Diminution of capital

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    This is my first posting to HB Info & I would appreciate any help on the scenario below. Clt has claimed HB for the last several years with two different LAs. It is now discovered that they had £40K+ in the bank all the time (and none of it can be disregarded). The previous LA that they claimed HB with have done a diminution calculation to reduce the capital & overpayment. What does the second LA that they are now claiming with do? Do they apply diminution (HB 2006 Reg 103) on the full £40K as misrepresented to the second LA at the outset of thier claim, or should they apply diminution to what is left of the capital after the first LA have done thier calculation? I personally see this as two separate HB claims & ovp decisions with the respective LAs, and think that each LA should calculate on the amount of capital that was misrepresented to them, but I’m prepared to be corrected.
    Many thanks in advance for your help. 😕


    Putting on my tin hat and sticking my head above parapet, if I had the figures that the first LA used, then I would, if I was the second LA, continue with them.
    I know of no basis, either legislative or as a result of caselaw for doing this, (I have done a quick search) but it seems to be more consistant, and, therefore, I would venture to argue, fairer.

    I do, however, stand ready to bre corrected! 8)


    I have to disagree with Jon on this one.

    I think it comes down to the definition of the ‘overpayment period’ referred to in reg 103. If this was the whole period for which the clt has been overpaid by both LA’s, you would use the already diminished amount as suggested.

    However, I think it’s just the period that the clt has been overpaid whilst claiming from you. In this case the regs state that you start with the actual amount of capital held by the clt and start reducing by the maount you have overpaid.

    Hope this helps


    I guess this is an unusual case and I suspect that the wording of the regulation may not match the likely intention. The intention of the provision is to mitigate potential harshness by deeming the capital as having been spent on rent because there would have been no HB if the capital had been declared. It therefore seems fair for the second authority to begin the process of diminution where the first authority left off. Otherwise the same amount of capital is counted twice. But the regulation refers to “that overpayment” and “that capital”. I think this must mean that the actual amount of capital that wasn’t declared (and not a notional amount) to the second authority in relation to the actual overpayment raised by the second authority is what should be considered by that authority. If they are two distinct claims and two distinct overpayments then surely there’s no scope for lumping them together. It therefore seems to me that it would be lawful for the second authority to disregard any history with another authority and start with the actual capital held when the claim was made with them. I too, however, stand to be corrected as I know of no precedents for either argument.


    Many thanks for your thoughts on this. I can certainly see Jon’s argument on this and the welfare approach would be not to plunge the clt into a bigger ovp, if I could read this into Reg 103 I certainly would do. However Simon & Clamar’s views match my own, but they are put far more professionally.
    I also ask myself how many LAs would contact a previous LA if they discovered undeclared capital? Two scenarios could happen, one – the clt may ‘get away’ with a claim at a previous LA if the capital was never uncovered, or two – the previous LA may well discover the undeclared capital, calc diminution & not bother to find out where the clt is now & notify the new LA. (of course the data match may help this) ❗

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