Notional capital - ‘gifted’ property

A slightly unusual case - cl has sold her property and gifted her brother £53000 to exercise right to buy of LA property. Cl & partner are now living in the property with her brother.

Cl made claim over the phone for PC, operative advised that they would not be entitled on the basis of notional capital.

I have been struggling to find much relevant caselaw beyond R(SB) 40/85, looking at CPAG (p.384 of 14/15) the exceptions are for paying off/reducing a debt or goods and services if reasonable in the case. Neither of these really fit snugly, but given cl is living in the property in question it would seem an argument could and should be made. For now I have advised she completes paper form or insists on the phone that she wants to make a claim regardless, so at least there is a challengable decision.

What do others think?

One very strong point in her favour is that if she had not done any of this she would still be living in her own home without any capital to take into account, so it is difficult to see how someone has deprived themselves of capital in order to obtain SPC when that capital was in a disregarded form to start with.

What sort of pension income is there?  Worst case scenario (assuming no other capital) is that the £53,000 generates £86 a week of tariff income which could still leave the couple qualifying for some Pension Credit.  If so it’s worth going through with the claim for that alternative reason as well

If the expenditure doesn’t fall as allowable under statute then the primary focus has to be on the intention behind the expenditure.  Don’t forget, the onus is on the DWP to establish on the balance of probabilities that it was a significant operative purpose behind the expenditure to get PC.  The reasonableness of the expenditure might or might not be a factor in determining that but is not of itself crucial.

I agree with the above. Another point in her favour could be that she has only claimed PC for the first time now (judging by the OP) so the sale of the property pre-dated her PC claim (possibly by some time). It will of course all hang on her reasons for doing what she did, but on the face of it she has only recently ‘discovered’ PC at all (so it seems unlikely a future potential claim for PC was at the forefront of her mind when she decided to sell her house).

Thank you all for very useful responses - I will keep you posted on how this one progresses.