From 1 April 2013 Loss of Benefit (LOB) penalties apply to tackle fraud and error in the benefits and tax credits system for offences that occur wholly on or after 1 April 2013.
The LOB provisions are designed to be a deterrent against abuses of the benefit system by applying a benefit reduction penalty to those who are convicted, or who have accepted an administrative penalty for a benefit fraud offence.
There are 5 Loss of Benefit levels as follows:
Level 1 – offences which result in an Administrative Penalty (Ad Pen) will result in a LOB penalty of 4 weeks;
Level 2 – for a first benefit fraud conviction the LOB penalty duration will be 13 weeks;
Level 3 – where there are two offences, within a set time period, with the latter resulting in a conviction the LOB penalty will be for a period of 26 weeks;
Level 4 – a 3 year LOB penalty where there are three offences within a set time period the latter resulting in a conviction;
Level 5 – an immediate 3 year LOB for serious organised and identity fraud cases.
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