Large Arrears of State Benefits

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    Can anybody help please?

    Due to an error on the part of the DWP, a claimant has received arrears of Incapacity Benefit back to 1995, with a value of £55,000.

    I cannot find in schedule 5 where it confirm that large arrears of state benefits caused by DWP error, can be treated as capital, rather than income over the period to which it relates, and that the capital can be ignored for 52 weeks?



    Treated as income over the period arrears relate to and therefore you’ll have OP’s to consider.

    Might be worth trying to pin OP on DWP error and make it non – recoverable but I’m not convinced that you could get that to stick. However would it be reasonable to recover the overpayment?

    Glad it’s not on my desk!!

    Do I know what I'm doing? The jury's out on that........................


    I don’t think it would be too hard to argue it is unrecoverable. Have a look at CH 943/2003.

    [url=]linky linky thing…[/url]

    Stephen Murray

    Can this circular help. Seems to suggest you should treat the sum as capital.


    Aren’t they treated as capital and disregarded for 12 months? I’m sure that’s what we did in Income support a few years ago after paying out thousands in arrears of Severe Disability Premium.



    The rule you are thinking of is in HB Regs Sch 6 para 9. That says that arrears of certain benefits (DLA, AA, HB, CTB, IS, JSA(IB), etc) are disregarded as capital for 52 weeks. In fact, they’re disregarded indefinitely if the arrears accrued were for £5000 or more and caused by official error. But the rule doesn’t apply in your case because you’re dealing with Incap arrears.

    So you’re left with HB Reg 31(1) I’m afraid and have to take the income into account over the period it covers. From what you say though this is clearly an official error overpayment and non-recoverable if the claimant couldn’t have known they were being overpaid at the time the arrears were accruing.

    You are then left with the problem that the £55,000 is probably still held by the claimant as capital – and inevitabely this puts them over the capital limit. Since the arrears obviously cover an entitlment period that has now passed (well they would wouldn’t they) then they now count in full as capital with no disregard. So, assuming the money is still held, entitlement has to end from the point when they were received.

    Some people think this is wrong because you are counting the money as both income and capital. But you need to realise that you are counting it as income for one period and capital for another (purely because they still have it). This approach was confirmed correct in the following cases:

    R(IS) 3/93 –

    R(SB) 35/83 –

    R(SB) 2/83 –


    Not sure I agree (edit – with Stephen). I read that to state that you would disregard the lump sum as capital (edit – didn’t realise it didn’t apply to IB!). However, the income should still be taken into account over the period it would have covered had it been [i:429b6ef381]timeously paid in that period at intervals appropriate to that income[/i:429b6ef381]

    It’s a Reg 79(7) issue.

    Kevin D

    In my humble opinion, Mark (& St Albans’ edited version) have nailed it comprehensively.


    I agree with Mark and St A. There is a more recent case in the HB jurisdiction: CH/1561/2005. In that particular case, the arrears were of a kind that did attract the 52-week disregard from the time they were paid (they were old WFTC), but quite separately the money was treated as income over the arrears period as well. In a case where the arrears are of a kind that does not attract a 52-week capital disregard, the impact is as Mark says: income for the arrears period, which creates an overpayment, and capital from now on for as long as you still have the money.

    Now of course if there has not been any DWP official error (which may or may not be the case), the Council will be wanting about 85% of the capital back straightaway and the claimant only gets to keep the 15% change. If it’s still more than £16,000 after that, the claimant does not qualify for any more HB/CTB: he or she is shafted all ends up. But all this is doing is putting them in the same position they would have been in if they had received the benefit week by week on time, been paid the correct amount of HB/CTB, and still managed to put a bit by each week as saved capital.

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