The answer is that they have every right!
Earlier this year there was a flurry of activity generated by IAgSA concerning the RPA's recovery of money that it had overpaid incorrectly and how unfair this was. It may be of interest to understand the legal basis for the RPA’s actions.
One of the issues with the Single Payment Scheme (SPS) is that because of the way that it has been implemented in England with the “dynamic hybrid” model is that it is very difficult to be certain that a farmer’s SPS payments are correct to the nearest pound let alone the nearest penny. The dynamic hybrid means that the value of most farmer’ entitlements vary according to the amount of money they claimed from the CAP in 2000, 2001 and 2002. At the time that this dynamic hybrid was introduced RPA were in the process of procuring a computer system to deal with all IACS (Integrated Administration and Control System). Although the SPS is an IACS scheme, it is a very different creature from the pre-2005 schemes such as Arable Aid Payment and the computer system has had to undergo a number of upgrades/repairs since 2005 to cope with the nuances of it. This has resulted over the years with a considerable number of under/over/delayed payments.
One of the consequences of the model and the way the SPS has been implemented in England is that there are very few professional advisors who can state categorically that a clients SPS payment is accurate. This has been highlighted by the uncertainty surrounding the alleged overpayments that the RPA has been seeking to recover over the last few months (particularly by threatening to withhold SPS payments) and the RPA’s reluctance to explain how the overpayment is calculated.
Whether it is an under or over payment, RPA has a legal responsibility to deal with them. Council Regulation 2988/95 deals with the protection of the Communities financial interests. Article 1.1 states
“Irregularity shall mean any infringement of Community law resulting from an act or omission of an economic operator which has or would have the effect of prejudicing the general budget of the Communities …”
This drafting and the status of the RPA means that any incorrect payment whether over or under caused by the “farmer” or RPA is an irregularity.
Article 9 of Council Regulation 1290/2005 on the financing of the CAP states that Member States shall:
1(ii) prevent and pursue irregularities
(iii) recover sums lost as a result of irregularities.”
(iii) recover sums lost as a result of irregularities.”
Article 5b of Commission Regulation of Commission Regulation 885/2005 states:
“Without prejudice to any other enforcement action provided for in national law, Member States shall off-set any still outstanding debt of a beneficiary which has been established in accordance with national law against any future payment to be made by the paying agency for the recovery of the debt to the same beneficiary.”
It must be noted that this right of interception is not restricted to the SPS. The RPA is the paying agency for ELS/HLS and CSS; if there are recoveries to be made in those schemes, they can be made by intercepting the SPS, and vice-versa.
The issue is further skewed against the farmer because Article 3 of 2988/95 provides for a limitation period that is arguably 13 years! The basic premise is that limitation should be four years, however a further four years, giving a total of up to eight, can be added, if within the first four year period an investigation or legal proceedings are commenced. If the result of the investigation is that an administrative penalty is imposed, the RPA has a further three years for implementing that decision.
The result of all of the above is that even if the RPA has made an overpayment due to its own mistake, as a matter of law it is obliged to recover it and it can do so by means of intercepting future payments.
Whether Article 5a of 885/2005 imposing a de minimis threshold of €100 for recovery and Article 11 of 1290/2005 stating that money due under the CAP to beneficiaries be paid in full, provide any comfort is questionable!
For more information or advice on the RPA's payments or recovery of money, please contact
Paul Rice.
