My client is 80 Years old and was living apart from her husband who was aged 90. He lived in the marital home up to the date of his death. The Pensions Service are saying that she has capital to the tune of £42k and therefore she is entitled to reduced PC. Their argument is that she has a 2nd home and has a 50% interest despite she had no access to the capital up to the time of his death. She has been advised that if she moves back to the property this stops the problem apart from any previous overpayment that may have occurred. Also that if or when the house is sold she will not be entitled to benefit because of the capital rules. I have submitted an appeal but the waiting time is long.
Any suggestions? HB are also on her case but I have put them off for the time being.

When did she leave her husband's household? I get the impression that she has been claiming PC and HB as a single person for some time. But if this is wrong, it could change the points I make below.

I'm also assuming that she was estranged or separated from her husband, and that there was not some other reason for their living apart. If there was then the answer is straight forward:

Para 4 (b) of Schedule V of the SPC regs says you should disregard
the value of ' Any premises occupied in whole or in part–
.... by the former partner of the claimant as his home; but this provision shall not apply where the former partner is a person from whom the claimant is estranged or divorced <8or with whom he had formed a civil partnership that has been dissolved>.'

Otherwise I'm not so sure that you can rely on the fact that she had no access to the capital. It's not the same as a house with a sitting tenant, she would have rights under matrimonial law to force the sale of the house and access the capital.

So unless there was an existing separation agreement or court order which prevented that her doing this then I think she can only have the value of the property disregarded for 6 months after they separated, (or longer if she was taking steps to occupy or sell the house). If there is such an agreement DWP may argue that she entered into it with the intention of depriving herself of the capital in order to claim benefit, you'd have to argue that on the facts.

Depending on the facts, you may or may not be able to argue on the grounds above that the value should be disregarded for all or some of the period up to the date of her husband's death.

For any period for which it can't be disregarded there may have been an overpayment. If there has then you need to consider whether it was recoverable: i.e. did it arise as a result of failure to disclose or misrepresentation on her part or did she tell the Pension Service about the property so they should have realised that she had this capital all along? If she told them then the OP is not recoverable. If not, it probably is.

Finally (I think!), you also have to consider the impact of any assessed income period. If she had an existing assessed income period on the first date that she should be treated as having the capital under SPC regulations, whether this is because of her husband's death or for some other reason, then the value of the house should be disregarded until the end of that assessed income period.