Deprivation of undeclared capital.

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  • #22660
    twill
    Participant

    We’ve just become aware that a claimant had a lottery win of £32k back in 2000 which she did not declare. She has now provided bank statements and of course the capital has reduced as she advises us that she’s spent it and also given a large proportion of it to family members (she was aware that it would affect her entitlement to benefit).
    I’ve applied the whole amount to the claim from the date she received it which of course has taken her out of benefit. My confusion is whether I am now looking at diminution of capital for the overpayment or underlying entitlement. I’ve tied myself in knots trying to think this one through and I’m sure there must be a simple explanation!

    #9044
    Carol Meredith
    Participant

    Just one question. How could she have deprived herself of it to obtain extra benefit if she did not declare the capital in the first place? I am assuming that she never intended to decalre it, but you found out.
    I think that you have to do a diminution calculation.

    #9045
    Anonymous
    Guest

    I agree with Carol, definately a nice juicy diminution 8)

    #9046
    Anonymous
    Guest

    Vote no. 3 for diminution…

    #9047
    RobBox
    Participant

    The problem that you may face is that over the 6 years that you may have to re-calculate the OP and the actual capital has decreased.

    If at various 13 week periods you take the revised capital that the claimant had left, as well as taking into account the amount of HB/CTB that would have been paid, you may then have to consider if they have deliberatly deprived themselves of those amounts if they have given it away.

    This could be tricky to show that this act was intentional to increase or maintain entitlement??

    #9048
    Anonymous
    Guest

    I don’t think you need to worry about fluctuations as Rob has described – this is a hypothetical calculation, after all. What you want is:

    1. What was the actual capital at the start of the O/P period, then add the undeclared £32k to this and calculate what would have been paid for first 13-weeks on that basis

    2. What was actually paid in the first 13-weeks

    3. Deduct 1 from 2 to get O/P for the first 13 weeks

    4. Deduct the O/P from the capital used in Step 1

    5. Repeat [i:94f4d077dc]ad nauseam[/i:94f4d077dc] for the remaining chunks of 13 weeks

    Having established the capital figure for Step 1, there is no need to take into account any fluctuations in ‘real’ capital over the years for the purposes of the calculation.

    #9049
    RobBox
    Participant

    Had a similiar discussion in Feb around this topic. Peter B seemed to think I should have taken variations of actual capital into account when carrying out diminution calculation?

    https://hbinfo.org/forum/viewtopic.php?t=5902&highlight=diminution

    #9050
    petedavies
    Participant

    Twill,

    I think Rob has a point.

    You are pretty much trouble free until capital drops below the cut-off limit.

    I think you then have to calculate UE and diminuation figures.

    Thankfully they are discrete entities – Just calculate each without reference to the other and take both figures off the total OP.

    I wonder if its mathematically possible to end up with a negative amount!

    Did not see Robbox 2nd posting, risky I know but…I do not think Peter B is correct on this one – the Regulation uses the word “treat” – I do not think that there is any room for the use of actual capital in the calculation.

    #9051
    Anonymous
    Guest

    Well, I am not saying that I am right and Peter is wrong, I just think it is not necessary to keep adjusting the ‘notional’ capital figure for each 13-week period…it is difficult enough to get assessors to do the diminution calculation without making life even more difficult for them!

    #9052
    Anonymous
    Guest

    Taking the diminution issue in isolation, I think you have to look at it in the light of fluctuating actual capital.

    Reg 103 applies to the calculation of any overpayment arising in consequence of a capital irregularity. It seems to me that an overpayment can only be caused for that reason in any week where, and only to the extent that, the amount of capital actually possessed is more than the amount of capital used to award benefit. At the end of the first 13-week overpayment period, if the claimant’s actual capital is still more than the amount originally used then there is still an overpayment in consequence of a capital irregularity. Reg 103 says “that capital” should be reduced at the end of the 13-week period; this must surely mean the amount of real-life capital that remains responsible for a continuing overpayment at that time.

    It is important to remember that the purpose of Reg 103 is to make the overpayment less than it would have been in the absence of such a rule. You are making an extra allowance for the additional rent and CT that the claimant would probably have had to pay using their capital had they not been receiving ill-gotten HB and CTB instead. If there were no Reg 103, you would base your overpayment calculation on the amount of capital actually held, responding to real-life variations as and when they happened. Reg 103 requires that real life capital to be further reduced for o/p calculation purposes every 13 weeks. It seems perverse to me to say to your claimant “Ah well, you see, we would have based the overpayment on the actual capital you still had left after reasonable disbursements, but, um, the thing is there is this rule that allows us to reduce the overpayment a bit by, er, using the full £32,000 throughout”. Does that honestly make sense? Of course not. The diminution must surely apply to the real-life capital that is still left.

    Now to throw notional capital into the mix. This applies where the claimant’s actual capital has reduced, but you pretend it hasn’t. This works fine alongside diminution: apply the diminution to the claimant’s actual capital plus notional capital as it stands at the 13-week break point.

    #9053
    petedavies
    Participant

    Peter B,

    I can see where you are coming from but still do not agree – two scenarios:

    1) Claimant retains a (reduced) entitlement to HB. The reduction in the capital is reflected in increased UE. To include it on a second occassion would lead to an element of double counting hence the use of the word treat in the Regs.

    2) Claimant loses all entitlement, as in the case in point. The overpayment is caused by the excess capital in the first week only and you make a superseding decision based on either additional tariff income or exceeding the capital limit. I do not think the overpayment is, strictly speaking, caused by the capital after the first week. It is caused because an award has come to an end, albeit because the claimant failed to properly declare capital. The only way a new award can be made is for a claim to be made. Going back to the use of the word treat – I think this demonstrates that the diminution exercise is a purely arithmetical one leaving no space for value judgements.

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