Self employed client in receipt of HB/CTB for 06/07 tax tear, prsumably with income based on 05/06 accounts. Renewed benefit recently and submitted 06/07 accounts which showed profit was slightly higher than in 05/06. LA therefore recalculated 06/07 benefit retrospectively resulting in lower award and recoverable overpayment. Is this normal? Would they carry out a similar adjustment if the actual income turned out to be less than the assumed income, creating an underpayment? The client won an appeal against the LA on another matter, they were pretty miffed and I feel they may be acting in a vexatious manner.

As far as I know we will use the date that the accounts are dated by the accountant, that would be the earliest possible date that the accounts could have been submitted and the claimant couldn't no before this time what his profit/loss would be. If the change is beneficial the usual four weeks to supply would apply.

Feel this is the common sense approach but not sure how the legislation stacks up on it. Don't know how this applies to your claimant unless he delayed in providing accounts.

No, it is not normal and it is unlawful. There is no provision to retrospectively adjust entitlement in this way. Regulation 30 states that "Where a claimant's income consists of earning as a self-employed earner his average weekly earnings shall be estimated by reference to his earnings from that employment over such period as is appropriate in order that his average weekly earnings may be estimated accurately but the length of the period shall not in any case exceed a year."

In the case of employed earners, there is a mechanism for dealing with unforseen changes in a claimant's income - e.g. a pay rise, or an increase in hours - Regulation 29(3): "Where the amount of a claimant's earnings changes during an award the relevant authority shall estimate his average weekly earnings by reference to his likely earnings from the employment over such period as is appropriate in order that his average weekly earnings may be estimated accurately...."

Any such change in earnings would be a relevant change of circumstances. However, it is not possible to deal with self-employed earnings in the same way.

If during the course of the claim business is poor, this will be reflected in the accounts which will determine Housing Benefit entitlement for the next period. There is no provision for a claim to be re-assessed during the benefit period if profits suddenly slump, unless the downturn in business is due to an identifiable change in the normal pattern of business, which amounts to a change of circumstances. Similarly, of course, there is no provision for an authority to re-assess entitlement if profits soar during the benefit period.

If business is poorer than anticipated, or poorer than in the previous year, then when the claim is reviewed the amount of Housing Benefit awarded will be higher than for the previous assessment period.

If business is better than anticipated, or better than in the previous year, then when the claim is reviewed the amount of Housing Benefit awarded will be lower than for the previous period.

Any increase in nett profit from one year to the next can only be reflected in a reduction in Housing Benefit entitlement for the next period. An authority cannot re-assess the previous claim, on the grounds that the actual income during the period was higher than anticipated, and then say that there has been an overpayment. Similarly, it cannot re-assess the claim if earnings were lower than anticipated and say that there has been an underpayment. It's a classic case of swings and roundabouts.

I agree Bob, LAs should be requesting accounts on a yearly basis if the SE earner has been in business for over a year, however if the accounts have not been supplied to the LA promptly there is potential for overpayment but only back to the start of that 'new' Self Employed year.

For example 1st year Feb 05 - Feb 06 supplied April 06 when created. 2nd accounts would therefore be expected April 07 and should be requested by LA. If not supplied until June 07 there will be an OP for the period April 07 to June 07.

The original post does not make reference to why the OP has occured. This surely is crucial?

All assuming of course that interventions are indeed lawful. And I don't take that for granted.....