HB overpayment offset

I am new to this type of query, so apologies if it falls in the realms of the bleedin obvious!

I have just discovered that a client who has been on IB for years has had over 16K in savings, therefore wiping out his HB/CTB entitlement that he has been in receipt of.

The LA thought it was only 8000 and have been paying full HB on this basis, as he is 65 years old on Wednesday and the lower means tested benefit threshold has been 10K for the last 5 years due to his age.

We are going to have to report this change, as when his SRP kicks in on Wednesday the tarriff income + SRP takes him over GPC threshold and therefore disallows HB until his capital reduces to below 16K.

He has been entitled to Guarantee pension credit for 5 years but never made the claim as he didnt know about it. He has been living on his IB, and IB+tarriff income is below GPC threshold, therefore he has been entitled to Guarantee pension credit all this time. His personal allowance for HB will also have been over his income anyway.

As we can prove entitlement for the period can HB recover due to failure to notify of his 18K capital, or will his retrospective entitlement notionally wipe out any overpayment?

Thanks

I see what you are saying, but I am not convinced the HB Regulations will stretch to include secondary underlying entitlement.  What the Council has to look at when calculating an overpayment is whether the claimant would have been entitled to at least some HB on the true facts as they were at the time.  If he never was actually on GC, I don’t think the Council will look at it as if he had been.

However, if the Council approaches this properly there are some factors that should at least mitigate the problem.

1. The Council must apply the diminishing capital rule, which means that every thirteen weeks throughout the overpayment period they have to reduce the amount of capital he actually held at that time by the amount of HB overpaid in the previous thirteen weeks.  For the first couple of 13-week periods this will make very little difference because he will still have capital over £16,000 at the start of the next period.  That means he has almost certainly been overpaid at least around £2000.  After that the cumulative overpayment each week is limited to whatever difference the tariff income makes.  The £10,000 TI threshold and £500 income steps for pensioners mean that the worst that can happen is that he has been overpaid by 65% of £12 a week on top of the initial £2000.

If his capital fluctuated during the period he has been getting HB, the calculation described above applies to the amount that he actually had from time to time - if his capital has not always been quite as much as £18,000 the overpayment might not be as bad.

2.  The Council has the discretion not to recover some or all of any overpayment.  You could try the notional GC argument at that stage - because he has claimed less than he was entitled to from DWP he has perversely ended up with an HB overpayment - shouldn’t they take that into account when deciding whether it’s fair to make him pay it back?  They will probably say “he’s still got all the HB money so he can just write us a cheque here and now”, but it’s worth a shot.

3.  I am assuming this is actually his fault - no possibility of arguing that it is non-recoverable due to official error?

4.  If he pays the money back immediately in full, there is a risk that DWP would have the chutzpah to suggest that is deprivation of capital and so keep the capital at £18,000 for SPC purpopses, and the Council then be obliged to follow that in the HB decision.  But SPC Reg 21(2)(a) specifically allows repayment of debt so he should be OK there.  All the better if it immediately takes him under £16,000 because the Council will then be able to award HB as well.  DWP should reduce the capital because it’s not an increase in retirement provision.

It is his fault and he simply will not acknowledge that he has any responsibility in this whatsoever. He kept telling me that the council should have known about his capital and that it wasnt his role to tell them. They thought he had 8 grand, not 18,and couldnt even tell me how they knew about the 8 grand. Clients eh?

I told him he will have to repay an overpayment, and when he does then GPC will kick in, as will full HB?CTB

Thanks for your advice. Seeing the guy next week with lots of lovely bank statements