HB and advance of wages

I hope someone can help!  Client (living in temp accommodation) on UC started work in January.  Her UC stopped early February.  She had an advance of her salary paid to her in January (no wage slip for January).  The amount of the salary advance appeared on her first/February wage slip, the wage slip essentially had two lots of salary on it (actual and advance),  and the amount of the advance was deducted off along with NI/Tax.

HB have calculated her earnings using her actual earnings AND the advance of her earnings.  I have challenged this saying the advance should be treated as capital.  They have come back and acknowledged an advance should normally be capitalised but as she was paid it in January it cannot be treated as capital in February’s earnings; the reason given is ‘an advance can only be treated as capital in the pay period in which it was received’ and that only Tax/NI/50% pension cont can be deducted from the payslip amount for February. 

Reg 46(5) says nothing of when an advance is received and how it is attributed.  Am I missing something or is that a ridiculous decision? 

Even if they are right, then the pay period ‘in which it was received’ was January (and therefore no concern of theirs), they can’t have it both ways. Its presence on the February pay slip bears no relationship to when your client actually received it. It is merely an accounting convenience on the part of your client’s employer to show expenditure in January, and income when the loan was repaid from your client’s salary in February. It might help if you ask them whether the tax and NI paid in February was that due on the income they claim he received, or the income he actually received in that month?

Thanks Paul, yes I have now appealed and basically said they cannot have it both ways!  The NI and pension conts taken are the total due for the two pay periods, they do not earn enough for Tax to be taken.  Again though, this is really just an accounting issue I would think.  Let’s see what they come back with!