It has always been accepted that HB has the final decision on whether a person lives in exempt/ temp etc. there is no reg that allows you to refuse to pay legitimate entitlements. The same situation often arises when a person on UC becomes pension age. The two schemes simply do not work well together. You can satisfy the number two group by writing to advise UC that HB was paid from x date. Audit will usually be satisfied with that. DWP often won’t care. They paid out many billions in error during covid so a few quid paid extra out to vulnerable. They may not even create an overpayment. That is for them. I would not lose too much sleep myself.
