Thia is an odd one- capital query

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  • #23329
    emm
    Participant

    I’ve received an appeal from claimant who wants us to only include the capital he received in respect from an inheritance from the date that it cleared his account. His argument is that he cannot be treated as possessing the capital until the bank authorised it had been cleared. the trouble is he received the inheritance on 27/7/06 and he insists it wasnt cleared until 1/8/06

    is there anything in the Regs which state that capital is treated as being owned from the date it is deposited and not cleared?

    or case law to back up our decision that it is treated as capital regardless of banking proceedure 😕 😕

    #12009
    Kevin D
    Participant

    This may be of interest, but I’m not sure it helps:

    [b:799210c4eb]CH/0972/2005[/b:799210c4eb]
    new.hbinfo.org.com/comdecs/ch_0972_2005.doc

    This was a case where a clmt did not bank a cheque, but it was held to be capital.

    But, in your case, it has been banked. So long as it was banked promptly, I think the clmt may have a point.

    Regards

    #12010
    Anonymous
    Guest

    I have to admit I’m on your claimant’s side on this one, on the principle that capital can only be taken into account once it is actually available to the claimant. If he received the cheque on 27 July he has legal ownership of the capital at that point, but he does not have beneficial ownership until the funds have cleared through the banking system. The funds not being available until 1 August is perfectly understandable, that is only three working days from the date he got the cheque, which is the usual time a cheque takes to clear.

    #12011
    emm
    Participant

    Thanks Kevin

    That was speedy , in the meantime I had looked at that decision and tend to agree now- the commissioner made the point that she could be treated as possessing the capital five working days after receiving the cheque

    #12012
    emm
    Participant

    Thank Andy too

    I had already replied before your post.

    Claimant wins and he gets an extra week!!

    #12013
    Anonymous
    Guest

    It was held in CSB/589/1987 that funds should have cleared before they can be taken into acount (notwithstanding notional cpaital if the claimant deliberately delayed banking the cheque.

    The Commisioner wrote ate para 9

    “9. In the present case, however, it is accepted by the adjudication officer that the cheque for £2,696.67, although “paid” into the claimant’s wife’s account on 9 October 1986 was not in fact cleared until 15 October 1986. As the Commissioner said in CSB/110/1987 at paragraph 12:
    II… As a matter of law it seems to me inescapable that whenever a person draws a cheque he embarks, whatever he may think or wish, upon a complex and technical transaction involving, at the very least his bankers, the payee and the payee’s bankers, and it would seem to follow that the date upon which a cheque is regarded as paid may, as a matter of fact and law, vary in relation to the various parties involved. ”

    #12014
    Anonymous
    Guest

    While I am not going to change my mind about what I wrote earlier, or disagree with the other posts (and Commissioners) which also support that view, the claimant could get his hands on some or all of the money immediately, even though the cheque had not yet cleared the bank.

    To get cash, he could take a cash advance on a credit card, which would not have to be paid until the credit card bill falls due, by which time the cheque would be long cleared – that would involve a charge, of course, but nonetheless he could get cash. Alternatively, if he wanted to go on a shopping spree, he could again use his credit card, safe in the knowledge that he wouldn’t have to pay up until the cheque had cleared, or he could write cheques himself – since these would take the same amount of time to go through the clearing houses as his inheritance cheque, there would be no danger of them bouncing.

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