Capital/Diminishing Capital Rules/Deprivation of capital

Client had been in receipt of ESA (ir) but reported change of circs April 15 when she received settlement(£60000) regarding sale of property. Was now living in rented Council property and no intention to purchase new property. Client’s 18 year old son was living with her, attending college but no bursary/student loan and no ChB.

Client retained underlying entitlement to ESA after she reported this change and credits duly awarded.

Client then lived a very full life for a year by totally refurnishing house/decoration, also couple of family holidays, supporting her son. therefore by June 16 her savings were less than £16000 and she reclaimed ESA(ir). She actually claimed when her savings were less than £13000.

DWP have stated that during the period April 15 to June 16 when she reclaimed that apart from some expenditure they have allowed for the furnishings/decoration that diminishing capital rules apply and that only the value of ESA payable/HB and CT are allowed. This has also been backed up at tribunal. Tribunal allowed for some additional expenditure but took no account of support given to son.

Having read ESA regs 2008 around this my understanding was that the diminishing capital rules applies to Notional Capital ie Once a claim is made and DWP have decided that the client has Notional capital then this applies.

I take it that my interpretation is wrong? Happy for any advice…......