116 Loss of tax credits

(1) The Tax Credits Act 2002 is amended as follows.

(2) After section 36 there is inserted—

“Loss of tax credit provisions

36A 5Loss of working tax credit in case of conviction etc for benefit offence

(1) Subsection (4) applies where a person (“the offender”)—

(a) is convicted of one or more benefit offences in any proceedings,

or

(b) after being given a notice under subsection (2) of the

10appropriate penalty provision by an appropriate authority,

agrees in the manner specified by the appropriate authority to

pay a penalty under the appropriate penalty provision to the

appropriate authority, in a case where the offence to which the

notice relates is a benefit offence, or

(c) 15is cautioned in respect of one or more benefit offences.

(2) In subsection (1)(a)—

(a) “the appropriate penalty provision” means section 115A of the

Social Security Administration Act 1992 (penalty as alternative

to prosecution) or section 109A of the Social Security

20Administration (Northern Ireland) Act 1992 (the corresponding

provision for Northern Ireland);

(b) “appropriate authority” means—

(i) in relation to section 115A of the Social Security

Administration Act 1992, the Secretary of State or an

25authority which administers housing benefit or council

tax benefit, and

(ii) in relation to section 109A of the Social Security

Administration (Northern Ireland) Act 1992, the

Department (within the meaning of that Act) or the

30Northern Ireland Housing Executive.

(3) Subsection (4) does not apply by virtue of subsection (1)(a) if, because

the proceedings in which the offender was convicted constitute the

current set of proceedings for the purposes of section 36C, the

restriction in subsection (3) of that section applies in the offender’s case.

(4) 35If this subsection applies and the offender is a person who would, apart

from this section, be entitled (whether pursuant to a single or joint

claim) to working tax credit at any time within the disqualification

period, then, despite that entitlement, working tax credit shall not be

payable for any period comprised in the disqualification period—

(a) 40in the case of a single claim, to the offender, or

(b) in the case of a joint claim, to the offender or the other member

of the couple.

(5) Regulations may provide in relation to cases to which subsection (4)(b)

would otherwise apply that working tax credit shall be payable, for any

45period comprised in the disqualification period, as if the amount

payable were reduced in such manner as may be prescribed.

(6) For the purposes of this section, the disqualification period, in relation

to any disqualifying event, means the relevant period beginning with

such date, falling after the date of the disqualifying event, as may be

determined by or in accordance with regulations.

(7) 5For the purposes of subsection (6) the relevant period is—

(a) in a case falling within subsection (1)(a) where the benefit

offence, or one of them, is a relevant offence, the period of three

years,

(b) in a case falling within subsection (1)(a) (but not within

10paragraph (a) above)), the period of 13 weeks, or

(c) in a case falling within subsection (1)(b) or (c), the period of 4

weeks.

(8) The Treasury may by order amend subsection (7)(a), (b) or (c) to

substitute a different period for that for the time being specified there.

(9) 15This section has effect subject to section 36B.

(10) In this section and section 36B—

• “benefit offence” means any of the following offences committed
  
  on or after the day specified by order made by the Treasury—

  (a)

  an offence in connection with a claim for a disqualifying
  
  20benefit;

  (b)

  an offence in connection with the receipt or payment of
  
  any amount by way of such a benefit;

  (c)

  an offence committed for the purpose of facilitating the
  
  commission (whether or not by the same person) of a
  
  25benefit offence;

  (d)

  an offence consisting in an attempt or conspiracy to
  
  commit a benefit offence;

• “disqualifying benefit” has the meaning given in section 6A(1) of
  
  the Social Security Fraud Act 2001;

• 30“disqualifying event” means—

  (a)

  the conviction falling within subsection (1)(a);

  (b)

  the agreement falling within subsection (1)(b);

  (c)

  the caution falling within subsection (1)(c);

• “relevant offence” has the meaning given in section 6B of the Social
  
  35Security Fraud Act 2001.

36B Section 36A: supplementary

(1) Where—

(a) the conviction of any person of any offence is taken in account

for the purposes of the application of section 36A in relation to

40that person, and

(b) that conviction is subsequently quashed,

all such payments and other adjustments shall be made as would be

necessary if no restriction had been imposed by or under section 36A

that could not have been imposed if the conviction had not taken place.

(2) 45Where, after the agreement of any person (“P”) to pay a penalty under

the appropriate penalty provision is taken into account for the

purposes of the application of section 36A in relation to that person—

(a) P’s agreement to pay the penalty is withdrawn under

subsection (5) of the appropriate penalty provision, or

(b) it is decided on an appeal or in accordance with regulations

under the Social Security Act 1992 or the Social Security

5(Northern Ireland) Order 1998 (S.I. 1998/1506 (N.I. 10)S.I. 1998/1506 (N.I. 10)) that the

overpayment to which the agreement relates is not recoverable

or due,

all such payments and other adjustments shall be made as would be

necessary if no restriction had been imposed by or under section 36A

10that could not have been imposed if P had not agreed to pay the

penalty.

(3) Where, after the agreement (“the old agreement”) of any person (“P”) to

pay a penalty under the appropriate penalty provision is taken into

account for the purposes of the application of section 36A in relation to

15P, the amount of any overpayment made to which the penalty relates is

revised on an appeal or in accordance with regulations under the Social

Security Act 1998 or the Social Security (Northern Ireland) Order

1998—

(a) section 36A shall cease to apply by virtue of the old agreement,

20and

(b) subsection (4) shall apply.

(4) Where this subsection applies—

(a) if there is a new disqualifying event consisting of—

(i) P’s agreement to pay a penalty under the appropriate

25penalty regime in relation to the revised overpayment,

or

(ii) P being cautioned in relation to the offence to which the

old agreement relates,

the disqualification period relating to the new disqualifying

30event shall be reduced by the number of days in so much of the

disqualification period relating to the old agreement as had

expired when subsection 36A ceased to apply by virtue of the

old agreement, and

(b) in any other case, all such payments and other adjustments shall

35be made as would be necessary if no restriction had been

imposed by or under section 36A that could not have been

imposed if P had not agreed to pay the penalty.

(5) For the purposes of section 36A—

(a) the date of a person’s conviction in any proceedings of a benefit

40offence shall be taken to be the date on which the person was

found guilty of that offence in those proceedings (whenever the

person was sentenced) or in the case mentioned in paragraph

(b)(ii) the date of the order for absolute discharge, and

(b) references to a conviction include references to—

(i) 45a conviction in relation to which the court makes an

order for absolute or conditional discharge,

(ii) an order for absolute discharge made by a court of

summary jurisdiction in Scotland under section 246(3)

of the Criminal Procedure (Scotland) Act 1995 without

50proceeding to a conviction, and

(iii) a conviction in Northern Ireland.

(6) In this section “the appropriate penalty provision” has the meaning

given by section 36A(2)(a).

36C Loss of working tax credit for repeated benefit fraud

(1) If—

(a) 5a person (“the offender”) is convicted of one or more benefit

offences in a set of proceedings (“the current set of

proceedings”),

(b) within the period of five years ending on the date on which the

benefit offence was, or any of them were, committed, one or

10more disqualifying events occurred in relation to the offender

(the event, or the most recent of them, being referred to in this

section as “the earlier disqualifying event”),

(c) the current set of proceedings has not been taken into account

for the purposes of any previous application of this section in

15relation to the offender,

(d) the earlier disqualifying event has not been taken into account

as an earlier disqualifying event for the purposes of any

previous application of this section in relation to the offender,

and

(e) 20the offender is a person who would, apart from this section, be

entitled (whether pursuant to a single or joint claim) to working

tax credit at any time within the disqualification period,

then, despite that entitlement, the restriction in subsection (3) shall

apply in relation to the payment of that benefit in the offender’s case.

(2) 25The restriction in subsection (3) does not apply if the benefit offence

referred to in subsection (1)(a), or any of them, is a relevant offence.

(3) Working tax credit shall not be payable for any period comprised in the

disqualification period—

(a) in the case of a single claim, to the offender, or

(b) 30in the case of a joint claim, to the offender or the other member

of the couple.

(4) Regulations may provide in relation to cases to which subsection (3)(b)

would otherwise apply that working tax credit shall be payable, for any

period comprised in the disqualification period, as if the amount

35payable were reduced in such manner as may be prescribed.

(5) For the purposes of this section the disqualification period, in an

offender’s case, means the relevant period beginning with a prescribed

date falling after the date of the conviction in the current set of

proceedings.

(6) 40For the purposes of subsection (5) the relevant period is—

(a) in a case where, within the period of five years ending on the

date on which the earlier disqualifying event occurred, a

previous disqualifying event occurred in relation to the

offender, the period of three years;

(b) 45in any other case, 26 weeks.

(7) In this section and section 36D—

• “appropriate penalty provision” has the meaning given in section
  
  36A(2)(a);

Welfare Reform BillPage 84

• “benefit offence” means any of the following offences committed
  
  on or after the day specified by order made by the Treasury—

  (a)

  an offence in connection with a claim for a disqualifying
  
  benefit;

  (b)

  5an offence in connection with the receipt or payment of
  
  any amount by way of such a benefit;

  (c)

  an offence committed for the purpose of facilitating the
  
  commission (whether or not by the same person) of a
  
  benefit offence;

  (d)

  10an offence consisting in an attempt or conspiracy to
  
  commit a benefit offence;

• “disqualifying benefit” has the meaning given in section 6A(1) of
  
  the Social Security Fraud Act 2001;

• “disqualifying event” has the meaning given in section 36A(10);

• 15“relevant offence” has the meaning given in section 6B of the Social
  
  Security Fraud Act 2001.

(8) Where a person is convicted of more than one benefit offence in the

same set of proceedings, there is to be only one disqualifying event in

respect of that set of proceedings for the purposes of this section and—

(a) 20subsection (1)(b) is satisfied if any of the convictions take place

in the five year period there;

(b) the event is taken into account for the purposes of subsection

(1)(d) if any of the convictions have been taken into account as

mentioned there;

(c) 25in the case of the earlier disqualifying event mentioned in

subsection (6)(a), the reference there to the date on which the

earlier disqualifying event occurred is a reference to the date on

which any of the convictions take place;

(d) in the case of the previous disqualifying event mentioned in

30subsection (6)(a), that provision is satisfied if any of the

convictions take place in the five year period mentioned there.

(9) The Treasury may by order amend subsection (6) to substitute different

periods for those for the time being specified there.

(10) An order under subsection (9) may provide for different periods to

35apply according to the type of earlier disqualifying event or events

occurring in any case.

(11) This section has effect subject to section 36D.

36D Section 36C: supplementary

(1) Where—

(a) 40the conviction of any person of any offence is taken into account

for the purposes of the application of section 36C in relation to

that person, and

(b) that conviction is subsequently quashed,

all such payments and other adjustments shall be made as would be

45necessary if no restriction had been imposed by or under section 36C

that could not have been imposed if the conviction had not taken place.

(2) Subsection (3) applies where, after the agreement of any person (“P”) to

pay a penalty under the appropriate penalty provision is taken into

account for the purposes of the application of section 36C in relation to

that person—

(a) P’s agreement to pay the penalty is withdrawn under

subsection (5) of the appropriate penalty provision,

(b) 5it is decided on an appeal or in accordance with regulations

under the Social Security Act 1998 or the Social Security

(Northern Ireland) Order 1998 (S.I. 1998/1506 (N.I. 10)S.I. 1998/1506 (N.I. 10)) that any

overpayment made to which the agreement relates is not

recoverable or due, or

(c) 10the amount of any over payment to which the penalty relates is

revised on an appeal or in accordance with regulations under

the Social Security Act 1998 or the Social Security (Northern

Ireland) Order 1998 and there is no new agreement by P to pay

a penalty under the appropriate penalty provision in relation to

15the revised overpayment.

(3) In those circumstances, all such payments and other adjustments shall

be made as would be necessary if no restriction had been imposed by

or under section 36C that could not have been imposed if P had not

agreed to pay the penalty.

(4) 20For the purposes of section 36C—

(a) the date of a person’s conviction in any proceedings of a benefit

offence shall be taken to be the date on which the person was

found guilty of that offence in those proceedings (whenever the

person was sentenced) or in the case mentioned in paragraph

25(b)(ii) the date of the order for absolute discharge, and

(b) references to a conviction include references to—

(i) a conviction in relation to which the court makes an

order for absolute or conditional discharge,

(ii) an order for absolute discharge made by a court of

30summary jurisdiction in Scotland under section 246(3)

of the Criminal Procedure (Scotland) Act 1995 without

proceeding to a conviction, and

(iii) a conviction in Northern Ireland.

(5) In section 36C references to any previous application of that section—

(a) 35include references to any previous application of a provision

having an effect in Northern Ireland corresponding to provision

made by that section, but

(b) do not include references to any previous application of that

section the effect of which was to impose a restriction for a

40period comprised in the same disqualification period.”

(3) In section 38 (appeals), in subsection (1)—

(a) the “and” immediately following paragraph (c) is repealed;

(b) after that paragraph there is inserted—

“(ca) a decision under section 36A or 36C that working tax

45credit is not payable (or is not payable for a particular

period), and”.

(4) In section 66 (parliamentary etc control of instruments)—

(a) in subsection (1)—

(i) after “no” there is inserted “order or”;

(ii) for “them” there is substituted “the order or regulations”;

(b) in subsection (2) before paragraph (a) there is inserted—

“(za) an order made by the Treasury under section 36A(8) or

36C(9),

(zb) 5regulations made under section 36A(5) or 36C(4),”;

(c) in subsection (3)(a) at the beginning there is inserted “an order or”.

(5) In section 67 (interpretation), at the appropriate place there is inserted—

• ““cautioned”, in relation to any person and any offence, means
  
  cautioned after the person concerned has admitted the offence;
  
  10and “caution” is to be interpreted accordingly;”.

117 Cautions

(1) In section 6B of the Social Security Fraud Act 2001 (loss of benefit in case of

conviction, penalty or caution for benefit offence)—

(a) in the heading, for “penalty or caution” there is substituted “or

15penalty”;

(b) in subsection (1), after paragraph (a) there is inserted “or”;

(c) subsection (1)(c) (cautions) is repealed;

(d) in subsection (13), in the definition of “disqualifying event”, after

“(1)(a)” there is inserted “or”.

(2) 20In section 36A of the Tax Credits Act 2002 (loss of tax working tax credit in case

of conviction, penalty or caution for benefit offence) subsection (1)(c) (cautions)

is repealed.

Administration of tax credits

118 Tax credit fraud: investigation

25In section 109A of the Social Security Administration Act 1992 (authorisations

for investigators), at the end there is inserted—

“(9) This section and sections 109B to 109C below apply as if—

(a) the Tax Credits Act 2002 were relevant social security

legislation, and

(b) 30accordingly, child tax credit and working tax credit were

relevant social security benefits for the purposes of the

definition of “benefit offence”.”

119 Information-sharing for prevention etc of tax credit fraud

(1) Section 122B of the Social Security Administration Act 1992 (supply of

35government information for fraud prevention etc) is amended as follows.

(2) In subsection (2)(a), after “social security” there is inserted “or tax credits”.

(3) In subsection (3)—

(a) in paragraph (b), after “1995” there is inserted “, the Tax Credits Act

2002”,

(b) 40in that paragraph, the final “or” is repealed, and

(c) after paragraph (c) there is inserted “or

“(d) it is supplied under section 123 of the Welfare Reform

Act 2011.”

120 Tax credit fraud: prosecution and penalties

5In section 35 of the Tax Credits Act 2002 (offence of fraud), for subsection (2)

there is substituted—

“(2) Where a person is alleged to have committed an offence under this

section in relation to payments of a tax credit not exceeding £20,000, the

offence is triable summarily only.

(3) 10A person who commits an offence under this section is liable on

summary conviction pursuant to subsection (2) to imprisonment for a

term not exceeding the applicable term, or a fine not exceeding level 5

on the standard scale, or both.

(4) In subsection (3) the applicable term is—

(a) 15for conviction in England and Wales, 51 weeks;

(b) for conviction in Scotland or Northern Ireland, 6 months.

(5) Where a person is alleged to have committed an offence under this

section in any other case, the offence is triable either on indictment or

summarily.

(6) 20A person who commits an offence under this section is liable—

(a) on summary conviction pursuant to subsection (5), to

imprisonment for a term not exceeding the applicable term, or

a fine not exceeding the statutory maximum, or both;

(b) on conviction on indictment pursuant to subsection (5) to

25imprisonment for a term not exceeding 7 years, or a fine, or

both.

(7) In subsection (6)(a) the applicable term is—

(a) for conviction in England and Wales or Scotland, 12 months;

(b) for conviction in Northern Ireland, 6 months.

(8) 30In relation to an offence under this section committed in England and

Wales before the commencement of section 281(5) of the Criminal

Justice Act 2003, the reference in subsection (4)(a) to 51 weeks is to be

read as a reference to 6 months.

(9) In relation to an offence under this section committed in England and

35Wales before the commencement of section 154(1) of the Criminal

Justice Act 2003, the reference in subsection (7)(a) to 12 months is to be

read as a reference to 6 months.

(10) In England and Wales—

(a) subsection (1) of section 116 of the Social Security

40Administration Act 1992 (legal proceedings) applies in relation

to proceedings for an offence under this section;

(b) subsections (2)(a) and (3)(a) of that section apply in relation to

proceedings for an offence under this section which is triable

summarily only pursuant to subsection (2) above.

(11) In Scotland, subsection (7)(a) and (b) of section 116 of the Social Security

Administration Act 1992 (legal proceedings) apply in relation to

proceedings for an offence under this section which is triable

summarily only pursuant to subsection (2) above.

(12) 5In Northern Ireland—

(a) subsection (1) of section 110 of the Social Security

Administration (Northern Ireland) Act 1992 (legal proceedings)

applies in relation to proceedings for an offence under this

section;

(b) 10subsections (2)(a) and (3)(a) of that section apply in relation to

proceedings for an offence under this section which is triable

summarily only pursuant to subsection (2) above.”

121 Unauthorised disclosure of information relating to tax credit offences

In Schedule 4 to the Social Security Administration Act 1992 (persons

15employed in social security administration or adjudication), in paragraph 1 of

Part 2, after “security,” there is inserted “to the investigation or prosecution of

offences relating to tax credits,”.

122 Tax credits: transfer of functions etc

(1) Her Majesty may by Order in Council—

(a) 20transfer to the Secretary of State any tax credit function of the Treasury

or the Commissioners;

(b) direct that any tax credit function of the Treasury or the Commissioners

is to be exercisable concurrently with the Secretary of State or is to cease

to be so exercisable.

(2) 25Provision within subsection (1) may be limited so as to apply only in relation

to cases within a specified description.

(3) Her Majesty may by Order in Council, as Her Majesty considers appropriate—

(a) make provision in connection with a transfer or direction under

subsection (1);

(b) 30make other provision within one or more of the following sub-

paragraphs—

(i) provision applying (with or without modifications) in relation

to tax credits any provision of primary or secondary legislation

relating to social security;

(ii) 35provision combining or linking any aspect of the payment and

management of tax credits with any aspect of the

administration of social security;

(iii) provision about the use or supply of information held for

purposes connected with tax credits, including (in particular)

40provision authorising or requiring its use or supply for other

purposes;

(iv) in relation to information held for purposes not connected with

tax credits, provision authorising or requiring its use or supply

for purposes connected with tax credits.

(4) 45An Order may make provision under subsection (3)(b) only if—

(a) the Order also makes provision under subsection (1), or

(b) a previous Order has made provision under subsection (1).

(5) Provision within subsection (3)—

(a) may confer functions on, or remove functions from, the Secretary of

State, the Treasury, the Commissioners, a Northern Ireland department

5or any other person;

(b) may (in particular) authorise the Secretary of State and the

Commissioners to enter into arrangements from time to time under

which the Commissioners are to provide services to the Secretary of

State in connection with tax credits.

(6) 10Provision within subsection (3)—

(a) may expand the scope of the conduct which constitutes an offence

under any primary or secondary legislation, but may not increase the

scope of any punishment for which a person may be liable on

conviction for the offence;

(b) 15may expand the scope of the conduct in respect of which a civil penalty

may be imposed under any primary or secondary legislation, but may

not increase the maximum amount of the penalty.

(7) An Order under this section may include such consequential, supplementary,

incidental or transitional provision as Her Majesty considers appropriate

20including (for example)—

(a) provision for transferring or apportioning property, rights or liabilities

(whether or not they would otherwise be capable of being transferred

or apportioned);

(b) provision for substituting any person for any other person in any

25instrument or other document or in any legal proceedings;

(c) provision with respect to the application in relation to the Crown of

provision made by the Order.

(8) A certificate issued by the Secretary of State that any property, rights or

liabilities set out in the certificate have been transferred or apportioned by an

30Order under this section as set out in the certificate is conclusive evidence of

the matters so set out.