CCM8460 - Closing the Examination: Means are Inadequate
In exceptional circumstances we will forgo penalty action but only where the imposition of a penalty will cause extreme hardship and there will often still be an overpayment to recover. Where the claimant will be using all possible funds to pay the overpayment, there is nothing left to cover the proposed penalty and there is no prospect of the penalty being met on an instalment basis, we may be prepared to forgo the penalty. If there are assets which could be realised over the short to medium term you should take these into account in your settlement proposals even if this means delaying some or all of the payment.
There is no definition of extreme hardship in the legislation and cases must be judged on their own merit, but decisions should not be taken lightly. We would accept extreme hardship where for example recovery of the penalty
- would result in the claimant losing essential services/utilities, such as gas, electric or water
- would result in the claimant losing access to basic necessities such as food, clothes, essential furniture
In judging hardship when you look at the monies available to meet the settlement you should only take into account essential expenditure. This might need to include other debts and liabilities which have already been quantified.
One example of such a case might be a claimant who made an incorrect claim, who has no savings or assets and has subsequently lost their job. They are now on income support, they have a number of existing debts, they are unlikely to be able to obtain finance and there is no other spending they can cut out.
Where you propose to forgo penalties on the grounds of extreme hardship you must seek the agreement of your HO Operational Manager by submitting the papers via your manager. This will ensure a consistent approach is adopted throughout your area. You must not forgo penalties as an easy way of settling your enquiries. This is not fair to other claimants who have had to pay their penalties and it undermines a national compliance policy. Where your HO Operational Manager agrees to waive the penalty you should not charge interest. In these cases the interest stencil should not be completed.
Claimants who are neither in employment or self-employment:-
Generally, we will not seek to impose penalties on claimants that are unemployed. However, in certain circumstances, it is important to undertake some basic checks to ensure that penalties are sought where they can be afforded. These circumstances are as follows:-
- Employment has ceased within the last month
In any discussion with the claimant you should seek to establish if the claimant has received any lump sum, such as a redundancy package which places them in a position where a penalty could be paid.
- An offer of new employment has been made
You should seek a penalty and consider any means or hardship issues in the context of the income that will be received from the new employment. The starting date of the employment should be taken into account when agreeing the terms of any offer.
- The most recent claim or declaration includes a declaration of “other income”
You should seek to establish exactly what the “other income” relates to and whether this puts the claimant in a position where a penalty can be afforded.
Where you are making a decision in the absence of a response from a claimant who is unemployed, you should not consider submission of your case to the Review Officer - Formal Penalty submissions unless the criteria under 1) or 3) above apply. It would be unusual in a non-response case to be aware that 2) above applies, but, should you be aware that it does, you should also submit the case.
