IS and ESA claim and Capital rules

I wonder if anyone can assist with this query - I think it may result from administrative error at DWP but wondered if I’d missed something.
A colleague saw a 53 yr old woman last week with mental health issues and some of the facts and dates aren’t exactly clear. Some time ago (at least 2 years we think) client and husband divorced and she received a settlement of £30,000 from the sale of the property. She informed DWP and her IS stopped. She now has capital of under £16,000 (£13,000) due to giving it to her non dep children, and using it as income to supplement her DLA.
When she came into our office last week my colleague phoned up on her behalf to make a claim for ESA and was told that the Income Support claim was still live - although no payments had been made and no overpayment. and refused to continue the claim for ESA. When my colleague asked about the IS it was stated that “due to a new rule” as the IS claim had been inactive for more than 8 weeks then this couldn’t be claimed either.
Obviously she needs to be able to claim something as she does have capital under £16,000 and does have quite severe mental health issues.
Any suggestions would be appreciated - could it be as simple as someone not properly closing IS claim down - if so is that official error and can we get IS re instated? Or will this “new rule” come in to play? or should we continue to push the ESA claim?

Thank you for any assistance

Jane

Under the ESA transitional regulations “a person who is entitled to an existing award is excluded from making a claim for an employment and support allowance”.  The IS claim no longer subsists (s8 Social Security Act 1998) so there is no question of “closing it”. 

What needs to be determined is whether the original IS award was properly superseded and the decision notified to the claimant.  If so, the claimant is not so entitled and a claim for ESA must be accepted and processed.  If the original IS award has not been properly superseded and the decision notified to the claimant then the Secretary of State should be invited to do so at once and to also accept and process an ESA claim. 

You probably want to initiate this in writing and follow it up with a phone call.  You will probably need to speak to a decision maker on the section and not a call centre operative in God knows where.

thanks for that - I’ll pass it on to my colleague and report back when we have a response!
Jane

You need to be aware also that if your client has disposed of capital by gifting some of it to relatives, “deprivation of capital” will be investigated before awarding a means tested benefit.