Undeclared Capital

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  • #22569
    su
    Participant

    HI

    We have an HBMS match that has identified fraudulently undeclared capital of c£40k!, back to 1994.

    In the interests of fairness (and I think, also the regs…) I am looking at calculating UE, by deducting from the capital the Rent and CTax they would have paid had they not applied for benefit. Is this right, or should this only be done in deprevation cases?

    Thanks
    …quotes of regs will help if applicable. 😉

    #8624
    Anonymous
    Guest

    No, Su.
    You are quite right to calculate the overpayment based on the amount of any HB and CTB they would have lost each week, and any IS / JSA(IB) / PC for that matter.
    You are using what I have heard called the Diminishing Capital (Overpayments) rule.

    This rule only applies in the following circumstances –
    • The overpayment was caused by a misrepresentation or a failure to disclose the correct amount of capital.
    • The overpayment was caused by an error concerning the claimant’s capital (or the capital of a member of the claimant’s family) but this must not be an official error or a mistake by a member of local authority staff or a mistake by the DWP / Jobcentre in calculating IS / JSA / PC resulting in wrong HB / CTB calculation or wrong advice given by an official body.
    • The period of the overpayment must be 13 weeks or more.

    The calculation of overpayment is then calculated as follows –
    • Work out how much capital there was at the beginning of the overpayment.
    • Work out the overpayment for the first 13 weeks. This is your overpayment for this period.
    • Deduct the amount of overpaid benefit from the total capital figure. (N.B. If part of the (actual) capital is spent in this period, the regs. do not make it clear if this should also be deducted, though in the interests of consistency (see above) perhaps this ought to be the case.)
    • Calculate the overpayment for the next 13 weeks, taking into account the reduced amount of capital.
    • Return to step 3 and keep repeating until capital is reduced below £6,000, or the correct disregard if in residential accommodation, or there are less than 13 weeks left to the end of the overpayment period.
    • Add up all the overpayments for each period. This will be the total amount “recoverable”.

    Should work this out in just a couple of mins (ahem!!) 😉
    Not sure which “new” reg it comes under, poss 103.

    Have fun 8)

    #8625
    andyrichards
    Participant

    There are similar rules covering both deprivation of capital and undeclared actual capital. In the former you reduce the notional capital by the amount of HB/CTB you are not paying by taking account of the notional capital. In the latter you reduce the actual capital by the amount of the overpayment, but you do this in 13-week chunks. The reg you want is 103 (HB) and its proper name is diminution of capital.

    #8626
    Anonymous
    Guest

    Just one point – I’d suggest that you check the wording of Reg 103 as my understanding is that you can only deduct the amount of Housing Benefit overpaid in each 13 week period to reduce the HB overpayment and the corresponding Ctax provisions suggest that you can only deduct the amount CTB overpaid in each 13 week period for the purpose of calculating the diminuation of capital rule.

    This is pretty impossible to input on most systems so you may need to consider manual adjustments, although with capital of £40,000 you may find that the capital stays in excess of the £16,000 limit for the overpayment period – depending on the size of the overpayment.

    I don’t believe that the regs do permit you to deduct other overpaid benefits such as PC/JSA or IS nor to aggregate overpaid HB and CTB.

    #8627
    aeverard
    Member

    Charlie John you are correct the HB and CTB calculations have to be done separately under the diminution of capaital rules whereas under the deprivation of capital rules everything gets counted in the one calculation.

    Has anyone ever got spreadsheets to work these out yet. They are both very messy manual calculations particularly if it goes back a few years and actual and notional capital has fluctuated due to changes in circumstances and I don’t think many assessors bother with them.

    It only seems to get picked up on reconsiderations and appeals. How many fraud cases for non-declaration of capital have gone forward for sanction or prosecution based on an overpayment NOT worked out using the diminution of capital rule?

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