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Benefit fraud & failure to disclose change of circumstances

July 8th, 2011 by Louise Humphreys

Posted In: Litigation

Tags: magistrates' court, litigation, benefit fraud, housing benefit, prosecution, council tax benefit

In the recent case of Coventry City Council v Vassell [2011] EWHC 1542 (Admin), the High Court gave consideration to the test to be applied when deciding whether a criminal offence has been committed under section 112(1A) of the Social Security Administration Act 1992 in a case of failure to disclose a change in circumstances affecting an entitlement to benefit.

By way of background, Mr Vassell had claimed Job Seeker's Allowance (JSA), Housing Benefit (HB) and Council Tax Benefit (CTB) at the job centre. He signed a declaration that he would let "the council" know about any changes in his circumstances which affected his claim. His circumstances changed in 2007, when he took up part-time work with the council. He notified the job centre and was directed to, and did, notify the council. He signed another change of circumstances declaration. In October 2007, he became a full time student, and notified the job centre. His JSA was terminated. He was not informed of the need to tell the council of the change regarding his HB and CTB, and believed that his notification to the job centre was sufficient. As a consequence he was overpaid £6,215.95 in HB.

Section 112(1A) creates a criminal offence if:

(a) there has been a change of circumstances affecting any entitlement of his to any benefit or other payment or advantage under any provision of the relevant social security legislation
(b) the change is not a change that is excluded by regulations from the changes that are required to be notified
(c) he knows that the change affects an entitlement of his to such a benefit or other payment or advantage; and
(d) he fails to give a prompt notification of that change in the prescribed manner to the prescribed person.

Mr Vassell was prosecuted by the Council for failing between specified dates to give prompt notification of the fact that he had begun to receive student finance by way of a supplementary grant, student loan and bursary. The Council argued that Mr Vassell knew that his changed circumstances would affect his entitlement to housing benefit and council tax benefit.

The magistrates, however, found Mr Vassell not guilty, making a number of important findings of fact, namely that

  • Mr Vassell did not notify the Council of his move to full-time education as a change in circumstance.
  • However, Mr Vassell believed he had informed the relevant authorities in respect of housing benefit and CTB, by giving the notice to job centre that he did give.
  • The failure of the job centre's staff to advise him of the need to inform the council's housing department of the change led him to believe he had discharged his responsibilities to notify the change correctly.
  • The benefit claim forms were not sufficiently clear as to how the duty to notify a change of circumstance must be discharged.

The Council appealed by way of case stated. The Magistrates posed a number of questions for the Courts consideration. However, Mr Justice Hickinbottom noted that there was a prior and discrete question as to what had to be notified to the Council.

Mr Justice Hickinbottom referred to the case of King v Kerrier District Council [2006] EWHC 500 Admin (a copy of which can be found here) in which the requirements of section 112(1A) were considered noting that that each of the ingredients of the offence set out in subsection (a) to (d) of the section had to be proved to the criminal standard, including subsection (c)

32. ...It was accordingly held that, for a successful prosecution, it must be proved that the defendant knew that the change would - as opposed to could - affect his entitlement to the relevant benefit. That confirms one mental element in the offence, and an element of some significance, namely a high degree of knowledge the prosecution have to prove with regard to the effect on entitlement to benefit by the change of circumstances. As I have already described, that is not a requirement for recovery of an overpayment as a result of non-notification... but, in terms of the criteria for a criminal prosecution, subsection (c) sets a substantial hurdle for the prosecution to overcome. As this is a criminal provision, that is hardly surprising.

The Judge continued:

33. Mr Vassell was aware that, when he became a full-time student, that was a change of circumstance that might affect his entitlement to housing benefit and council benefit. Under Regulation 88 of the Housing Benefit Regulations (and CTB Regulations equivalent), he therefore had a duty to notify that change of circumstances. That he thought it could have that effect was enough to trigger that obligation.
34. However, although he knew it could affect that entitlement (and he expected to have his housing benefit and CTB stopped), he clearly did not know that it would. As he continued to receive the benefits, despite having (as he thought) given notice to the Council of his change of circumstance, he thought that, contrary to his expectation, that change of circumstance did not affect his entitlement to housing benefit and CTB. Having given notice to [the job centre], he believed that he was continuing to receive housing benefit and CTB because he was entitled to them... He made that clear in his interview, the substance of which the justices accepted.
35. Consequently, in my view, the prosecution were unable to prove the element of the offence set out in subsection (c) of section 112(1A), namely that, at relevant time, Mr Vassell knew that his move into full-time education would (rather than could) affect his entitlement to housing benefit or CTB. For that reason alone, I consider this appeal should be dismissed.

However, the Judge proceeded to consider the question as to whether the prosecution had to prove mens rea in respect of the failure to give prompt notification of the change in circumstances.

65. The failure to notify a change of circumstances in section 112(1A)(d) must, in my judgment, be knowing in the sense that the benefit claimant must be aware of the person to whom and the manner in which the notification of the change of circumstances must be made; and must, in that knowledge, not give the notification, promptly, when there has been a change of circumstances requiring to be notified. It will usually be obvious that the notification must be made to the relevant local authority: but, in relation to the manner of notification, the authority is required to provide the benefit claimant with the relevant information of how to notify a change, in clear terms. That is anything but an onerous requirement for the authority. Particularly given the statutory provisions including the requirement to notify the designated office thus..., it will no doubt usually make the manner of notifying changes clear on, or with, the benefit claim form (as the August 2009 form completed by Mr Vassell seeks to do). On any prosecution, whether the notification requirements have been expressed clearly enough will be a matter of fact for the justices to consider and decide. Where they are insufficiently clear, the justices will usually be able to make a ready finding that the defendant was unaware of the requirements, and therefore did not knowingly fail to notify the change...

Whilst this judgment may on the face of it cause concern to local authorities, not least because s112 has always been considered the "lesser offence" to s111, as the Judge clearly indicates any issues can be overcome by ensuring that the forms clearly indicate to whom and in what manner any change in circumstances is to be notified.