second home problem

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    We have a claimant, aged 96, has dementia ( I’m trying to get our CTAX dept to consider her as SMI, and if they do it will solve my problem).
    However, until then and in case they can not award SMI exemption….
    Her son bought her a flat next to his own, out of our area.The flat according to land registry is in her name. We are not sure who financed it.

    Anyway, the property was purchased in December 2005 and she moved in on 06.01.06. However, the claimant was so unhappy there that she returned to our area on 06.03.06. Her property with us as far as I know wasnt put up for sale. Her new flat is now up for sale.

    Our fraud dept want us to cancel her claim from December 2005 saying her capital exceeds. But, I think that we can ignore the value of the flat out of our area from December to January as it was her intended home and we can ignore that value for 26 weeks. Then, although presumably she did not intend to return here when she vacated, she was absent for less than 13 weeks. So, can we say she remained entitled to CTB with us as temporary absence ( but if we do, does the value of her home here count as capital for that period? It wasnt put up for sale as far as we know).
    Then as the flat near her son is now up for sale and she is back living in our area, we would be able to disregard the capital of that flat for another 26 weeks etc?
    I don’t think it is right to just cancel her claim all the way back to December 2005. Can anyone untangle this situation for me?


    I’ll have a go.
    [b:100876f853]Council Tax[/b:100876f853]

    It sounds as if at the the time she moved in January 2006 she was moving permanently as far as she was concerned. I’d be interested to mknow whether the other Council charged for Council Tax as a resident – if so, she should not be billed as a resident in Brentwood for that period. That would get rid of the trickiest part of your problem. Failing that, I’ll discuss the benefits angle further on.


    Benefit for the first period (Dec – Jan) is easy. What you say about disregarding the other property is true: CTB 60+ Regs, Schedule 4, para 1 says that you disregard the value of any premises acquired for occupation for at least 26 weeks and for as long after that as is reasonable to arrange to move in. In this case it was only two or three weeks, so no problem there.

    Jan – March: tricky, lets come back to that.

    Next, the current period from March 06 onwards. Again, easy. Para 7 of Schedule 4 allows a minimum disregard period of 26 weeks, extendable where reasonable. The crucial point here is that the disregard applies to any premises – it doesn’t have to be the claimant’s former dwelling (which might have been tricky), so go ahead and disregard.

    Your only problem is the January to March period. If your claimant remained resident in your area for tax purposes then she is still your CTB claimant during those months. The absence was less than 13 weeks, but it does not sound as if she had an intention to return, at least not at first.

    Her capital stake in both properties is a slight problem too, because the taxation position is out of step with the drafting of the disregards. As far as your claimant was concerned she had moved in to the other property, so para 1 of Schedule 4 no longer applied to it … and para 26 no longer applied to the home in Brentwood that she was claiming CTB for (although it did apply to the new home)! The only sensible way to interpret the Schedule I think is to say that she intended to occupy the other property for as long as it was not yet her sole or main residence for taxation purposes, and she did occupy the Brentwood property for as long as she was resident there for tax purposes. The trouble with trying to do anything sensible under CTB legislation is that the Regs still, after all these years, contain several ill thought-out provisions lifted straight out of HB which do not work coherently in CTB (check out Reg 3(3)(b) and (c), for example: utter garbage in the CTB context). CTB Reg 2(2) says that occupation of a dwelling should be interpreted in accordance with HB Reg 7. Occupation of a dwelling is not a concept that belongs in CTB at all, but it is used in the capital disregards so we are stuck with it. But I would still apply Sched 4.1 for any period when the other property had not become her sole or main for tax purposes, and Sched 4.26 to the Brentwood home for the same period – in practice, the whole of the period for which you were charging her tax in Brentwood.

    Temporary absence is the obstacle though. Since April 2005, a person who is absent from their sole or main residence in a way that would fall foul of the corresponding HB Regs is a “prescribed person” excluded from CTB. Sounds like she was, because there was at least for a spell no intention to return.

    A truly heinous crime of dishonesty that fully merits the involvement of your Fraud section. I hope they prosecute.


    Um, thanks.. I think!


    Perhaps if I condense that a bit:

    I agree that the periods either side of when she went to the other flat are covered by capital disregards, so she can still get CTB in Brentwood.

    The period when she was in the other flat is probably caught by the temporary absence rules, but there are two options for making her not liable in the first place:

    1. sole or main elsewhere
    2. SMI

    I didn’t mean to be rude about the fraud. I realise the mean streets of Hutton Mount need zero tolerance policing. Apologies for any offence.


    I’m not convinced that you have a major problem here.

    Assuming her son bought the property using his own financial resources:

    Even though the her name is on the land reg that, in itself, only means that she is entitled to sell it etc. It sounds to me as if her son is probably the beneficial owner with your claimant as a trustee (I’m not sure she can be a trustee if she has dementia but do not think that is relevant – it will not change the beneficial ownership).

    You really need to look into how the 2nd property was financed, what will happen to the proceeds once it is sold and what was the intended fate of the first property?

    If her son gifted her the second property and she was going to keep the first one, possibly as a source of income then she has capital, ditto if he bought the property on her behalf using her financial resources (e.g. securing a loan on her original place)


    Thanks Peter B, and no I wasn’t offended. We just have a very keen fraud dept. And the mean streets of Bretwood are a scary place.
    Pete D, we think her son financed the purchase, if it came from her finances then she must have had capital we weren’t aware of, but fraud havent told us this.
    I’m hoping out CTAX dept will make her SMI, if not, at least I think I know where I’m going with this.
    Thanks for the help.

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