Dealing With Supplementary Benefit Claim Mistakes

UK Benefit Fraud Statistics

The latest figures from the Department For Works and Pensions (DWP) indicate that out of total benefit expenditure in the UK of £159 billion during 2011/12, some £3.2 billion has been overpaid.  £1.1 billion of this is due to fraud, with twice as much down to a combination of public and DWP errors.

Dealing With Benefit Fraud

The DWP are confident that their improving control framework is reducing losses and leading to savings in the benefit bill.  However, with admitted fraud levels hovering around the billion mark and the real figures likely much higher (it is impossible to know exactly how much fraud goes on underneath the surface) the amounts stolen continue to be massive.

In 2012 Mark Jenner & Co has seen a rise in the number of cases of benefit fraud requiring forensic accounting input.  Sometimes these are the predicate cases of theft and fraud, or the proceeds of crime cases following conviction.  This increase in work has come about primarily due to a flaw in the benefit administration system.  This is the wrong treatment of a few offenders who have claimed the incorrect benefit type.

Claiming the Wrong Benefit

We do not condone the abuse of the supplementary benefit system, and in fact feel that its regulation should be much more rigidly controlled and wrongdoers more severely punished.  However, it is our concern that the benefit regulators continue to be unable to police their public domain efficiently in certain areas of operation.  Many benefit claimants claim incorrectly and leave themselves open to severe punishment.  Many of these unfortunate people do have a right to benefit, but are not aware of the many different avenues open to them in what is an extremely complex system.  Very often, they feel that a change in their circumstances will lead to a withdrawal of benefit.  In most circumstances benefit payments are required simply to purchase the next meal.  Any delay, even a day or so, could lead to hardship.  No wonder many are fearful of reporting every little detail when their circumstances change.

In order to explain why these allegations can be made in some cases, a brief understanding of the UK benefit system is needed.

If a person unexpectedly loses their job, they are able to fall back on the welfare system.  Even if they give up work, they can obtain benefits to live on.  Also, if a person is unable to work, due to incapacity or as a result of having responsibility for caring for others, they can claim supplementary benefit.

Somebody who loses his or her job is able to claim Jobseeker’s allowance.  Those unable to work can claim Income Support.  Additional benefits such as Housing benefit (to pay rent or sometimes mortgage interest) and Council Tax benefit can be claimed depending on circumstances as these two are examples of means tested benefits.

A single parent household, where an adult is looking after young children, including the unfortunate case where disabled children require additional care, could be claiming several different benefits:

  • Child benefit
  • Income Support
  • Housing Benefit
  • Council Tax Benefit
  • Disability Living Allowance
  • Disability Care Allowance

The receipt of benefits depends on keeping the benefit providers up to date on any changes in circumstances.  It is a crime to claim for benefit that a person is not entitled to – and as can be seen from the number of cases that Mark Jenner & Co is presently dealing with, these can be punished quite severely with substantial proceeds of crimes sanctions following on from any convictions.

In our experience, claimants are reluctant to report changes in circumstances to the authorities.  In many cases this is obviously because they knowingly attempt to keep the benefit payments that they are not entitled to.  However, in a noticeable number of cases the reluctance is because reporting a change can upset the household cash flow and cause hardship to the claimants, or the claimant is not aware of the alternative benefits available.

A common scenario is where a mother is abandoned by her husband and left bringing up several children.  The benefit system will provide various different strands of funds as noted above that allow a reasonable standard of living to be maintained.  If any of the children are disabled, or the mother must care for an elderly or infirm relative, the payments can be substantially enhanced.

What commonly happens is that the single parent meets a new partner, or the estranged husband returns to visit her from time to time.  At this stage, the benefit claimant usually does not inform the authorities of a change in circumstances.  Arguably, nothing has changed for her.  When the visits become more frequent, the new partner or ex-husband stops over more often and also begins to contribute to the household finances, the line has clearly been crossed.  This is where the claimant, fearful that the new relationship is only transient and scared to interrupt her benefit payments, overlooks her duty to inform the authorities.

The minute somebody with an income co-habits with the claimant, the right to claim the income support and housing benefits are severely impacted, if not completely eroded. The argument that “I never know when he comes or goes” does not mitigate the responsibility to disclose changes in circumstances.

The sad fact is that in some cases, having a partner cohabiting may not have a disadvantageous impact on the overall benefit levels enjoyed.  This is because households with an income still have a right to claim two different strands of benefit – child tax credit and working tax credit. These benefits are also substantially enhanced where a disabled child or relative is involved.

This year has seen two example cases where low earning households would have been entitled to a similar amount of benefit from the correct source had they disclosed their correct circumstances.  Instead, in each case the sole parent continued to claim unemployment benefits instead of the whole household claiming tax credits.  This resulted in criminal convictions in both cases.  However, by presenting the alternative benefit scenario to the Court, something that is not formally considered by the DWP when bringing charges, a forensic report provided mitigating evidence for more lenient treatment of the admittedly criminal negligence of the claimant.

The issue outlined above is only relevant in some cases of benefit fraud.  There are many situations where no benefit is payable and the claim is simply a fraudulent attempt to obtain something for nothing.  However, there are cases where the DWP really ought to be identifying and warning that if a partner returns to the household – the benefit entitlement does not necessarily disappear.

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About Mark Jenner

Mark Jenner is an experienced forensic accountant specialising in fraud and white collar criminal matters. He provides independent financial investigation and expert accounting witness services to police forces, fraud regulators and criminal defence lawyers, also providing assistance and solutions to organisations embroiled in financial disputes.

One Response to Dealing With Supplementary Benefit Claim Mistakes

  1. Pingback: Recent Developments In Benefit Fraud Legislation | Mark Jenner & Co Limited - Forensic Accounting Services

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