The Secretary of State for Work and Pensions v M Cotter

For recovery under section 71, the duty to disclose a material fact need not relate to the benefit later overpaid. The earlier failure must have caused the later payment, or the part of it that would otherwise not have been made. Where a claimant moves from one benefit to another, earlier awareness of a duty to report the same income is a relevant consideration in deciding whether the claimant could reasonably have been expected to know that disclosure remained required. A tribunal errs if it treats a separate duty specific to the later benefit as necessary or fails to consider that earlier awareness.

Ms M Cotter received Incapacity Benefit (IB) and an occupational pension. The pension was not reported to the Secretary of State until December 2018, and it affected her entitlement to both IB and Employment and Support Allowance (ESA). The First-tier Tribunal found the IB overpayment recoverable from April 2007, after she had received a form requiring her to report changes. It found the ESA overpayment from November 2011 to December 2018 was not recoverable, because it was not satisfied that she had been adequately informed of a disclosure duty for ESA.

The Secretary of State appealed the decision on the ESA overpayment. The issue was whether recovery under section 71 of the Social Security Administration Act 1992 required a disclosure duty specific to ESA, and whether the First-tier Tribunal had properly considered Ms Cotter’s earlier awareness of a duty to report her pension.

1. Appeal allowed. The First-tier Tribunal erred in law by treating a specific disclosure duty in respect of ESA as necessary for recovery under section 71. The section does not require the duty to disclose to concern the benefit later overpaid. The question was whether the earlier failure to disclose caused the ESA overpayment ([30]–[33]).

2. In TM v Secretary of State for Work and Pensions (ESA) [2015] UKUT 109 (AAC), the earlier non-disclosure would have prevented entitlement to the earlier benefit and thus led to the later ESA overpayment. Here, disclosure would have reduced, but not extinguished, IB entitlement. Ms Cotter would still have moved to ESA, but at a lower rate. The Upper Tribunal held that the earlier non-disclosure could nevertheless cause the later overpayment ([32]–[36]).

3. For section 71, “payment” includes the part of a payment that would not have been made but for the failure to disclose. A failure that caused only a reduction in an earlier benefit could therefore make part of a later benefit payment recoverable ([35]–[36]).

4. Alternatively, the First-tier Tribunal erred in its assessment under regulation 32(1B) of the Social Security (Claims and Payments) Regulations 1987. Its finding that Ms Cotter had known since 2007 that she should report changes in her pension was relevant to whether she could reasonably have been expected to know that she should report the same information while receiving ESA. The Tribunal failed to consider that factor ([37]–[40]).

5. The Secretary of State’s separate challenge concerning regulation 32(1A) failed. There was no evidence that an ESA40 leaflet had been sent, and the First-tier Tribunal’s finding on that issue was not shown to be perverse ([42]–[45]).

The First-tier Tribunal’s decision was set aside under section 12(2)(a) and (b)(i) of the Tribunals, Courts and Enforcement Act 2007. The case was remitted to a fresh tribunal to determine the amount of ESA overpayment for 9 November 2011 to 4 December 2018. The parties may adduce further evidence and submissions on that issue ([Decision; directions 1–5]).

• Upper Tribunal (Administrative Appeals Chamber): On appeal, allowed the appeal, set aside the First-tier Tribunal decision and remitted the case for determination of the ESA overpayment amount: [2026] UKUT 384 (AAC) .
• First-tier Tribunal (Social Entitlement Chamber): On 2 November 2023, decided the ESA overpayment appeal under case number SC240/22/00554 in Ms Cotter’s favour on recoverability. The Upper Tribunal set that decision aside.