My client separated from partner in Feb 07/08. Partner was working full-time and they were getting WTC/CTC. Tax Credits paid into my
client's bank account (was a joint account at the time, but on separation was changed solely into client's name.)

Following separation, my client claimed CTC and Income Support as a single parent.

At the end of 07/08 tax year, partner and client made annual declarations in respect of award given as a couple. Client recently received arrears of WTC due for the period April 07 - Feb 08. A one-off payment in excess of £100.

How does this payment affect my client's Income Support? Is the payment treated as a lump sum payment of arrears covering the period before my client received Income Support? Or is it treated as income for the current period and, if so, how?

Any ideas appreciated

In case you haven't already found it, have a look at pages 861(income) and 921 (capital) of this years CPAG handbook. I believe the arrears of WTC are treated as capital.