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Capital and assesment periods

roecab
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Dear All,

We have a client who is in receipt UC. 

He is 55 and has a private pension fund that he can now access, and he wants to take a lump sum from the pension fund to pay for repairs to his house.  It appears that the lump sum could be over £16k, I think this will depend on the option client takes i.e. what percentage.

Unless the repairs are essential, then the capital cannot be disregarded but if it is then accepted that, after he spends the capital on repairs, it is not deprivation how does that impact on the UC claim?

If, say, the client gets £20k in middle of August, then he would lose UC from the start of that AP, but then he spends it and gets the repairs carried out, and in September, makes a new claim - and DM accept no deprivation and pay the claim. Would they revise decision to end or no? As even though accept no longer has the capital, it was actual capital in August?

As ever thanks in advance

Elliot Kent
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Sorry, I’m struggling a bit. Are we thinking of a situation where the claimant has capital exceeding £16k at some point in the middle of the AP but it has then depleted below £16k by the end of the AP?

E.g. AP runs from 10/08/20 - 09/09/20. Receives £20k on 14/08 and pays out £14k on 02/09.

roecab
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Elliot,

Yes, exactly that!

Cheers

Ianb
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It is the capital on the last day of the assessment period that determines the UC payable for that period. If the capital is received and expended within the period such that the capital on the last day is not over £6,000 it has no impact on the UC claim.

I don’t think there is any issue about deprivation of capital. Claimant is under no obligation to withdraw the capital from the pension pot so they clearly can’t have spent it in order to increase benefit payable. If their purpose was to maximise benefit they simply wouldn’t withdraw it in the first place.

Elliot Kent
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This is basically the same as a situation which Charles and I were discussing on some other thread where the claimant had left the country and then returned within the same AP.

The idea is that your entitlement is based on the facts at the end of the AP. If everything is working properly, then the brief period during which your client exceeds the capital limit is a non-event. If DWP only act on the known facts at the end of the AP, then everything is fine.

The problem which arises is if your client promptly informs them of the excess capital and the case manager immediately ends the award or “closes the claim” as soon as the capital exceeds £16k without allowing the full AP to play out - lets say on 16/08.

That decision is correct on its terms; because a supersession for change of circumstances generally takes effect on the first day of the assessment period in which the change occurs. And you can’t appeal it or have it revised on the basis that at some later point your capital fell below the limit again as the DM/Tribunal cannot take into account facts post-dating the decision.

So despite being the wrong decision, it becomes quite difficult to dislodge.

roecab
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Ianb - 10 July 2020 05:32 PM

It is the capital on the last day of the assessment period that determines the UC payable for that period. If the capital is received and expended within the period such that the capital on the last day is not over £6,000 it has no impact on the UC claim.

I don’t think there is any issue about deprivation of capital. Claimant is under no obligation to withdraw the capital from the pension pot so they clearly can’t have spent it in order to increase benefit payable. If their purpose was to maximise benefit they simply wouldn’t withdraw it in the first place.

Ian,

Much appreciated, under what provision is that? I’ve always understood that a change within an assesment period was taken from the first day of the assessment period?

Many thanks

Ianb
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roecab - 10 July 2020 05:53 PM
Ianb - 10 July 2020 05:32 PM

It is the capital on the last day of the assessment period that determines the UC payable for that period. If the capital is received and expended within the period such that the capital on the last day is not over £6,000 it has no impact on the UC claim.

I don’t think there is any issue about deprivation of capital. Claimant is under no obligation to withdraw the capital from the pension pot so they clearly can’t have spent it in order to increase benefit payable. If their purpose was to maximise benefit they simply wouldn’t withdraw it in the first place.

Ian,

Much appreciated, under what provision is that? I’ve always understood that a change within an assesment period was taken from the first day of the assessment period?

Many thanks

UC is always based on circumstances at the end of the AP. Am sure somebody else will be able to quote the relevant regulation. (I’ve said always but no doubt I will be corrected if there are exceptions that I’ve forgotten about.)

[ Edited: 10 Jul 2020 at 06:09 pm by Ianb ]
roecab
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Elliot Kent - 10 July 2020 05:46 PM

This is basically the same as a situation which Charles and I were discussing on some other thread where the claimant had left the country and then returned within the same AP.

The idea is that your entitlement is based on the facts at the end of the AP. If everything is working properly, then the brief period during which your client exceeds the capital limit is a non-event. If DWP only act on the known facts at the end of the AP, then everything is fine.

The problem which arises is if your client promptly informs them of the excess capital and the case manager immediately ends the award or “closes the claim” as soon as the capital exceeds £16k without allowing the full AP to play out - lets say on 16/08.

That decision is correct on its terms; because a supersession for change of circumstances generally takes effect on the first day of the assessment period in which the change occurs. And you can’t appeal it or have it revised on the basis that at some later point your capital fell below the limit again as the DM/Tribunal cannot take into account facts post-dating the decision.

So despite being the wrong decision, it becomes quite difficult to dislodge.

Elliot

Many thanks, so to have no affect he has to get the captial, spend it and then tell them i.e. not promptly but within an AP he should be OK in theory, makes sense

Appreciate your time

Best wishes

roecab
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Ianb - 10 July 2020 05:56 PM
roecab - 10 July 2020 05:53 PM
Ianb - 10 July 2020 05:32 PM

It is the capital on the last day of the assessment period that determines the UC payable for that period. If the capital is received and expended within the period such that the capital on the last day is not over £6,000 it has no impact on the UC claim.

I don’t think there is any issue about deprivation of capital. Claimant is under no obligation to withdraw the capital from the pension pot so they clearly can’t have spent it in order to increase benefit payable. If their purpose was to maximise benefit they simply wouldn’t withdraw it in the first place.

Ian,

Much appreciated, under what provision is that? I’ve always understood that a change within an assesment period was taken from the first day of the assessment period?

Many thanks

UC is always based on circumstances at the end of the AP. Am sure somebody else will be able to quote the relevant regulation.

Ian,

I think Elliot’s response explains it.

Thanks

roecab
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DUTY TO NOTIFIY A CHANGE OF CIRCUMSTANCES FOR UC

The Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013

UK Statutory Instruments2013 No. 380

Notification of changes of circumstances affecting personal independence payment or universal credit for purposes of sections 111A and 112 of the Administration Act [ie. criminal liablity]

44.—(1) Subject to paragraphs (2) and (3), where the benefit affected by the change of circumstances is personal independence payment or universal credit, notice must be given to the Secretary of State (“S”) at the appropriate office—

(a)in writing or by telephone (unless S determines in any case that notice must be in writing or may be given otherwise than in writing or by telephone); or

(b)in writing if in any class of case S requires written notice (unless S determines in any case to accept notice given otherwise than in writing).

(2) Where the notice in writing referred to in paragraph (1) is given or sent by an electronic communication that notice must be given or sent in accordance with the provisions set out in Schedule 2 to these Regulations (electronic communications).

(3) In such cases and subject to such conditions as the Secretary of State may specify, the duty in regulation 38(4) to notify a change of circumstances may be discharged by notifying the Secretary of State as soon as reasonably practicable—

(a)where the change of circumstances is a birth or death, through a local authority, or a county council in England, by personal attendance at an office specified by that authority or county council, provided the Secretary of State has agreed with that authority or county council for it to facilitate such notification; or

(b)where the change of circumstances is a death, by telephone to a telephone number specified for that purpose by the Secretary of State.

This duty is described in CPAG Handbook Chapter 3 at p 52.

But it remains the case no matter when you report the change – so long as it is within the assessment period it TAKES effect from the start of the assessment period.

Va1der
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What happens if you, having regained entitlement, reclaim within the same assessment period? Do you have to wait for the end of the next AP for the next payment?

roecab
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Va1der,

Good point

A nice flow chart would help!

Cheers

:-)

Jac
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Just a word of caution.I had a client who made a one off withdrawal from a pension fund to help contribute to a funeral. UC treated it is income as it was reported by HMRC. It took me to the appeal hearing to have the decision changed that it was capital not income.

Ianb
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roecab - 11 July 2020 01:49 PM

But it remains the case no matter when you report the change – so long as it is within the assessment period it TAKES effect from the start of the assessment period.

I think we may be at risk of muddling two things.

The UC entitlement is always calculated on the last day of the AP. The calculation is then applied to the whole AP which does indeed mean that any change which occurs during the AP, and which remains in place at the end of the AP, takes effect from the start of the AP. However it’s not the circumstances at the start of the AP that determine the amount payable.

Elliot Kent
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Ianb - 13 July 2020 04:20 PM

The UC entitlement is always calculated on the last day of the AP. The calculation is then applied to the whole AP which does indeed mean that any change which occurs during the AP, and which remains in place at the end of the AP, takes effect from the start of the AP. However it’s not the circumstances at the start of the AP that determine the amount payable.

The reason why entitlement is decided by reference to the last day of the AP is because supersessions based on changes of circumstances are always effective from the first day of an AP (usually the one in which the change occurs) - see Sch 1 of the D&A regs. This has the effect that the claimant’s circumstances on the last day of the AP are deemed to have been the case throughout the AP.

If we are dealing with a case where a claimant gets £8k of capital and then spends £4k within the month, then the award will remain the same. We could rationalise that in two ways:
(1) The DM is superseding the award, effective from the first day of the AP, to introduce a tariff income on the basis of the increase in capital. The DM is then further superseding the award, effective from the first day of the AP, to remove the tariff income on the basis of the decrease in capital. Everything is therefore cancelled out.
(2) The DM makes no decision, because nothing relevant has in fact changed. The circumstances are materially the same.

The question which I think Roecab is barrelling towards is - how does this logic apply to a terminal event for the award such as capital exceeding £16k?

An award can be ended by supersession, but it can’t be resurrected by supersession. So if you are going to adopt method (1) for dealing with different changes, you hit a wall. The increase in capital is a ground for supersession terminating the award and it is effective from the first date of the AP in which the change occurs. The decrease in capital then cannot be a basis for supersession as there is no award to supersede. So you are left with no award.

I would argue that the problem is that method (1) is the wrong way of looking at things and the better view is that the decision maker ought simply to make no decision. The claimant is ending the AP with an immaterial amount of capital and it is correct simply not to supersede the award and to leave it as it is, regardless of whether there was a period of dis-entitlement occurring within the AP. It is not a relevant change.

(Let’s just park the whole thing about obligations to report a change. This is complicated enough as it is.)

Va1der
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I meant my question seriously 😛 Not a situation I’ve ever come across.

What if the award is closed on that first supersession, you can’t reopen by supersession, but can you do so by claiming within the AP? Which regs regulate this?

Charles
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Elliot Kent - 13 July 2020 05:14 PM

An award can be ended by supersession, but it can’t be resurrected by supersession. So if you are going to adopt method (1) for dealing with different changes, you hit a wall. The increase in capital is a ground for supersession terminating the award and it is effective from the first date of the AP in which the change occurs. The decrease in capital then cannot be a basis for supersession as there is no award to supersede. So you are left with no award.

I thought method (1) would also be fine under the closed-period supersession rule. But as you mentioned earlier, that’ll only help if no terminating decision had been made before the capital reduced below £16k.

Elliot Kent
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Va1der - 13 July 2020 06:06 PM

What if the award is closed on that first supersession, you can’t reopen by supersession, but can you do so by claiming within the AP? Which regs regulate this?

This is what I was alluding to in the first post. If the DM opportunistically ends the award before allowing the AP to play out then all the claimant can do is to make an entirely new claim and any entitlement between the end of the final AP on their first award and the date of the new claim is lost. This is completely avoidable if the DM just holds fire.

Charles - 13 July 2020 06:14 PM
Elliot Kent - 13 July 2020 05:14 PM

An award can be ended by supersession, but it can’t be resurrected by supersession. So if you are going to adopt method (1) for dealing with different changes, you hit a wall. The increase in capital is a ground for supersession terminating the award and it is effective from the first date of the AP in which the change occurs. The decrease in capital then cannot be a basis for supersession as there is no award to supersede. So you are left with no award.

I thought method (1) would also be fine under the closed-period supersession rule. But as you mentioned earlier, that’ll only help if no terminating decision had been made before the capital reduced below £16k.

Yes I suppose you could think of it as a sort of closed period supersession where the closed period in fact has no effect on entitlement at all.

[ Edited: 13 Jul 2020 at 07:20 pm by Elliot Kent ]
Gareth Morgan
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Elliot Kent - 13 July 2020 05:14 PM

[
The reason why entitlement is decided by reference to the last day of the AP is because supersessions based on changes of circumstances are always effective from the first day of an AP (usually the one in which the change occurs) - see Sch 1 of the D&A regs. This has the effect that the claimant’s circumstances on the last day of the AP are deemed to have been the case throughout the AP.

Isn’t it simply a consequence of the earnings rules?  The assessment uses earnings received up to the last day of the AP, so it would be dificult to use anything other than other circumstances on that day.

roecab
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Thank you to all of you for taking the time to respond and help with this, has proved invaluable

Best wishes

Jon Shaw
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Whilst I struggle to connect the example to my own understanding of the law, the ADM suggests that a correct UC refusal (on an initial claim) can be superseded if there is a change of circumstances within the first AP, effective from the first day of that AP. It is Example 2 to para A4103:

‘A claim to UC is made on 20.12.15. The claim is disallowed on 17.1.16 because the claimant has capital in excess of £16,000. On 22.1.16 the claimant reports that their capital fell below £16,000 on 5.1.16. The DM determines that no deprivation has occurred. The disallowance is superseded and an award of UC is made from 20.12.15.’

That certainly suggests to me that capital rising and falling within a single AP might also be treated as a zero day closed period supersession, as Elliot suggests.

For completenesss, if this doesn’t happen and the UC award is ended by an overenthusiastic DM, I THINK that the clamiant simply needs to reclaim within the same AP, and as long as capital has dropped again and there is no notional capital decision. As I read it, Reg 21(3C) of the UC Regs says that the AP remains the same, and so the claimant wouldn’t lose out in any event. But it is hard to knit together Reg 21 and Reg 10 of the Claims and Payments Regs. I am also unwisely disagreeing with Elliot about the effective date of the new claim, so someone should probably point out what I am missing…

Jon

Charles
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Jon Shaw - 15 October 2020 05:18 PM

Whilst I struggle to connect the example to my own understanding of the law, the ADM suggests that a correct UC refusal (on an initial claim) can be superseded if there is a change of circumstances within the first AP, effective from the first day of that AP. It is Example 2 to para A4103:

‘A claim to UC is made on 20.12.15. The claim is disallowed on 17.1.16 because the claimant has capital in excess of £16,000. On 22.1.16 the claimant reports that their capital fell below £16,000 on 5.1.16. The DM determines that no deprivation has occurred. The disallowance is superseded and an award of UC is made from 20.12.15.’

That certainly suggests to me that capital rising and falling within a single AP might also be treated as a zero day closed period supersession, as Elliot suggests.

Agreed, but only if the decision to terminate or to refuse the claim was made after the capital had already reduced, as was mentioned earlier in the thread.

For completenesss, if this doesn’t happen and the UC award is ended by an overenthusiastic DM, I THINK that the clamiant simply needs to reclaim within the same AP, and as long as capital has dropped again and there is no notional capital decision. As I read it, Reg 21(3C) of the UC Regs says that the AP remains the same, and so the claimant wouldn’t lose out in any event. But it is hard to knit together Reg 21 and Reg 10 of the Claims and Payments Regs. I am also unwisely disagreeing with Elliot about the effective date of the new claim, so someone should probably point out what I am missing…

Jon

I agree that a reclaim in the same assessment period would mean nothing is lost. But this is only the case where the original claim was put into payment, and not if the capital was too high in the first AP and then reduced within that first AP (as in the above example from the ADM).
It is important to realise that the new auto-reclaim rules will not apply in such cases.
Also interesting to note that under the original UC rules (as used for the live service), there would have been a loss in such circumstances.

By the way, I think Reg 10 of the C&P Regs is a red herring - the important provision is Reg 26(5) of those Regs.

Jon Shaw
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Thanks Charles. Reg 26(5) is indeed the missing piece. I should have thought to look for a backdating rule.

I agree with you about the ADM example, too. I think it is easier to see where the DWP’s interpretation might come from if there was a previous UC award and Reg 21(3C) applied on the date of the new claim (as the concept of an assessment period would make sense). But it still sits uneasily with me.

Even if there was a prior award I think I would always advise to reclaim the day after the capital dropped, rather than rely on this happening in practice…