 court case where I represented him at the Commissioners in respect of appeals against his self employed income tax estimated assessment. Eventually for the first three years it was determined that he made losses for tax purposes. This information was then submitted to the DHSS together with his accounting records in order to demonstrate a lack of income I also demonstrated to the DHSS that by set off he could have claimed a start up benefit instead more or less equal to the benefits he did claim. My wife (partner in practice) has experience of welfare benefits for her sins.

Brian JB
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Advisor - Wirral Welfare Rights Unit, Birkenhead

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Gareth Morgan - 05 November 2019 03:31 PM

During the AIP, the DWP should have automatically been increasing his private pensions, and SRP, automatically each year.  He may wish to argue that he understood that would continue to be their practice.

This would certainly be relevant if DWP relied on a regulation 32(1B) SS (Claims and Payments) Regulations obligation to disclose, but it will be important to see what he was actually told about the changes he must notify, after the AIP ended. If he was sent clear and unambiguous instructions to report any changes in his pension income,  then regulations 32(1) and (1A) apply and what he thought he needed to report will not assist him

Mike Hughes
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Senior welfare rights officer - Salford City Council Welfare Rights Service

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Have successfully countered that in the past with the argument that mental ill health denied the claimant knowledge of the material fact for a period. Turns on the specific facts of course.