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Capital disregards for personal injury compensation
Hi all,
I have a case at the moment involving receipt of personal injury payment. Client was on IS and recieved substantial sum of compensation way back in December 2005. There’s an issue about potential disclosure in June 2006 but the Department’s case at the moment is that he didn’t disclose it until 2009 and have raised an overpayment.
The general capital disregard for personal injury payments (not the trust one) didn’t come into affect until October 2006 (12A of Schedule 10 of the IS General Regs). This applies to disregard the value of the compensation payment for 52 weeks from the day on which the payment is first received. I’ve looked into arguing it should apply retrospectively so that the disregard applies in this case from December 2005 for 52 weeks but I don’t think such an argument is going to get too far.
But I wanted to argue that when the disregard came into affect on 6 October 2006, client is entitled to the remainder of the 52 weeks disregard so that his capital (which was entirely the personal injury payment, he had no other capital to muddy the waters) is disregarded from 6 October 2006 to December 2006. It would at least reduce the overpayment.
Any thoughts, or anyone know of case law that may help/hinder such an argument?
no; my only thoguht is to wonder why his solicitor didn’t advise putting in to a PI trust, thus avoiding the problem altogether (of course, if your client WAS so advised and didn’t take the advice, that’s a different matter…) but it’s too long ago to be able to claim against the solicitor if s/he failed to advise…
what did he/she do with the money ?, was it just used up the in normal course of time or was it kept in a separate account for example.
I successfully argued that an IS claimant who had inherited cash but failed to disclose it had set the money aside in an implied trust as she intended it for the funeral costs of other family members of the person from whom she had inherited the cash. fortunately she had kept it in a separate bank account.