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Deprivation of capital
This should be simple (I hope!) but I would just like to confirm my view.
Cl. on IBJSA. She has debts. She has received a tax rebate of £4K & hopes to use this to agree full & final settlements with her creditors. Question has been raised of whether this could count as deprivation of capital. (The debts have not been “called in” - i.e. are not immediately due, although payments are in arrears.)
My view is that it couldn’t, because the amount is below the £6K minimum & the rules (as set out in CPAG) refer to deprivation as being action intended to obtain or increase benefit.
I would appreciate any confirmation of this view - or explanation of why I’m wrong!
This should be simple (I hope!) but I would just like to confirm my view.
Cl. on IBJSA. She has debts. She has received a tax rebate of £4K & hopes to use this to agree full & final settlements with her creditors. Question has been raised of whether this could count as deprivation of capital. (The debts have not been “called in” - i.e. are not immediately due, although payments are in arrears.)
My view is that it couldn’t, because the amount is below the £6K minimum & the rules (as set out in CPAG) refer to deprivation as being action intended to obtain or increase benefit.
I would appreciate any confirmation of this view - or explanation of why I’m wrong!
I agree with your analysis Derek. There must be a significant operative purpose to obtain or increase benefit. Although it is the purpose that counts rather than that actual end effect, it is difficult to see any sensible DM, certainly FtT, finding against your client. The client’s position will be even stronger if:
1) early repayment saves interest / other charges; thereby reducing the overall debt(s); and/or
2) if the creditors will accept a lesser amount in return for early repayment, it is a wholly appopriate approach to settle.
3) the clmt has a history of being otherwise financially responsible with repayment being consistent with that approach; and/or
4) the existence of the debt has had a detrimental effect on his/her health and early repayment would have a positive effect in that context.
There are some CDs where deprivation has been upheld where clmt’s could have foreseen the expenditure would have a future effect on benefit. However, from recollection, the amounts involved in those cases were substantially higher and elements of “luxury” spending were at issue (expensive holidays etc).
Hope the above helps.
I accept all of the above but…..............
Is the receipt of a one off £4K payment a relevant fact that has to be reported to the authorities? If the £4K makes no difference to the benefit claim do they need to know?
If receipt doesn’t have to be reported, does the spending of it have to be reported? How many of us advise claimants with capital under £6K that the spending of it has to be reported to the authorities?
Q: Is the receipt of a one off £4K payment a relevant fact that has to be reported to the authorities? A: No but you can tell them
Q: If the £4K makes no difference to the benefit claim do they need to know? A: No but you can tell them
Q: If receipt doesn’t have to be reported, does the spending of it have to be reported? It’s probably advisable if you told them you ha it in the first place. Remember sometimes the DWP only count money coming in and not money going out for instance where someone once transfered £10k to someones account as short term loan, it was paid back a month later. Account was £10k, then nil then £10k but Dwp recorded £10k, Notional £10k, then Notional £10k + £10k actual = No IS.
Q: How many of us advise claimants with capital under £6K that the spending of it has to be reported to the authorities? A: Advisable to disclose
Hi John
I fuly accept disclosure has to be made whrn the threshold figures are reached but I do question the reporting of facts that make “no material difference to a claim” If we say that all changes of capital have to be reported where do we draw the line? Do we report receipt of a £25.00 birthday gift put into an account?, a £100 gift, £500, £1000 ........................
All I am trying to say is that we sometimes look for the more complicated answer to a qury when there is a simpler one. in this instance capital disregard seems over complicated when in truth the receipt of the £4000 in this instance isn’t a material fact since it makes no difference to the claim.
What do others think?
The reason I say its advisable is;
a) as it covers as yet unknown events which will protect the claimant
b) to put the onus on the DWP and;
c) to protect the adviser.
Reasoning for a) you get £4k back from Tax Office, spend it no problems. Next say for instance aunty dies and leaves £4k or more. Don’t disclose then maybe DWP add 4 + 4? Then again perhaps another windfall and if (big if) by going back the DM potentially could say the £8k and further £?k fall to be added together and say no IS.
Unliklely yes but can you say it definitely won’t happen? Therefore best advice er on side of caution, waste the DWP’s time and protect the claimant?
Thank you all. Why did I say it was simple?!!
As it happens Cl. was unemployed & living with (& paid for by) her family for some time. She got the £4K before applying for JSA so DWP already know about it.