Terms & Conditions

[Christina]

Customer lives in privately rented property, she has previously been made bankrupt and has a history of poor health.

She stated son has power of attorney and pays her 50.00 pm towards fuel etc. This has been taken into account as unearned income – she has appealed. She now states these amounts were loans which have since been repaid to her son.

Any advice much appreciated

[Kevin D]

There’s irony. If the payments had not been loans, they would probably have been disregarded as “voluntary payments”.

However, as the payments were loans, a bit of digging will be needed to establish whether or not the payments counted as income, based on the circs. Two main judgements are a good starting point:

[b:8361aace4f]MORRELL v SoS for Work & Pensions (2003) EWCA Civ 526[/b:8361aace4f]

[b:8361aace4f]LEEVES v Chief Adj Officer (1998) EWCA Civ 1706 ELR 90[/b:8361aace4f]

Also:

[b:8361aace4f]CH/3393/2003[/b:8361aace4f] (ignore the credit card aspect)
[b:8361aace4f]CH/1605/2005[/b:8361aace4f]

Er, good luck….

[Christina]

Thanks Kevin, advice much appreciated

[Anonymous]

[quote:cbe48e4a0e]She now states these amounts were loans which have since been repaid to her son. [/quote:cbe48e4a0e]
Were they originally loans, or did she just say that they had to be repaid after you took them into account as income? They might have thought they’d be better off by saying they had to be repaid when in fact they [b:cbe48e4a0e]were[/b:cbe48e4a0e] voluntary payments.

[Christina]

I did wonder that myself however it has expanded into other areas now as her claim has since been terminated, as the tenancy has been found to be in son’s name

[Anonymous]

I am not sure that loans from family and voluntary payments are mutually exclusive. In CH/3013/2003, the Commissioner was satisfied that money loaned by a relative out of kindness took the form of a voluntary payment, but the issue then was whether to treat it as income or capital – see Reg 46(6). In those days it mattered – if the payments were not capital, they would count as income subject only to a £10 disregard (later increased to £20). Now that voluntary payments are fully disregarded as income, it will seldom matter whether you count them as income or capital: unless the claimant at any time posseses enough cash to generate tariff income or bust the capital limit, voluntary payments don’t affect anything.

You will need to decide whether the claimant received these loans on a volunbtary basis, which is to say that they were made as a gesture of kindness with no expectation of any kind of gain on the lender’s part. Morrell and CH/3013/2003 are both very good on that point. If you conclude that the loans were voluntary, then they are disregarded in full as income and it does not matter whether they were or had to be paid back.

[Christina]

Thanks Peter I think with the claimants history, it sounds as though the son was helping his mother as at the time her income was very low

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