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England and Wales High Court (Administrative Court) Decisions
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Cite as:  EWHC 1160 (Admin)
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QUEEN'S BENCH DIVISION
B e f o r e :
MR JUSTICE MOSES
|MILTON KEYNES COUNCIL||(DEFENDANT)|
Smith Bernal Wordwave Limited
190 Fleet Street London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
MR R GREGORY (instructed by Milton Keynes Council) appeared on behalf of the DEFENDANT
Crown Copyright ©
Tuesday, 8th March 2005
The facts of the matter
"Family credit and disability working allowance shall be known, respectively, as working families' tax credit and disabled person's tax credit."
"A person shall be guilty of an 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."
"13. The following sections -
(a) sections 111A and 112 of the Social Security Administration Act 1992 (dishonest and fraudulent representations)...
Shall not apply in any case where the benefit or other payment or advantage is or relates to, or the failure to notify relates to, tax credit."
"Where a person fraudulently or negligently makes any incorrect statement or declaration in connection with a claim for tax credit, he shall be liable to a penalty not exceeding the amount of the difference specified in subsection (2) below."
"(b) proceedings for an offence under this Act relating to housing benefit ... may be begun at any time within the period of 3 months from the date on which evidence, sufficient in the opinion of the appropriate authority to justify a prosecution for the offence, comes to the authority's knowledge or within a period of 12 months from the commission of the offence, whichever period last expires."
"For the purposes of subsection (2) above -
(b) a certificate of the appropriate authority as to the date on which such evidence as is mentioned in paragraph (b) of that subsection came to the authority's knowledge shall be conclusive evidence of that date."
"It is accepted that all the documentary evidence sufficient to justify a prosecution was available to the Council by 10th February 2003."
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Case stated by Mrs J Lousada, Mrs A L Pocock and Mr M Griffiths,
Justices for the Thames Valley Commission Area, acting in and for the Petty Sessions Area of Milton Keynes in the County of Buckingham, in respect of their adjudication as a Magistrates' Court sitting on the 29th April 2004 at 301 Silbury Boulevard, Witan Gate East, Milton Keynes, MK9 2AJ.
(a) It was contended for the Appellant that, if the benefit received by a person or the change in circumstances that he or she failed to notify related to Working Families Tax Credit, Section 112 Social Security Administration Act 1992 did not apply. We were referred to Stone's Justices' Manual 2003, Volume 3, paragraph 8-29091, footnote 1 where it is stated that Paragraph 13 of Schedule 2 to the Tax Credits Act 1999 does not require notification of receipt of tax credit. Section 18 Tax Credits Act 1999 defines "tax credit" as Working Families Tax Credit or Disabled Person's Tax Credit. It was submitted that failure to notify receipt of Working Families Tax Credit is thus excluded from prosecution under Section 112 Social Security Administration Act 1992.
(b) It was contended for the Respondent that the purpose of Paragraph 13 of Schedule 2 to the Tax Credits Act 1999 was to demarcate Section 9(1) of that Act which provides that where a person fraudulently or negligently makes any incorrect statement or declaration in connection with a claim for tax credit, he shall be liable to a penalty. That failure to notify related to circumstances in which tax credit has been obtained with the Tax Credits Act 1999 did not exclude prosecution for obtaining Housing Benefit or Council Tax Benefit under Section 112 Social Security Administration Act 1992.
(a) The Appellant made two applications for Housing Benefit and Council Tax Benefit.
(b) The first such application was made on 5th November 2001 and received by the Respondent on 17th November 2001. The Appellant stated she was working as a sales advisor at Debenhams PLC and in receipt of Child Benefit amounting to £72.40 pcm and Working Families Tax Credit amounting to £273.43 pcm. Accompanying the application was a certificate of earned income completed and signed by the Appellant confirming that her gross income from her employment amounted to £666.90 pcm. The Appellant also provided a copy of her Tenancy Agreement showing her net rent as £71.42 payable weekly.
(c) The Appellant made a further application for Housing Benefit and Council Tax Benefit dated 3rd December 2002. This was received by the Respondent on 3rd December 2002. Income from earnings at Debenhams PLC was shown as £158.70 per week. Child Benefit was received at £70.20 every 4 weeks. Working Families Tax Credit was received of £159.12 every 2 weeks i.e. £79.56 per week. The Appellant's rent was £62.73 per month.
(d) The Appellant's Working Families Tax Credit was altered twice. With effect from 1st April 2002 it increased to £75.00 per week from 1st October 2002 it increased to £79.56 per week. Housing Benefit was paid at the same rate from 1st April 2002 to 1st October 2002.
(a) We heard evidence in chief from David PRYKE, a Benefit Fraud Investigator employed by Milton Keynes Council, that the Appellant's case was referred to him following an electronic sweep to check Working Families Tax Credit against Housing Benefit. The sweep showed that for the period 1st October 2002 to 1st March 2003 the rate of Housing Benefit payable to the Appellant was £79.56. When Milton Keynes Council carried out an electronic sweep on 29th November 2002 the rate was £61.79. A fraud file was raised on 6th February 2002. The Council's records were accessed and the period in question checked to ascertain that any notification had not been overlooked. An exhibit bundle was produced containing application forms and letters relating to the Appellant's claim for Housing Benefit during the relevant period 5th November 2001 to 4th February 2003. The applicant showed Child Benefit received at £72.40 per month and Working Families Tax Credit at £273.43 per month. There was a certificate of earned income of £666.90 per calendar month and a letter from the Inland Revenue dated 5th October 2001 stated that Working Families Tax Credit was payable to the Appellant at the rate of £61.79 per week for a period of 26 weeks. There was a signed declaration by the Appellant dated 5th November 2001. A further Housing Benefit claim form was submitted by the Appellant dated and received 3rd December 2002 which showed Child Benefit received of £70.20 every 4 weeks, Working Families Tax Credit awarded at £159.12 every two weeks, net weekly take home pay of £158.70, rent payable monthly of £62.73 together with a signed declaration by the Appellant dated 3rd December 2002. There was a letter dated 26th February 2002 from Warden Housing Association Limited to the Appellant notifying a change in rent payable with effect from 1st April 2002. The letter was actioned by the Milton Keynes Council and endorsed accordingly 8th April 2002. A letter from the Milton Keynes Council dated 9th October 2002 confirmed that the Appellant's benefit had been reassessed as a result of a change of circumstances. The Respondent wrote to the Appellant on the 18th December 2002 requesting proof of payment of Working Families Tax Credit for the period April 2002 to September 2002. A letter from the Inland Revenue dated 10th February 2003 to the Milton Keynes Council confirmed awards of Tax Credit to the Appellant starting 2nd April 2002 and ending 30th September 2002 in the sum of £75.00 per week and an award from 1st October 2002 ending 31st March 2003 in the sum of £79.56 per week. As there was no mention of this on the Council's records system, the Appellant was called in for interview on 27th March 2003.
The interview did not go ahead as the Appellant wished to consult a Solicitor. Further interviews were arranged for 9th April 2003, 9th May 2003, 11th September 2003 and finally 23rd September 2003. There was no response from the Appellant and the file was prepared for prosecution.
(b) During Cross-examination Mr PRYKE told us that the Appellant did submit all information in November 2001 in an application form 24 pages long. Working Families Tax Credit is not one of the benefits itemised in the form except under 'any other benefits'.
The award letter states that Working Families Tax Credit will start 2nd October 2001 the original was seen by the Respondent on 16th November 2001. The claim form for Housing Benefit can be sent by post or collected from the Housing Benefit Office. It would have been sent to the Appellant in November 2001. The electronic sweep shows a discrepancy and raises suspicions. The documents printed off the Council's imaging system on 6th February 2003 showed that the benefit payable to the Appellant had gone up and confirmed the dates and amounts. The Appellant's file was studied for the period 5th November 2001 to December 2002. A search was made for any missed correspondence and checked 10 to 12 times. The Housing Benefit Office is a separate office and all mail goes to Saxon Court. It is accepted that anyone can make a mistake and that documents can be mis-filed but it is not accepted that this happened in this case. It is accepted that all the documentary evidence sufficient to justify a prosecution was available to the Council by 10th February 2003.
(c) We heard evidence from Gill LONG, employed by Milton Keynes
Council, that she clarified payments and updated the system due to an overpayment. The overpayment was recalculated at a lower rate - for every £1 of income 65 pence would be lost in Housing Benefit. Once the information was received on the new award the new entitlement had to be input. The second application is a review form. Working Families Tax Credit was higher and the outcome was that there had been two six monthly Tax Credit awards not notified which needed to be calculated and adjusted. A letter dated 4th February 2003 to the Appellant shows the extent of the overpayment for the period 1st April 2002 to 8th December 2002 as £335.17. The letter dated 18th December 2002 from Benefits Officer Sonia Howse to the Appellant requests proof of the award of Working Families Tax Credit for the period April 2002 to September 2002.
(d) During cross-examination, Ms LONG told us that prescribed legislation required that Working Families Tax Credit be taken into account in assessing housing and Council Tax Benefits.
(e) We heard evidence from Olive KING, Administration Support Team Leader at Milton Keynes Council, that she was responsible for supervising the reception and front office. This included overseeing the production of documents by those in receipt of benefit and the scanning of documents produced as part of the process of notifying a change in circumstances. There were 15 members of staff in the section. The procedure used was to stamp the copy of the document to confirm that the original had been seen. The copy was placed in a plastic folder and sent for scanning. A receipt could be given to the person producing the document if requested. Receipt books to cover the period 14th December 2001 to 17th January 2003 were produced and it was confirmed that no receipt had been issued to the Appellant during that period.
(f) During cross-examination Ms KING stated that all paperwork came into her section which was open from 9.00 a.m. to 5.15 p.m. There was a rota shift in operation in 2002 with a total of four receptionists. It was not known if anyone had left nor if any agency staff or temporary staff had been employed during 2002, but there had been no work experience person at that time. There was no knowledge of any complaints made about documents being misplaced. It would be unlikely that post would get misplaced and it would not be possible for post to be mis-filed. The person who takes the post is the person responsible for handing it to the scanner. The document is scanned into a general file and then onto the claim file. There are five indices if your circumstances change and you have to notify the change on a change of circumstances form. The form, held at reception, is a prescribed form and if it is not scanned the person delivering it does not get a copy. A receipt for the document is not issued unless requested. If there is no receipt there is no proof. An original document, if it is a letter, would be scanned straight away.
(g) We read a statement under Section 9 of the Criminal Justice Act 1967 from Sarah HEATON, a Multi Agency Officer in the Tax Credit Office at Preston, Lancashire. A notification letter was sent to the Appellant on 28th March 2002 confirming an award of £75.00 per week Family Tax Credit based on earnings of £131.91 per week. A further letter was issued on 25th September 2002 confirming an award of Family Tax Credit of £79.56 per week based on earnings of £132.76 per week. Copies of the letters were sent to Milton Keynes Council.
(a) It was contended for the Appellant that by virtue of Section 116(2)(b) Social Security Administration Act 1992 the prosecution was brought outside of the time limit. The time limit began either 12 months from the date of the commission of the offence or three months from the date of which evidence came to the knowledge of the prosecution. The allegations related to 2nd April 2002 and 1st October 2002 and the proceedings were not commenced until 20th November 2003. David PRYKE had given evidence that he received all relevant documentation between 6th February and 10th February 2003. The time limit had expired when the proceedings were issued.
(b) It was contended for the Respondent that the evidence adduced established a prima facie failure to declare the receipt of Working Families Tax Credit. On three occasions an interview was set up and the Appellant did not respond. The last interview was arranged for 17th September 2003 following which the proceedings were issued. This was within the period of three months when sufficient evidence to justify prosecution came to the Respondent's knowledge.
(a) We heard evidence form the Appellant that she was 31 years of age, a single mother to a daughter aged 8 years. She had lived in Milton Keynes since 1998. During 2002 and preceding years she had been working part time and receiving Working Families Tax Credit and claiming Housing Benefit. She received a letter like a form from Milton Keynes Council on or about November 2002 and went to Saxon Court and handed it in. Her Working Families Tax Credit was reassessed every six months by the Inland Revenue and she knew that she had to notify the Housing Benefit Office of any changes. In April 2002 she received a letter from the Inland Revenue informing her that her Tax Credit had increased. As far as she was concerned, she had notified the Council of this change. She had attended Saxon Court with a wage slip, her tenancy agreement and the letter from the Inland Revenue and had completed a one-page form given to her by the receptionist. The receptionist had then copied all the documents produced by her, stamped the copies and returned the originals except the change of circumstances form. She was not aware that a receipt could be obtained. In October 2002 her Working Families Tax Credit was increased again. She did attend at Saxon court but not immediately. She always completed the forms. She received the annual renewal of Housing Benefit form towards the end of the year which she completed. In March 2003 a letter arrived asking her to go to the office of Milton Keynes Council. She phoned Pictons Solicitors to book an appointment and Mr PRYKE rearranged her appointment at the Council. She received another letter from the Council but was still trying to get legal advice. The letter was sent in September 2003 regarding the interview, but she probably didn't get round to doing it.
(b) During cross-examination the Appellant confirmed that she had lived at the address since 1998 and had been receiving Housing Benefit for some time, but not to begin with as she was unaware that she was entitled to it. She accepted that if there was any change in her circumstances she had to inform Milton Keynes Council as she had signed the declaration contained in the form. She accepted she did not notify the Council until December 2002 of the change to her Tax Credit and that she had received the letter dated 5th September 2002. Documents were provided to the Council on 3rd December 2002 and the first change in her Tax Credit had been in April 2002. The letter dated 28th March 2002 stated that there was an increase in Working Families Tax Credit and she probably received it some time in April 2002. The letter informing her of the increase represented a change in her circumstances which she had notified to the Council. She could not state the date she did this. The letter from Miss Hughes confirmed an award of Housing Benefit and cheques were sent direct to the landlord. She did not receive cheques herself. She said that she was not confused in that she did take the application form but did not go to ask for a Housing Benefit claim form as it was always posted to her. She sent it back by going personally to Saxon Court. All changes are notified when the claim form was received. She went there on the day she took her Housing Benefit form and she asked for a change in circumstances form. The only office she went to was Saxon Court. She did go in between but could not remember the month. It could have been November 2001 and December 2002. She had notified the Council all the time of all of her changes of circumstances. She did not want to go to the Council office without a Solicitor and in September 2003 she did not get round to it. Her Housing Benefit was renewed at the end of each year and at no other time and she had been in to the Council to make notification. She still receives Working Families Tax Credit but does not claim Housing Benefit now.
(c) We read a statement under Section 9 of the Criminal Justice Act 1967 to Mrs J WILLIAMS, a Supervisor at Milton Keynes Citizens' Advice Bureau. At the date of the statement - 5th April 2004 - nine clients had complained about Milton Keynes Council losing correspondence. These generally related to applications going astray.
Section 112(1A) Social Security Administration Act 1992
Section 116 (3)(b) Social Security Administration Act 1992
Section 9 Tax Credits Act 1999
Paragraph 13, Schedule 2, Tax Credits Act 1999
The questions for the opinion of the High Court are:
(a) Whether we were correct in finding that Paragraph 13 of Schedule 2 to the Family Tax Credits Act 1999 did not prevent a prosecution relating to the obtaining of Housing Benefit or Council Tax Benefit under Section 112(1A)Social Security Administration Act 1992.
(b) Whether we were correct in finding that the informations laid on 20th November 2003 had been laid within the time limit specified on Section 116(2)(b) of the Social Security Administration Act 1992.
(c) Whether there was evidence on which we could convict the Appellant of the two offences contrary to Section 112(1A) of the Social Security Administration Act 1992.
Justices' Clerk for Buckinghamshire
Signed on behalf of the adjudicating Justices and by their direction
Dated this 26th day of July 2004