Invoice Overpayment Policy - DOC by dvc19743


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									                    Macclesfield Borough Council
                Housing Benefit and Council Tax Benefit
                    Overpayment Recovery Policy

1.1   The Benefits Section’s Vision Statement states claims for housing benefit and
      council tax benefit will be processed accurately, recovering overpaid benefit to
      which there is no entitlement and providing a quality service to customers.

1.2   A key area of the service is the way we present, administer and collect
      overpayments of Housing and Council Tax Benefit (within this policy the term
      ‘Overpayments’ refers to overpaid Housing Benefit and Excess payments of
      Council Tax Benefit). This policy supports the basic principles identified in the
      Department for Work and Pensions (DWP) and Benefit Fraud Inspectorate
      (BFI) Performance Standards and DWP Corporate Debt Standards Policy.

1.3   All overpayments will be dealt with in accordance with this overpayments
      policy and each case will be considered on it’s own merits, considering all
      factors and options.

1.4   The Benefits Section reports to the Corporate Manager, Finance and Asset
      Management, and is managed by the Service Manager, Benefits. The
      Benefits Operations Manager, reporting to the Service Manager, supervises a
      dedicated specialist team to administer overpayments, striving for continual
      improvements and ensuring compliance with the standards outlined within this
      document, any additional guidance issued and all relevant legislation.

Background to Housing and Council Tax Benefit overpayments

2.1   What is an overpayment?
      An overpayment of Housing Benefit or Council Tax Benefit is any payment
      that is made to which there is no entitlement to that benefit.

2.2   Causes of Overpayment
      Overpayments can be caused by a number of reasons including:
       Changes to the claimant’s circumstances
       A mistake by Macclesfield Borough Council
       A mistake by a Government Department

2.3   Identification Of Overpayments
      All Housing and Council Tax Benefit overpayments should be identified as
      early as possible. Notification of changes will be separately identified on the
      Document Management System and treated as a priority. The section will
      strive to avoid backlogs of work, and minimise the level of outstanding work to
      ensure any changes not easily identifiable are still actioned promptly.

2.4   When processing changes, officers will determine:
       Why the overpayment has been caused
       If the amount of the overpayment can be reduced by calculating any
        underlying entitlement
                                  Page 1 of 11                Revised: September 2006
         The classification of the overpayment for subsidy purposes
         The value of the overpayment
         The period during which the overpayment was made
         Whether or not to recover the overpayment
         Who to recover the overpayment from
         Notify the person of the decision to recover the overpayment and advise
          them of their appeal rights, and also notify any other persons affected
         Decide the most appropriate method of recovery

2.5   Statistics will be kept on overpayments, to assist with monitoring purposes,
      subsidy returns and performance indicators.

Prevention Of Overpayments

3.1   We are committed to minimising fraud and error, which will help to reduce
      overpayments. The following measures will assist with this aim:
       Continuing to comply with DWP standards of evidence
       A sample check of claims processed before notifying the customers
       Identifying individual error rates for each member of staff and implementing
         training as required
       Advising claimants and landlords of the requirement to report changes in
       Regular publicity of fraud prevention and prosecution activity
       Dedicated Training and Development Officer within Benefits
       Ensure adequate staffing levels
       Prompt processing of notifications of changes in circumstance
       Dedicated interventions team reviewing entitlement
       Undertaking pro-active visits to identify possible errors
       Minimise outstanding work

Classification of overpayments

4.1   Classification types
      On identification all overpayments are categorised into specific types to record
      reasons for overpayments occurring and for subsidy purposes. The types of
      overpayment are:
       Claimant error
       Local Authority error
       DWP official error
       Future overpayments
       Fraud overpayment
       Other error
       Technical error

4.2   Classification of overpayments is the responsibility of assessment officers at
      the time they make amendments to Benefit claims. In the event of an error in
      classification the assessment officer or the overpayments officer within the
      Benefits service will amend the error.

                                 Page 2 of 11                Revised: September 2006
Calculation and notification of overpayments

5.1   All overpayments will be calculated at the time they are identified and any
      entitlement to underlying entitlement will be pursued, which will reduce the
      gross overpayment. Once any underlying entitlement has been established,
      notifications will be dispatched to the appropriate person within 5 days of the
      date on which the overpayment and any underlying entitlement is determined.

5.2   Notifications will clearly state the amount of the overpayment, the reasons for
      the overpayment occurring and how recovery will be sought in line with the
      Housing and Council Tax Benefit regulations

5.3   Where there is no ongoing entitlement to Housing benefit, an invoice will be
      despatched immediately, but recovery action will not be pursued until one
      month has elapsed from the date that the overpayment was notified, in order
      to allow the claimant time to exercise his or her right of appeal.

5.4   For claimants above pension age who incur an overpayment in excess of
      £1,000, and where there is no immediate arrangement for full repayment,
      officers will consider interviewing the claimant at the offices or through a visit
      to their home. The purpose will be to advise them of the overpayment and
      establish their ability to pay, providing help and guidance on negotiating

Deciding if the overpayment is recoverable

6.1   The majority of Housing and Council Tax Benefit Overpayments are
      recoverable. The only debts that are irrecoverable are those caused by
      Official Error where the claimant could not reasonably known they have been
      overpaid at the time the overpayment occurred.

6.2   Officers assessing claims will decide if the overpayment is recoverable at the
      time of processing the overpayment. Any overpayment considered to be
      irrecoverable will be referred to a Senior Officer for a decision to be made.

6.3   Care will be taken to identify any potential underlying entitlement and the
      customer will be invited to provide further details to assist with identifying any
      additional benefit due throughout the period of the overpayment.

6.4   Whether an overpayment is recoverable is at the discretion of the Council.
      Where possible the personal circumstances of the claimant should be taken
      into account when deciding whether to recover the overpaid amount.

Deciding whether recovery should be sought

7.1   All overpayments are recoverable including ‘official error’ overpayments where
      a claimant could reasonably have been expected to know that they were not
      entitled to the benefit, but the council has discretion as to whether to seek

                                  Page 3 of 11                  Revised: September 2006
7.2    Regard should be given to individual circumstances when deciding if recovery
       is appropriate. There is no obligation for the Council to recover all recoverable
       overpayments. However subsidy arrangements result in a penalty if recovery
       is not sought on most recoverable overpayments.

7.3    Recommendations not to recover will be passed to the Corporate Manager,
       Finance and Asset Management, summarising the reasons considered.
       These will be where the claimant’s social factors are exceptional, and the
       claimant has no funds to repay.

Persons from whom recovery may be sought

8.1    An overpayment may be recovered from the claimant or the person to whom it
       has been paid. Overpayments may not be recovered from a landlord where
       Housing Benefit has been paid direct and the landlord has written to notify the
       council of a suspected overpayment and there has been no collusion between
       the landlord and tenant.

Deciding who to recover the overpayment from

9.1    Any recoverable overpayment may be recovered from the claimant or the
       person to whom payment was made (this could be a landlord or the claimants
       appointee). When deciding who should repay the debt all appropriate factors
       must be taken into account such as the likelihood of a person receiving the
       payments knowing they were being overpaid. Where payments are made to a
       landlord we will make a judgement based on evidence available on whether it
       is more appropriate to recover from the landlord or the claimant.

Fraudulent Overpayments

10.1   Where the overpayment has been made as the result of misrepresentation or
       failure to disclose a relevant fact by the customer recovery will be directed to
       the customer.

10.2   Where the overpayment has been made as the result of misrepresentation or
       failure to disclose a relevant fact by someone acting on their behalf or their
       landlord or agent the recovery will be directed to that person.

Administrative Penalties

11.1   Where a claimant has been offered an Administrative Penalty as an alternative
       to prosecution they are interviewed by a member of the Benefits Section’s
       Fraud Team. If they accept, they will sign an agreement. The agreement will
       state the amount of the Administrative Penalty (30% of the overpaid benefit)
       allowing a period of 28 days to accept. Once the 28 days has elapsed, and
       provided the claimant hasn’t withdrawn from the agreement, recovery can be
       put into place.

                                  Page 4 of 11                Revised: September 2006
11.2   Where deductions from ongoing Housing Benefit are already in place to
       recover the Housing Benefit overpayment, recovery of the Administrative
       Penalty can also be recovered this way, but should only commence after the
       Housing Benefit overpayment has been recovered in full.

11.3   Where an invoice has already been issued for the Housing Benefit
       overpayment, a further invoice will be set up to repay the Administrative
       Penalty, otherwise a single invoice can be set up for both the Housing Benefit
       overpayment & the Administrative Penalty. Payments that are made to firstly
       reduce the Housing Benefit overpayment and then the Administrative Penalty.

Methods of payment

12.1   We will receive repayments of overpayments using the following methods:
        Cash
        Cheque
        Credit or debit card payments
        Recovery from ongoing Housing Benefit (by this council or another)
        Recovery through recharging excess Council tax benefit to the Council Tax
        Recovery from other Welfare Benefits
        Recovery from ongoing payments to the landlord (‘Blameless tenant’ rule).
        County Court Action
        Home visits for overpayments greater than £1,000 for pensioners

Methods of Recovery

13.1   Councils can recover overpayments by any lawful means. The following are
       the main methods that are adopted: -
        Deductions from ongoing benefit
        Payment of an invoice issued
        By recovering overpayments from a landlord through a third party benefit
          for an overpayment in respect of another claimant;
        Deductions from other benefits paid by the Benefits Agency;
        From ongoing benefit paid by another authority;
        For council tax benefit only, by adding overpaid council tax benefit, onto a
          claimant’s council tax account as an amount of council tax owed.

Recovery from ongoing benefit

14.1   Where a claimant continues to receive Housing Benefit we will make
       deductions from arrears of Housing Benefit and ongoing payments of Housing
       Benefit having regard to their financial circumstances. Where appropriate we
       will recover debts at the weekly amounts recommended by the DWP and in
       accordance with the relevant regulations.

14.2   Where a claimant can demonstrate that these levels of overpayment will
       cause hardship to themselves/their family then negotiation of lower payments
       is acceptable. In such cases the customer will be invited to complete a

                                  Page 5 of 11               Revised: September 2006
       financial statement and to make an offer of repayment.                      In these
       circumstances a reasonable offer will be accepted.

Other methods of recovery

15.1   Payment arrangements
       A leaflet is issued with every Overpayment Letter and invoice issued providing
       information to claimants about overpayments and appeal rights. There is a
       section within the form for claimants to supply information about their personal
       financial circumstances and for them to make arrangements to repay the debt.

15.2   Recovery from Welfare benefits
       Deductions will be taken from other benefits as claimed by the debtor. Where
       necessary entitlement to benefits will be identified through access to DWP

15.3   Recovery from benefit payments made by another authority
       We will seek to recover from on-going Housing Benefit awarded by other
       councils, and will likewise make deductions if requests are received from other
       councils in respect of any of our current housing benefit customers.

15.4   Revenues Bailiffs
       Arrangements are made for the council bailiffs to visit to explain the debt to the
       claimant and to obtain their agreement to a payment arrangement.

15.5   Collection agents
       If the customer has moved outside the Borough of Macclesfield a collection
       agency may be used to recover overpayments provided the debt is for a
       minimum of £30. The collection agents retain a percentage of any debts

15.6   County Court action
       The council’s legal section takes court action if the debt is a minimum of £50.
       The debt is registered at the local county court and the judgement is then
       enforced by way of a warrant, oral examination, charging order or attachment
       of earnings.

15.7   Appendix A details the collection and recovery timescales and Appendix B
       includes flowcharts for the main processes.

15.8   The Sundry Debtor Section has policies in place concerning the collection of
       debts where an invoice has been raised.

Collection of overpayments from landlords

16.1   The collection of overpayments in respect of former tenants or tenants no
       longer in receipt of housing benefit, will be undertaken by deducting amounts
       from future payments to the landlord (known as ‘blameless tenant’
       deductions). An overpayment of benefit in respect of one tenant is recovered
       from a current tenant’s payment made to the same landlord. The current
       tenant’s rights are protected and the deduction counts as their rent payment.
                                   Page 6 of 11                Revised: September 2006
16.2   The first principle will be to seek settlement in full from the landlord for all
       overpayments received. In exceptional circumstances, the Landlord may
       negotiate a repayment arrangement with the Council to avoid cash flow
       problems. The Senior Overpayments Officer must approve all requests.

Unrecoverable debts

17.1   Where a debt is recognised as not recoverable, it will be identified as such at
       the earliest possible time and properly accounted for under appropriate
       legislation and council policy.

Recommendations to write off overpayments

18.1   When considering whether to write off an overpayment, the following factors
       will be considered:
        Size of the debt
        Age of the debt
        Whether the current whereabouts of the debtor are known
        Cost effectiveness


19.1   When an appeal against the recovery of a recoverable overpayment is
       received, ongoing recovery action will be suspended until the outcome of the
       appeal has been decided. If it is accepted as a late appeal and an invoice has
       already been set up, the sundry debtor section will be requested to hold
       recovery action until the outcome of the appeal has been determined.

Data Protection requirements

20.1   Processes and controls will ensure that the information on the overpayment is
       up to date, accurate, and complete, complying with Data Protection

                                    Page 7 of 11                  Revised: September 2006
Appendix A:

Collection and Recovery Timetable for cases where there is no ongoing
entitlement to Housing Benefit

Action                                                         Timescale                               Follow Up
Notification                                                   Issued within 5 calendar days of
                                                               the overpayment being determined
Invoice                                                        As soon as practicable after the
                                                               overpayment is notified
Reminder Letter                                                If no response is received from the
                                                               customer, as soon as practicable
                                                               32 days after invoice was issued
Final Reminder                                                 14 days after reminder issued
Court Summons                                                  14 days after final reminder issued
Warning letter
Departmental                                                   As soon as practicable 14 days          Decide on further action
memo to Benefit                                                after Court Summons warning             (see following points a-f) &
Section for                                                    letter issued                           advise Sundry Debtors
instructions                                                                                           Section of decision within 14
                                            a) Consider if     14 days after departmental write        Advise Sundry Debtors
 Benefit section will decide which is the appropriate action

                                            are now able       regarding deductions if applicable      Section to hold recovery on
                                            to make                                                    the account
                                            from ongoing
                                            HB or other
                                            b) MBC             14 days after departmental memo         14 days later Sundry
                                            Bailiffs           arrange for bailiff to call             Debtors Section to check for
                                                                                                       a response from bailiff
                                            c) Collection      14 days after departmental memo         14 days later Sundry

                                            agency             consider if falls within criteria for   Debtors Section to check for
                                            where              referral to a collection agency         a response from collection
                                            claimant has                                               agent
                                            moved out
                                            the area
                                            e) Court           14 days after departmental memo         Sundry Debtors Section
                                            action             consider if falls within criteria for   awaits advice from legal
                                                               legal action to obtain a judgement      section
                                            f) Trace           Where the customer has moved            Where no trace can be
                                            agencies           from their last known address,          found further checks of all
                                                               tracing will be attempted tracing       available systems will be
                                                               agencies and other credit               made at 4 monthly intervals
                                                               references agencies

                                                                            Page 8 of 11                 Revised: September 2006
Appendix B: Flowcharts of main processes

1      Is the Overpayment Recoverable?

                               Overpayment is

           No               Was the overpayment              Yes
                            due to Official error?

    Overpayment is                   Yes              Could the claimant
    recoverable                                       have reasonably
                                                      known they were


                                                     Overpayment is
                                                     not recoverable

                              Page 9 of 11              Revised: September 2006
2           From whom should recovery be sought?

                              Overpayment of
                              housing benefit is

                 Yes              Was benefit paid to
                                  the claimant or their

    Can recover from
    the claimant (or                 No
                                                                            Can recover
                                                                            from the person
                               Was it caused by                   Yes       who caused it
                               misrepresenting/ failing
                               to disclose a fact?


                               Could the landlord or agent
                 No            reasonably have known
                               there was an
                               overpayment? (If the
                               landlord reported fraud,
                               answer No)


                                  Can recover
                                  from the

                              Page 10 of 11                  Revised: September 2006
     3              Issuing a decision notice and taking recovery action for recoverable

                                           LA is notified of a change in
                                           circumstances resulting in an

                                Yes             Is all the information                No
                                                available to identify any
                                                underlying entitlement?

         Assess the case.                                                    Assess the change &
         Send a decision                                                     write to the claimant to
         notice detailing the                                                establish underlying
         overpayment to all                                                  entitlement.
         affected persons.                                                   Allow one month and
                                                                             assess, or sooner if all
                                                                             information supplied,
                                                                             sending decision notice
                                                                             detailing overpayment to
                                                                             all affected persons.

Raise an invoice                      No
                                              Is there any on-going
                                              housing benefit
But wait one month if
recovering from ongoing
payments to landlord.


                                            Wait one month then
                                            commence recovery from
                                            ongoing benefit

                                              Page 11 of 11                 Revised: September 2006

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