When to report PI payment and capital limits

This relates to a payment of about £10k on a PI claim. I am aware of standard procedures around the 52 weeks disregard of compensation monies, the CRU and setting up a trust.

My question is,  does the client have to report the capital to DWP immediately on receipt of it, or only when the 52 weeks expires?

The client is reluctant to:

a) spend £600 on setting up a trust as he is likely to have gone below the £6k limit within the 52 weeks period
b) report it if he does not need to as he is worried about the DWP putting in its diary to investigate deliberate disposal/notional capital issues in 52 weeks time and potentially suspend benefits whilst it does so

Thank you.

safer to put it in a trust, tbh spending the money setting it up and putting the money in it solves all problems.

that’s from my perspective as a PI practitioner.

in fact i often advise people who aren’t currently on benefits to set up a trust - on the grounds that you don’t know what’s round the corner…

Thanks Claire. Assuming though, for whatever reason, the person was not going to be persuaded to set up a trust, do you know when the capital has to be reported to the DWP - on receipt or after 52 weeks?

Billy Durrant - 07 March 2018 03:54 PM

Thanks Claire. Assuming though, for whatever reason, the person was not going to be persuaded to set up a trust, do you know when the capital has to be reported to the DWP - on receipt or after 52 weeks?

The requirement is usually to report any new money that you receive as soon as possible - it is for the DWP to decide that the capital should be disregarded, once the change has been notified

Brian JB - 07 March 2018 04:18 PM

Billy Durrant - 07 March 2018 03:54 PM

Thanks Claire. Assuming though, for whatever reason, the person was not going to be persuaded to set up a trust, do you know when the capital has to be reported to the DWP - on receipt or after 52 weeks?

The requirement is usually to report any new money that you receive as soon as possible - it is for the DWP to decide that the capital should be disregarded, once the change has been notified

yes

Thanks again.

Sorry to bang on about this but do you know where that requirement is to be found in legislation?

Hi Billy - I believe the specific reg re “duty to disclose” is regulation 32 of the Social Security (Claims and Payments) Regulations 1987

Information to be given when obtaining payment of benefit
32.—(1) Every beneficiary and every person by whom or on whose behalf sums payable by way of benefit are receivable shall furnish in such manner and at such times as the Secretary of State may determine such certificates and other documents and such information or facts affecting the right to benefit or to its receipt as the Secretary of State may require (either as a condition on which any sum or sums shall be receivable or otherwise), and in particular shall notify the Secretary of State of any change of circumstances which he might reasonably be expected to know might affect the right to benefit, or to its receipt, as soon as reasonably practicable after its occurrence, by giving notice in writing of any such change to the appropriate office.

(2) Where any sum is receivable on account of an increase of benefit in respect of an adult dependant, the Secretary of State may require the beneficiary to furnish a declaration signed by such dependant confirming the particulars respecting him, which have been given by the claimant.

Much obliged.

My reading of that is that there would not actually be a duty to disclose receipt of the PI payment immediately as the claimant is aware that the sum should be disregarded and not count as capital for 52 weeks: “might reasonably be expected to know might affect the right to benefit, or to its receipt”.

There may be some practical difficulties that subsequently arise as a consequence, such as data matching info alerting DWP to money in the account sparking a compliance investigation, etc., but the client is aware of these risks. I agree it would be sensible to disclose it but I am now thinking it is not strictly necessary…
EDIT
Have just noticed that the legislation has been amended slightly http://www.legislation.gov.uk/uksi/1987/1968/pdfs/uksi_19871968_301117_en.pdf

i did think of that, as a legal argument, but have to say i think it would be given very short shrift if tried, both by DM and FT, and you’d have to go to UT.

he’s much better putting in a trust.  that’s the point of them.

OK, thanks again Claire. I trust your judgement on this, I’d be a fool not to.

I’m not quite so sure…...not a disagreement with Claire as to the advisability of putting the money in trust, more a general point about the legal position if he doesn’t report….

A person’s entitlement is not affected simply by virtue of the fact that they did not report a change of circumstances - not even where they fail to report something they have been given clear and unambiguous instructions that they should report. I would imagine that the latest INF4 will tell a claimant “you must tell us if you receive capital or an increase in your capital” - it will not set out the exact capital limits and the way they operate.

Conceivably then, a claimant will be in breach of their reg. 32 obligation where they currently have capital of £1000 and fail to report the receipt of a £2000 inheritance. Be that as it may, any breach will not affect entitlement.

It’s the same as ticking the ‘no’ box in answer to the question as to whether you hold capital on behalf of someone else when in fact you do. You’ve certainly failed to disclose and - if you properly understand what is being asked - have likely misrepresented as well. But if those funds truly are held on trust, your entitlement isn’t affected and neither have you been overpaid.

Of course, not disclosing - or in this case, not disclosing and not putting the money into trust (I think the client would be safe if he put it in trust but did not disclose) does then leave you something of a hostage to fortune in terms of the view that the DWP, or on appeal the FtT, might subsequently take of the deprivation of the capital.

But in summary, while there may be a legal obligation to disclose, there aren’t any adverse consequences unless actual entitlement is actually affected….

aye, whilst i see what you say, and it could make sense - to me its as much about saving the client the grief of adverse decision pulling benefits and trips then to FT and UT to get them back, with possibly no guarantee of success in the short term and in the meantime ?

the only other point to make - does he have £4K of debt/justifiable expenditure that won’t lead to him being told he’s intentionally deprived himself of said £4K?  since it’s only £4K that’s at risk (the other £6K being within the limit, assuming he had nowt else).

and then working out what the assumed income would be for that £4K and how much difference it would make to his benefit income

and so on and so forth

likely to be more trouble than the £600 or so to set up the trust…

Sure Claire - I wasn’t arguing against your advice - it’s what I’d advise myself as the sensible course of action. Was just on the issue of whether there is actually any obligation to disclose…..