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No evidence of how capital was disposed of.

geep
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My client gave capital to relatives, apparently to stop him spending it all on alchohol. The relatives claim that they have given him weekly cash payments from the capital over the last couple of years. The problem is that they can’t prove that they gave him the cash payments and he doesn’t have receipts to prove what he spent the money on.

He hasn’t received HB before and the LA has stalled his claim until he proves what the capital was spent on. But we’re at a dead end with getting evidence for that, so what do we do next?

Should I insist that they issue a written decision (which will presumably have a reduced or nil award due to the addition of notional capital in his calculation), and then appeal with the argument that the disposal of capital was not ‘for the purpose of securing entitlement to benefit’ (Reg 47 of HB SPC regs). I recently won an appeal with this approach but I was able to get a lot more for supporting evidence for that one.

Any suggestions or alternative strategies would be much appreciated!

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Ultimately, it will come down to the credibility of your client at FtT (and that of any relatives he might be able to call on as witnesses). Presumably there is some medical evidence as to his alcohol dependency? You at least need to be able to present that, I think, for the tribunal to accept that what he says is in any way credible.

But there may be some circumstantial evidence….

- How much was the capital before he disposed of it?

- How was it held? In cash or in the bank?

- How did he give it to his relatives? In cash or by cheque/bank transfer (if the latter, evidence of this could still be obtained).

- What did the relatives do with it? Even if it was cash, if there were large sums involved, it might well be that they banked it (evidence of this could still be obtained).

- If the money did go into the relatives bank accounts, then there could be good circumstantial evidence of their giving him cash every week - one could compare the pattern of their weekly cash withdrawals before they were holding money for him to the pattern after he gave them the money - you would expect there to be a noticeable difference.

- Over what period of time was it used up? i.e. how long between when he gave it to his relatives until it was used up?

Yes, he (or his relatives) will have to spend some money to obtain the evidence - tha banks will charge for the statements, but it’s money worth spending if the evidence is there.

But depending on the sums involved, I might be inclined to be a little bit sceptical if there was no paper trail at all.

But a few other points;

1. What is the LA’s position - is it saying notional/deliberate deprivation of capital - or is it saying actual capital? (i.e. that he’s trying to hide it). If the former, it’s worthwhile bearing in mind that he didn’t dispose of it at all - surely it remained his and the relatives were only holding it for him? May be worthwhile pushing for a decision so you at least know what you need to argue.

2. If the LA position is saying deliberate deprivation, remember that it will need to establish that your client was actually aware of the capital limits in order to show any disposing of the capital was for the purpose of securing benefit.

2. What was your client living on during the period in question? Was it just the money handed out to him by the relatives or was he also claiming means-tested benefits? If the former, this could add credibility to what he says about what happened to the capital - but if the latter, you’re going to need to consider the impact of his having continued to possess that capital. Even if he made a bare gift of it to the relatives (rather than them holding it for him on trust) he will still have had it as income - i.e. the weekly payments from the relatives.

 

Edmund Shepherd
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This must be a capital question. From what I can see, regular payments are voluntary payments, which are disregarded as income. If irregularly made, they are capital.

I would say it comes down to deciding whose the money is - his or his relatives’. What was the understanding on which it was given away? Was it just “take it, I’ll waste it” and then relatives decided to use the money they had been given to help him out, or was it “take it and I’ll let you know when I need some money”, in which case it’s really being held for him.

In the first case, it’s not his and in the second, it’s his.

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Well, we’re just speculating here until we get some more info from geep - but whilst I take your point about voluntary payments, I think it would be an uphill battle to get payments accepted as such in circumstances where the source of the sums paid was capital originally owned by the claimant. Not impossible, but it would be something so open to abuse that I think even the mmost generous of tribunals would baulk without some pretty watertight documentary evidence.

Playing devil’s advocate, if I were the tribunal judge and your first scenario were put to me, I’d be looking to establish whether the relative ever truely regarded the money handed over as their own. They might have taken the money because they realised the claimant would indeed waste it, but I’m not sure I could reconcile the two opposing propositions;

- ‘I took £10k of Charlie’s money because he asked me to and he would waste it. From that point the £10k belonged to me and Charlie had no claim on it.’

- ‘Once I had the £10k, I gave Charlie cash every week until all the money was used up. (or ‘I gave him cash every week amounting to £5k in total - and there’s still £5k left.’)

Dan_Manville
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First get a witness statement from the relatives stating how much and how often they paid him then once that’s signed ask them for the bank statements to corroborate it.

You should be able to see the withdrawals on the given days and as long as they were giving him a reasonable amount you’ve got a case on your hands.

If they start squirming when you ask them for the statements you’ve got a situation on your hands!

Karina K
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Questions:

1) How much was the capital? - presumably over £6K as everything under this amount is disregarded, obviously.
- about his rellies’ bank statements (most LAs will now accept computerised print-outs - it depends on how far back you can obtain them on-line)
3) What’s the pattern? If savings can be shown to be depleting in small regular amounts consistent with what they’re saying then the LA should accept that this is not intentional deprivation. Large one-off payments would be a different matter and these would likely attract a request for evidence.

It sounds like the LA has already decided that the money given to his rellies is notionally his otherwise this would not be an issue.

It is reasonable to reduce your capital by spending it to live - only large unaccounted for deductions should really attract the request for evidence;

Your client has a valid explanation for the reducing capital;

It would be a real push for the LA to decide that the capital is really his AND to prove that he intentionally deprived himself of it by giving it to his rellies, AND that it’s reducing amount is a further attempt to deprive himself of capital. They’d never win it.

And then the diminishing notional capital rule would apply. 

geep
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Thanks to everyone for the feedback.

Okay, so I have proof that the client transferred the money to his relatives about two and a half years ago. It was considerably more than the upper capital limit for HB.

The relatives claim that the money is all but gone after making regular cash payments back to the client over the two year period. They cannot prove any of these payments. They said that they receive cash payments from tenants of theirs, and paid the client his weekly amounts from this money. If this is true, I imagine they will be reluctant to let anyone delve into the issue because it might uncover ‘discrepancies’ with their own tax arrangements.

The relatives have already submitted a breakdown of the client’s expenditure to the LA to try and demonstrate how the money has been spent over the last 2 years. Looking at activity on his bank account over the last 6 months, they appear to have overestimated his outgoings. He also has a decent private pension income, so basically the evidence suggests that he has not spent all the money over a two year period.

The relatives have emphasised that their expenditure calculations do not include the spending money that they have given to him, but they would have needed to have given him some very generous spending money payments to account for the diminishing capital over the two-year period. This doesn’t look good given that the spending money wasn’t for bills and the reason for not letting him have access to a lot of money was due to his drinking.

I could get social services involved to look into it from a financial abuse perspective, although my experience of social services dealing with this sort of issue doesn’t instil me with confidence that they would be much help.

From a benefits point of view, what can I do to get the best result for the client? I don’t think he has knowingly done anything that breaks the HB regs.

I have to work on the basis that the relatives will not be able to prove that they gave any of the money back to the client other than some cash payments which are showing on recent statements (but which I suspect they only started paying in regularly when all the HB problems started).

I think first of all I need to get his bank statements for the whole period and get a good idea of his average household bills/expenses over the whole period. Then I’ll add up any cash payments that came into his account (presumably from the relatives) plus his pension income, and add it to the capital that he gave to his relatives. I’m hoping that this will give me a better grasp of how big the gap is between the amount of money that we can prove he has spent and the amount of money that his relatives say he has spent.

All suggestions welcome!

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geep - 24 October 2014 02:11 PM

Okay, so I have proof that the client transferred the money to his relatives about two and a half years ago. It was considerably more than the upper capital limit for HB.

The relatives claim that the money is all but gone after making regular cash payments back to the client over the two year period. They cannot prove any of these payments. They said that they receive cash payments from tenants of theirs, and paid the client his weekly amounts from this money. If this is true, I imagine they will be reluctant to let anyone delve into the issue because it might uncover ‘discrepancies’ with their own tax arrangements.

If the money was ‘transferred’, I’m assuming that this was into the relatives bank accounts. Real ‘proof’ of the transfer would require not just your client’s bank statement(s) showing the money going out, but the relatives’ statements showing it coming in (otherwise it could be thought that the transfer was simply to another account that he controlled).

If the relatives are prepared to provide statement(s) showing the money being paid in, I don’t see why they should have a problem with providing statements from that date down to this. The statements won’t prove that they gave your client weekly cash sums from the capital, but could provide the evidence to rule out other possibilities that you would wish to avoid;

- that the money is still sitting intact in the relatives’ account(s)
- that it has been transferred into some other form of capital that your client could possess, such as an ISA.

In addition, I would suggest that it should not be too difficult for the relatives to show that they do in fact own properties that they let to tenants and that the rent from these is received in cash (tenancy agreements?). If I’ve understood correctly, the relatives are saying that when they gave your client the money (from his capital) they did so from the rent that they received in cash, rather than by drawing the money from the bank account(s) where the capital was actually held. Fine - but if this is the case you would expect the capital to have diminished roughly in line with what they were giving him (i.e. they were paying themselves back the cash/rent they were giving your client by spending the capital).

If the capital hasn’t in fact diminished, you’ve got a problem - another reason for asking that they provide bank statements.

And if they are saying it has ‘all but gone after making regular cash payments back to the client over the two year period’ then how do they know this? Given the sum was considerably in excess of the HB capital limit, I’d find it very difficult to accept there was really no record of what they gave him and someone simply kept score in their head.

The relatives have already submitted a breakdown of the client’s expenditure to the LA to try and demonstrate how the money has been spent over the last 2 years. Looking at activity on his bank account over the last 6 months, they appear to have overestimated his outgoings. He also has a decent private pension income, so basically the evidence suggests that he has not spent all the money over a two year period.

The relatives have emphasised that their expenditure calculations do not include the spending money that they have given to him, but they would have needed to have given him some very generous spending money payments to account for the diminishing capital over the two-year period. This doesn’t look good given that the spending money wasn’t for bills and the reason for not letting him have access to a lot of money was due to his drinking.

Indeed - it would seem to defeat the stated purpose of him giving them the capital in the first place.

I could get social services involved to look into it from a financial abuse perspective, although my experience of social services dealing with this sort of issue doesn’t instil me with confidence that they would be much help.

If he’s a vulnerable person and you have genuine reason to suspect financial abuse may have occurred, you’re obliged to refer to social services regardless. Does he have a social worker?

From a benefits point of view, what can I do to get the best result for the client? I don’t think he has knowingly done anything that breaks the HB regs.

I have to work on the basis that the relatives will not be able to prove that they gave any of the money back to the client other than some cash payments which are showing on recent statements (but which I suspect they only started paying in regularly when all the HB problems started).

The best you can do is to satisfy yourself that he is genuinely entitled to HB (I think there are too many unanswered questions about whether all of the capital has actually been spent to be certain of this at the moment) and then, when you are, fight his corner to the best of your ability. You ulimately have the right to appeal to FtT - which will be much more prepared than HB to balance and weigh evidence impartially. Your client’s oral evidence will also be crucial - if he presents as honest and credible, then this can often make up for gaps in the documentary evidence. But see above about what evidence there might be available if the relatives were prepared to co-operate.

Continued below (character limit problem!)

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geep - 24 October 2014 02:11 PM

I think first of all I need to get his bank statements for the whole period and get a good idea of his average household bills/expenses over the whole period. Then I’ll add up any cash payments that came into his account (presumably from the relatives) plus his pension income, and add it to the capital that he gave to his relatives. I’m hoping that this will give me a better grasp of how big the gap is between the amount of money that we can prove he has spent and the amount of money that his relatives say he has spent.

All suggestions welcome!

If the relatives were giving him the payments in cash then he was presumably (probably) just spending this, rather than banking it and then spending it? If so, then what you suggest won’t necessarily result in clear evidence of what has gone on.

However, obtaining his complete bank statements might enable you to identify a pattern of spending that would suggest that there must have been other money coming in apart from the pension - i.e. the cash from the relatives. This (if it were possible) coupled with some the evidence I’ve suggested above might be enough to get you home….

MNM
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Case principles from CIS/515/2006 may be handy.

It was held a Claimant should be asked to produce what records he does have and can be asked to explain any large/unusual payments. Too demand actual receipts of all expenditure is not reasonable.

 

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Agreed. And expenditure/a lifestyle that might appear profligate (in comparison to that of a person on benefits) shouldn’t be held against the claimant either.

Geep - can you tell us how much was the original capital sum? Disposed of over the course of 2 years, the exenditure might not then appear particularly unreasonable - and deliberate deprivation/notional capital might not be something that the LA could really make stick.

My worry here is the possibility of actual capital…..

geep
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Thanks for all the feedback.

I haven’t got the exact figure in front of me now, but I think the amount transferred to the relatives was just over £35,000.

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Not that much to go through over the course of 2 years.

How much is the private pension, roughly?

geep
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About £700 per month.

He should start receiving PIP soon too, so his HB applicable amount should increase.

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So he’s basically been living on £26k a year for the past two years…..

This is hardly excessive and I doubt very much whether the LA, faced with someone who was employed for two years on £26k a year and now out of work and having to claim HB, would even request info on how rthe money was spent or receipts for the same.

Of course, we’re talking capital rather than income, so it is treated differently and the LA have a right to request info that they wouldn’t request if it were £26k a year income that had been spent. But I’d be tempted to say to the LA;

1. If it’s suggesting notional capital/deliberate deprivation then it hardly seems likely that a person would wait two years after desposing of the capital before making a claim.

2. If it’s suggesting actual capital then it’s up to the LA to show, on the balance of probabilities, that your client still has the money (or at least a significant portion of it).

If you’ve supplied all of the evidence that you can, then I’d demand a decision so that your client can at least exercise his appeal rights.

But bear in mind that if you do go down that route that your chances of success might be limited if you cannot (and have not already) supplied some of the evidence I’ve suggested above;

a) statements from the relatives’ bank accounts showing the money being received in.

b) statements from their accounts from that date down to this showing the amount of capital gradually diminishing - i.e. not being transferred out into another account and not still sitting there more or less untouched.

It’s true you shouldn’t need to provide receipts/proof for anything but major items of expenditure - but if the LA is going down the actual capital route, you’re going to need to show he doesn’t still have the money.