Using LCWRA appeal arrears to pay off old TC overpayment

I am not sure whether this belongs in the UC or TC topic.

The client I saw had an old TC overpayment which is not related to the tax year when she moved to UC.  She says she had TC overpayment deductions taken from her UC award, but I have not actually seen her UC breakdown.

Now DWP Debt Management has used her whole arrears from her successful LCWRA appeal to pay off a large part of the TC overpayment. The client also has rent arrears, CT arrears and a HB overpayment. Debt Management have said over the phone that she can write and ask for a refund of the money paid towards the TC OP if she provides evidence what she needs the money.

But I was wondering whether they actually have the power to use the arrears in the way they did. 
I thought that only those TC OPs incurred in the same tax year as the UC award will automatically turn into UC overpayments.