Recovery of a Fraud Overpayment

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    Firstly i hope this is in the right forum and also apologies if this has been asked before…

    The CAB are asking us why, having awarded underlying entitlement, we used the underpayment of housing benefit in full to reduce the overpayment. They are saying it is contrary to the rules of natural justice.

    If anyone could point me in the right direction as to whether we are ok to have done this… i seem to think we are but cant find the right part of the reg.

    thanks for your help.


    Reg 104. Sums to be deducted in calculating recoverable overpayments.

    Basically once you have created an overpayment – you allow any amount of Housing benefit that should have been determined had the true circumstances of the claimant been known at the time.

    The CAB seem to have got the wrong end of the stick – underlying entitlement is there to reduce the overpayment – it is not entitlement to Housing benefit and can only be applied to the period of the overpayment.

    You are not going to pay them the underlying entitlement – because they have already received benefit for that period – but at the wrong rate.

    What has been done is not a revision and is not arrears of Benefit (which in some cases can be used wholly to reduce an overpayment).

    I have answered this in a very basic fashion, but am sure that others will quote the necessary if that is required.


    thank you for your reply.

    sorry i should have said that because it was a fraud investigation the claim had been suspended Nov – Jan 06 and so probably the amount they mean was arrears of benefit?

    so were we still right to use this amount in whole to reduce the overpayment (failure to declare tax credits)?


    Ah – no I do not think you have done the right thing.

    The overpayments guide specifies arrears as a revision of a decision – so Mr A receives £30.00 a week benefit and then you go and revise the decision and he is entitled to £40.00 per week.

    The whole of the arrears can be used to offset an overpayment.

    Delays in processing a claim – and a claim being suspended would probably fall into this category cannot be treated as arrears of Benefit.

    The recovery where this occurs has to be at the weekly rate applicable for the number of weeks that you have a Housing Benefit credit for.

    Have a look at the DWP overpayments guide under ” recovery of a HB overpayment” and then under “from arrears of HB”


    There is nothing to stop an LA in doing this; the legislation does not preclude it (I strongly suspect this was an oversight by DWP). As Caroline suggests however, it does go against DWP HB guidance (but what they say to do in HB does not match the practice in other social security benefits or tax credits).

    It is good practice to only deduct the set amounts and I fully agree with CAB that it is against natural justice not to do so. But that is a policy decision for each LA.

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