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Home > Publications > Selected cases — Parliamentary > Selected Cases and Summaries of Completed Investigations - November 1997 - April 1998 > C.853/96
Summary of selected cases
MINISTRY OF AGRICULTURE, FISHERIES AND FOOD
Misleading advice leading to an overpayment of allowances
Matters considered:
Mr X complained that the Ministry of Agriculture, Fisheries and Food (MAFF) gave wrong advice to his family's farming partnership about how the dissolution of that partnership might affect applications made in 1993 for premium payments under the Common Agricultural Policy (CAP). He contended that as a result family members had lost and had had to repay to MAFF significant amounts of premium and that MAFF had failed to acknowledge that they had given the wrong advice and that they had delayed in dealing with the case.
Summary of case
Before the introduction of the Integrated Administration and Control System (IACS) the X family's farming partnership, partnership X1, told MAFF's Regional Service Centre (the RSC) that they were going to split up and they wondered how they should proceed with their IACS application. The RSC told them that the IACS form should reflect the business as at 15 May 1993 (the IACS closing date) and everything would be sorted out at a later date. The partnership split into two businesses, partnership X2 and partnership X3, on 1 June. The RSC were told. Both businesses submitted applications for Beef Special Premium (BSP) and Suckler Cow Premium (SCP) payments on their respective animals and partnership X1 received Arable Area Payments (AAP). In January 1994 the RSC decided that as partnership X3 had not submitted a separate IACS form that business should be restricted to premium payments on 15 livestock units only. The Xs and their advisers objected and the RSC referred their case to MAFF Headquarters for consideration. BSP and SCP payments continued to be paid to partnership X2 and SCP was paid to partnership X3. In July 1994 the European Commission (the Commission) suggested that in cases such as the Xs the former partners should continue to maintain their partnership in a notional sense for the rest of the scheme year. After much discussion, in September 1994 MAFF's Beef Division decided, on the basis of legal advice, that as the two businesses had not submitted any joint claims during the 1993 scheme year the concept of a notional continuing partnership was not relevant. In the absence of a valid IACS form for each business premium payments for each business would have to be restricted to 15 livestock units. On 16 November 1994 the RSC told partnership X2 that their overpayment to them amounted to £11,695.85 while that to partnership X3 was said to be £1,945.09. Following a meeting between the RSC and the Xs on 14 December 1994 the RSC asked MAFF headquarters to reconsider the case. After further discussion and legal advice MAFF decided that to remain consistent with their treatment of other cases they would not ask the Commission for advice as to whether the Commission's concept of a notional partnership could be applied retrospectively; and they told the RSC on 22 January 1996 that the overpayments would have to be recovered. On 18 April the RSC wrote and told each business that the original overpayment calculations had been wrong. Partnership X2 were said to owe £20,707.75 and partnership X3 £2,839.69. Both businesses under pressure from MAFF agreed to offset those overpayments against money owed to them for 1995 claims.
Findings
Although there are no contemporary records of what advice the Xs had been given, on the balance of probabilities I accepted Mr X's recollection and I criticised MAFF's failure to warn them of the possible consequences of splitting the partnership. Even after potential problems had been identified, the RSC failed to communicate internally and failed to follow BSP and SCP scheme rules. That I criticised; and I found that by not raising problems about the Xs' claims for a considerable time, and by continuing to make payments to the Xs even after the problems had been raised, the RSC gave them a reasonable expectation that they would receive and retain BSP and SCP payments in 1993. MAFF received advice on dealing with partnerships which might have provided a solution in July 1994 but on legal advice decided they could not apply that advice retrospectively. After the Xs were told that MAFF had overpaid them, 16 months of discussion and negotiation ensued, of which part, but not all, flowed from a wish to mitigate the effect of IACS on the Xs. I criticised that delay; and I criticised careless work by the RSC which meant that when the overpayments were confirmed in April 1996 they were nearly double what they had been before. In addition, MAFF chose to recover the money from outstanding 1995 SCP and BSP payments, delaying the payment of the balance, which I criticised. In the light of all the circumstances, I invited the Permanent Secretary to consider making an ex gratia payment equivalent to the disputed 1993 SCP and BSP payments, together with interest on the delayed 1995 payments.
Remedy
The Permanent Secretary apologised for the maladministration found in the investigation and agreed to pay partnership X2 £21,687.04 and partnership X3 £12,598.92.
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