Deprivation: New claim date and award of benefit when notional capital ceases to apply

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    On 7.3.12, a decision was made that a customer was not entitled to HB and CTB on the grounds that he had deprived himself of capital amounting to £35,000.00 from the sale of a property which he had given to his son. The decision was effective from 26.12.11 (no overpayments were produced as the claim had already been suspended) . 

    Letters were sent to the customer telling him that he was ineligible to claim due to capital exceeding £16,000. A subsequent letter was sent telling him that his claim had been cancelled. 

    The customer asked for a revision of this decision within the time limit of one month on 23.3.12.

     There was a delay in the revision being considered but in the meantime the customer was awarded income based ESA  from 1.5.12. The DWP notified the council of this award on 17.7.12 giving the date of claim as 5.12.08. A Housing and Council Tax Benefit form was completed on 6.8.12 and Housing and Council Tax Benefit awarded from 16.7.12.

    The decision was eventually reconsidered on 22.11.12. The decision was to uphold the original decision not to award Housing and Council Tax Benefit from 26.12.11 but only until 7.5.12 when both benefits were reinstated because of the award of ESA had been made by the DWP from 1.5.12. 

    Was this decision correct?

    One view is that it was not possible to award HB/CTB again from 7.5.12 because the claim had ended on 26.12.11 and that there was no claim until August 2012 with no request for backdating the claim.  The decision to award from 7.5.12 is therefore an official error as there was no claim on which to award HB/CTB before August 2012..

     The other view is that the customer had requested a review of a decision not to award benefit from 26.12.11 and that that decision could be revised from a later date if the notional capital decision could not be justified. It was considered that the Hamilton case did not apply and that therefore benefit should be reinstated from the Monday following the date ESA had been awarded. The only reason the customer was not entitled to benefit was because of the notional capital rules. 

    A further question concerns the operation of regulations 49 and 50 when the customer ceases to qualify.

     Firstly, should the council tell the customer that the notional capital rule has been utilised. Should it also tell the customer about the diminishing notional capital rule and advise him to reapply within 26 weeks? If it does not, is the decision null and void?

     The guidance manual states that councils do not have to apply the diminishing notional capital rule if the customer no longer qualifies. Regulation 50(4) seems to say that the diminishing notional capital rule should still be applied subject to reg 50(5). The latter reg seems to say that the rate the capital is diminished by can be altered if the customer reapplies for benefit after 26 weeks have passed. It does not seem to say that capital should not be diminished for 26 weeks or that it should not continue to diminish even if the customer does not reapply. Is this a correct interpretation of these 2 regulations?

     If it is, does that mean that the claim is still live even though no benefit is in payment and that the customer will eventually requalify once capital has diminished sufficiently? If that is the case, does that mean that the decision to revise from 7.5.12 was correct on the grounds that there was still a live claim although benefit was no longer in payment or is that simply not possible because the award had ended whatever the reason for it and in spite of the diminishing notional capital rule? 


    Two issues that stand out to me. When you say the claim was “cancelled”, do you just mean on the system? Your decision was that capital exceeds.

    Secondly, what was the result of the review? Was it sent to a Tribunal and if not why not? On the face of it, this sounds like a live case where the Council has made a decision, the claimant has appealled, the Council has superceeded from a date because of the change in circumstances…and the appeal is still outstanding. But I may be confused.


    1. The decision was ‘capital exceeded’ due to notional capital from December 2011 so there was no entitlement and then the claim was cancelled on the system.
    2. A claim form was submitted in August 2012 and entitlement awarded from the date of claim.
    2. In reviewing the claim for the appeal against the capital exceeded and claim cancellation it was found that ESA(IR) had been awarded from an earlier date than the date of claim in August so decided to award benefits again from the date ESA(IR) was awarded. As the decision to award from the ESA(IR) date has been awarded it is argued that this is possible because of Reg 50 there is an ongoing ‘technical claim’ so this is possible. This has allowed the benefit to be awarded and because it is a beneficial change then the appeal appears to have lapsed. The Appeals Officer says this is the way it works.

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