Wed 01-Jun-05 02:14 PM by shawn

Have a client who, whilst an IS claimant, had a finding of deprivation of capital for purposes of obtaining that benefit made in respect of disposal of assets from sale of his home. The deprivation occurred in 2000. The IS decision (confirmed by an appeal tribunal) was made in 2001.

My reading of Reg 21(1) of SPC Regs, is that deprivation that occurred before SPC was even a glimmer in a DWP ministers eye simply cannot have been for the purpose of obtaining that benefit (regardless of whether it was for the purpose of obtaining IS- which is still disputed by the claimant). R(IS)14/93 involved a similar issue (this time with the move from Supp. Ben. to IS) and Comm. Rice held that the deprivation which took place before IS existed could not have been for purpose of obtaining that benefit). I cannot see anything different in my case(Reg 21(1) similar to Reg 51(1) of IS Regs).

Let me know if anyone thinks anything different .... ?

Ironically the Pension Service has awarded the guy a savings credit on the basis of his notional income! (This cannot have been the intention of the Sec of State- notional income is applied as a punishment for getting rid of savings to get benefit, savings credit is given as a reward and to encourage saving). I have seen a letter to an MP from the Chief Exec of Pension Service (personally signed) in which he refers enthusiastically to the fact that the new Pension Credit means the claimant still gets a couple of pounds saving credit which he could not have got under IS. This seriously makes me wonder- how can what is clearly never an intended consequence of the scheme and is actually a reward for being profligate with money be commended in this way? (sorry rant over).

Martin.

I won an appeal last year that included the argument that the deprivation occurred before the introduction of PC and so it was not caught by the wording of the regs. The Pension Service put up some weak arguments against this and were clearly unhappy with what I was saying. Despite this there was no appeal by them to the Commissioners.

The wording of the Pc regs is that the intention must be to claim PC, not to calim IS or means tested benefits in general. On what you have put in your posting I would say that your client is entitled to PC assessed without the amount of the deprivation.

PS I did have to put in a fully argued case on the point.

The DWP have folded on my one following instructions from Quarry House. It appears that quite a few claimants may be having notional capital applied from an act of deprivation said to have occurred whilst on IS (before PC).

As the wording of the SPC Reg is similar to the IS one and as the IS reg was construed in this way by the reported decision I referred to above I think it is clear that the drafter intended this result.

The DMG makes the same point.

Perhaps someone could ask the DWP to trawl their claims for those with notional capital that is being applied from before the introduction of SPC?

Martin.

I wonder if you can help on my problem.
My client received £42,000 from sale of a property in 2002.
The Pension Centre are taking £14,165 as notional capital. I ask them to apply the diminishing capital rule which they have verbally refused to do as they say client has not deprived herself of capital to gain PC. They are instead taking the £14,165 into account as actual capital forever, as client cannot justify or provide any proof of how the capital was spent. She would have been better off if they thought she had deprived herself of capital wouldnt she?

Am I missing something here? If so, please ignore the following ramblings.....

Deliberately depriving oneself of Capital is surely the foundation of the notional capital regulations is it not. To apply the notional capital rules they need to be able to show that said deliberate deprivation took place so as to get benefit.

If the PS are saying they accept she did not deprive herself of her capital in order to obtain benefit, then how can they explain at which point does money which has been spent become actual capital - now that is a class sleight of hand.......

Are they saying that they think she hasn't disposed of the capital but hidden it from them? That seems the logic.

Does she have any proof of expenditure?

Client can only prove expenditure of some of the capital. There is still £14,000 unaccounted for. The PC know she does not hold the capital, but are saying she must provide receipts if they are to disregard it.

your client has been asked to account for the disposal of £42,000 in capital. this is not the same thing as providing £42,000 worth of receipts. does your client know how she spent her money?

1. The capital was obtained in 2002 - before Pension credit was invented in Oct 2003 - over what period did she then dispose of it?

2. Did she claim Pension credit in Oct 2003, at a later date? or was she in receipt of Minimum income guarantee prior to Oct 2003?

My client knows how she spent most of the money on caravan, car, decking, furniture, holidays, electrical goods, credit card settlement and living expenses but cant provide the receipts. She disposed of all the capital between Nov 02 and Mar 03. She applied for IS march 03 but was turned down. She applied for PC Oct 03.

There is no requirement that a claimant can only demonstrate they have spent the capital with independent evidence (ie receipts etc).

Your client's evidence that she did in fact spend the money can be accepted (and the fact that she has all of the items she alleges she spent it on may help to corroborate this). It is clear that claimant oral evidence can be accepted to establish a point (R(SB)33/85).

The problem which you will now have is in getting her PC award changed. If the decision on actual capital was made back in October 2003 your client is now too late for even a late appeal of the decision.

Rather you will have to either:

1. Get the decision altered by way of revision on the grounds of official error (one potential error may have been if the decision maker was of the opinion that without receipts the claimant could not demonstrate she had spent the capital- although how you would show that this was actually the thinking behind the decision is a difficult point- perhaps before applying for such a revision you should request a copy of the decision awarding PC as it may show that this is what happened). If official error revision is refused then only a judicial review can remedy this.

2. Get the decision altered by way of supersession on the grounds of ignorance/mistake of fact. The problem with this as a route is that you will not be able to argue that a different view of the facts is sufficient grounds (ie you cannot argue that the Decision Maker had all of the evidence but simply drew the wrong inference of fact from it). Rather, you will have to show that there was some primary fact of which the Decision Maker was ignorant (for example if the claimant's account of how they spent the money was not before the decision maker).

Hope this helps.