Terms & Conditions

[jomckeigue]

I have been asked to submit this one for a colleague so here goes:
Son and father reside in a flat but the son has the tenancy in his name. The son is severely mentally impaired and the father lives there to support him (although the father is in full time employment). How would this be treated for Hsg benefit and Council tax benefit purposes please. Council Tax will be set up in the father’s name as per legislation. What we are trying to figure is do we have to set this one up with the son as the tenant and the father as the non dependant, but with no non dep deduction as the son receives DLA care or can we treat the father as the tenant due to the sons SMI status and the son as the non dependant. The implications of these scenarios are that the first would mean basically full benefit would be awarded whilst the other would mean basically no benefit would be paid!!
When i look at it seems to me to be a way round the system that someone is ‘cashing in on’ so to speak, if this is legal then that’s fine but i wanted to make sure we were doing the correct thing.
thanks

[Anonymous]

Shouldn’t the Council Tax be in the son’s name?

As an SMI person, he cannot be jointly liable with anyone else, he is “invisible” for discount purposes and if he was the only person in the property it would be exempt as only occupied by SMI residents. But he seems to be in the one situation where an SMI resident can be liable: he has the superior interest in the property, there is a non-SMI resident and no-one else has a joint stake in the tenancy.

So I would say that the SMI person should be the claimant for both HB and CTB. However, you suspect that they have set things up this way in order to put the father’s income out of reckoning, both in the principal means test and as a non-dep by virtue of the son’s DLA. You might be especially concerned about this if the son’s affairs are conducted by the father. There is a rarely-used mechanism that allows you to stop such abuse (if indeed there is wilful abuse going on here). In both HB and CTB, for the purposes of calculating the claimant’s income you can treat him as if he had the father’s income instead (HB Reg 26 and CTB Reg 16). But there are some limitations: first, the non-dep must have more income [b:c5d4413fd9]and[/b:c5d4413fd9] capital than the claimant; and second, the rule does not apply if the claimant is on Income Support, as I would expect he might be in a case like this (depends on whether he gets the age-related IB increase and whether he gets Enhanced Disability Premium).

In addition, Reg 26/16 only applies when calculating the claimant’s income and capital – it is a limited deeming provision for that purpose only. When it comes to non-dependant deductions, you would revert to the real-life fact that the claimant is on DLA care, so there would still be no non-dependant deduction.

If you were feeling really bold, you might even argue that the tenancy is created to take advantage of the HB scheme and disallow HB under Reg 9(1)(l). The argument here would be that while there is nothing intrinsically wrong with the rent liability itself, the contrivance lies in the fact that a particular person is liable to pay it as opposed to another one. Personally, I wouldn’t be convinced about that – I think that Reg 9(1)(l) is aimed at tenancies that are inherently “dodgy” and shouldn’t exist at all.

[Kevin D]

The son is the tenant. No question in this case in my view. And, I don’t think that you can treat the father as being liable, the reasoning being that the son is actually in-situ.

Although a different situation, this CD *may* help in terms of looking at why the son should, or shuoldn’t, be liable:

[b:f50ca438db]CSHB/0606/2005[/b:f50ca438db]

As for the SMI issue, if the son was considered “fit” to enter into an agreement, I don’t see how there is any question that he IS the liable party.

Regards

[Andy Thurman]

Maybe I’m being naive, but this does not sound a particularly uncommon arrangement. If the SMI person did not have their father available to provide support, they would surely be housed by an LA/RSL in accommodation where a carer could be present. (As per PB’s post – the SMI person would also be liable for the council tax.)

[Anonymous]

I think it is outrageous that you should consider punishing this person because his father is looking after him.

He is the tenant, he is entitled to HB full stop.

I agree with Peter Barker that he should also be the claimant for CTB because he has the superior interest in the property.

Findlay cites a number of decisions (p217 18th edition), including CIS/754/1991, CH/663/2003, that support the entitlement to HB of the mentally incapacitated.

There isn o doubt in my mind that this person is entitled to HB/CTB with no non dependant deduction.

[Anonymous]

At the risk of getting the Scrooge of the Day award, I would say the Council is right to look into this one. We perhaps don’t know enough about the extent of the son’s disability, his age or his past housing arrangements; but if father and son have moved into a new property together with a new tenancy, it doesn’t seem unreasonable to me that the Council should query why the father is not the tenant. In particular, if the father is in control of everything and the son does not contribute any lucid input into financial considerations, it would strike me as odd that the son ends up having the tenancy and the legal obligations that go with it, while the father is, in effect, his long term house guest. It raises the possibility that the father is trying to protect his own income – I wouldn’t rule that out and Reg 26 might still be the answer. I think the Council should get the father to provide reasons why things have been set up this way round. There may be good ones, there may not.

[Anonymous]

The focus in terms of commerciality or contrivance is the arrangement between the landord and the claimant, not third parties

The burden or proving that an arrangement is designed to abuse the HB scheme rests with the Council, and so in the absence of any specific reson to suspesct the arranagment is so deisgned, there is no reason for the Council to go on a fishing trip to find such reasons.

In CIS/754/1991 cited in Findlay, the person had Downs syndrome and was held to have suffient contractual capacity. The case was princpally concenred with the severe disability premium, and the landlord in that case was a the claimants mother who also resided with her.

The arrangement was held to be a commericial arrangement and so the SDP was allowed, but only until 11 November 1991 when the Regulations were changed so as to exclude such arrangements with resident close relatives.

In the present case, there is no contractual relationship between father and son, unlike that in CIS/754/1991. There is nothing in the relationship between father and son that needs to be investigated in the context of Reg 8. The only provision of Reg 9 that could have any relevance is Reg 9(l), and the burden of proof is on the Council. Neither the claimant nor his father has any need to prove that the arrangement is not an abuse of the scheme.

I can not see any specific reason for the Council to suppose that the contractual arrangement is an abuse.

My argument re abuse applies equally to the application of Reg 26 suggested by Peter Barker as it does to Reg 7, but while the actions of the father may be relevant, it is for the Council to identify the suspect elements and show how they are considered to be possibly abusive of the scheme

[Julian Hobson]

I agree with Peter and take a different approach to the application of the Law suggested by Stainsby. I accept that I’m talking in impractical terms but in essence all the regs are considered for every case, the difficulty arises in cases where one of the regs [i:a2261bf5fa]might[/i:a2261bf5fa] stick. To ignore the possibility would be to fetter decision making in all cases.

I’ve not thought about this in any depth but is there any reason why we might not use the same anti abuse provisions to prevent any parent from being the non dependant of there otherwise dependant child.

We already know that HB has no age restriction and that children can be tenants, why can’t/don’t the majority present claims like this.

[Anonymous]

The answer to Julian Hobson’s connundrum in the case of children is simple, the parent is resonsible for the child and the Regulations specifically recognise that fact.

If an arrangment along the lines of JH’s were presented to any Council as an HB claim, Reg 26 could easily be applied and the non dependant parents income taken as that of the claimant. There is equally no provision to include the parent in the claimants applicable amount so there is a double penalty for such abuse.

The present case is very different to the JH scenario because the father has no legal responsibility for his son.

[Author]

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