There is no legislation governing settlement of benefit disputes with the authorities, but there is no reason in principle why you can't make a binding agreement with the DWP to settle an overpayment dispute. However, in my experience, it is hard to get anyone at the DWP to be willing to be responsible for making a decision to accept part-payment of an overpayment.
Local authorities may sometimes be more pragmatic. I have just been involved in a case involving an alleged overpayment of over £180,000 which settled on payment of a substantial sum by two of the people from whom recovery was being sought.
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