Benefit fraud acquittal

Earlier this year I was instructed by the solicitors of a defendant, let's call him Matt, charged with dishonestly failing to disclose a change in circumstances affecting his entitlement to Incapacity Benefit - a criminal offence under s111A(1A) Social Security Administration Act 1992.  He was to be tried in Crown Court.

Matt had had a stroke in 1998 and had to stop work.  Once his Statutory Sick Pay ran out he was released by his employers and claimed Incapacity Benefit.

In 2001 he was approached and invited to undertake some sedantary part-time work on a low rate of pay for a local commercial organisation.  The work was evenings only and for a total of 14 hours per week.

Matt accepted the job, but did not inform the DWP / Benefits Agency of this.  He believed that provided he was working for less than 16 hours per week his benefit would not be affected, but he accepts that he could (and with hindsight, he should) have told the DWP and cleared it with them.

In fact Matt had misunderstood the position.  The DWP would have reconsidered his Incapacity Benefit had they known of his commencement of part-time employment (unless his earnings were no more than £20 per week).  They would (at the least) have set limits upon the duration of this employment - or more accurately, on the duration of his entitlement to Incapacity Benefit had the employment continued.

Matt's employment continued for several years.  He was paid under PAYE and suffered some small amounts of income tax and National Insurance deductions.  He continued to receive Incapacity Benefit.

From time to time Matt received forms from the DWP regarding his health.  Questions covered such matters as his ability to stand, to walk without aids, to dress himself, etc.  But there were no questions on these forms regarding his income, financial affairs, or employment status.

A couple of years ago Matt reached age 65 and his Incapacity Benefit came to be reviewed.  That review brought to light his National Insurance contribution record and the fact that he had been working since the 2001/02 tax year.  Alarm bells obviously rang at the DWP at that point and Matt was formally interviewed under caution.

He admitted the fact of his employment and that he had not notified the DWP.

The result was that Matt was charged with benefit fraud in relation to about £30,000 of Incapacity Benefit received since November 2001.  Given the amount obtained from the alleged fraud, Matt faced possible imprisonment if convicted.

Matt's contention was that he had not been dishonest since he had believed his Incapacity Benefit would not be affected by his part-time work (although he now accepted that his belief had been mistaken).

I was asked to check the DWP's computation of Incapacity Benefit overpaid and to consider whether Matt had any unclaimed entitlements to other benefits (such as Tax Credits) which might show him in a less unfavourable light if convicted.

I spotted that although the current employment commenced in November 2001 the employer's PAYE records showed what appeared to be a P45 figure of previous earnings.  Sure enough it transpired that Matt's employment had commenced earlier - perhaps around April / May 2001 - and he had left in June 2001  (and apparently gone to work for someone else) and rejoined the organisation in November 2001.

By a quirk of the law, s111A(1A) SSAA 1992 applies only to changes occurring on or after 18 October 2001 which affect benefit.  (The subsection was inserted by s16 Social Security Fraud Act 2001.) But Matt had in effect lost his entitlement to Incapacity Benefit in April / May 2001 (and never regained it).

He therefore had no entitlement to Incapacity Benefit at any time on or after 18 October 2001 and therefore there could not have been a change of circumstances on or after that date affecting his entitlement to benefit.

When this was made clear in Crown Court a verdict of "not guilty" was formally entered and Matt left the court with no stain on his character.

Of course he remains under an obligation to repay the Incapacity Benefit he received to which he was not entitled.

You may feel that Matt was a little fortunate to have been acquitted in the circumstances!

David

www.AccountingEvidence.com

P.S.  Among the lessons to be learned from Matt's experience is that it is folly to assume that one understands the eligibility rules for state benefits (unless one genuinely does have an in-depth knowledge of them).

Another point is that criminal prosecution is much more readily pursued in relation to overpayments of state benefits than it is in relation to underpayments of tax.