How should payment of an arts council grant be treated for HB purposes?

Good afternoon

I would be grateful for any advice you could give me.

client is a disabled self employed person who scupts prosthetics for films etc Gets IB , WTC HRM and LRCC

My client has received an arts council grant for £15.526 in April.  she says that £5541.00 was for access and support due to disability and is paying for a special sculting stand.  Our local authority is treating the grant as capital and has applied tariff income.  LA were only made aware of the grant following completion of an intervention form and bank statements being requested. 
Are the council correct to treat the grant as capital?  Can any of it be defrayed as self employment costs?  Claimant says all of it has gone back into her business.  I cannot find anything in CPAG which says how this grant should be treated. 

Please help as I am at a loss

Thanks