IS overpayment and possible offsetting

Afternoon all

My client has been saving her daughter’s high rate DLA care and mobility for years without declaring it and now because she went over the capital limit has an IS overpayment of over £30k for period up to early 2013.  I feel sorry for her because she genuinely seemed to think she was doing the right thing in preparing for her daughter’s future - just wasn’t advised to put it in a trust fund.

Anyway I’m clutching at straws to try and at least reduce the amount of the overpayment and part of the reason it is so high is that she was still getting the dependent’s addition (and disabled child premium) in Income Support as she hadn’t been moved onto Child Tax Credit.  On the appeal form I said that it would be in the interests of natural justice for the notional entitlement to Child Tax Credit (ie the amount of the dependent’s addition and disabled child premium) to be removed from the recoverable overpayment as she would have received Child Tax Credit had she applied as it has no capital limit.  It seems so unfair that just by a fluke she was one of the few who even last year still hadn’t been moved onto Tax Credits.

The Secretary of State’s response says although she may have had an entitlement to Child Tax Credit there is no basis in legislation to abate an overpayment by notional entitlement to Child Tax Credit.

Any ideas would be appreciated.

If she was saving her daughter’s DLA payments, isn’t there an argument that the capital sums involved were the daughter’s and not hers?

Reg 23(2) IS Regs 1987 refers to this position outright post-6 April 2004, when CTC was introduced.

As a presumably on-going transitional IS case, this could mean that if the daughter’s capital exceeded £3,000, under the old reg 23, she would lose entitlement to the child additions but retain her overall IS entitlement, which might reduce o/p?

Thanks for this Paul and apologies for the delay in replying.  I will try this argument although of course the DWP are adamant that the capital is my client’s and that she’s the beneficial owner as it wasn’t in her daughter’s name.  She did have a couple of accounts that she held as trustee for her daughter and they have disregarded those.

Anyway I’ll try your argument and let you know the outcome.  It would greatly help her if successful as continued Income Support entitlement would mean she doesn’t have a Housing/Council Tax Benefit overpayment as well…....

Were the daughter’s benefit payments the only source of the funds in that account, or was there also money belonging to the client -was her income support paid in as well, for example?

I can’t claim to be an expert on this - oh how we miss Ariadne’s advice on this discussion forum!!

However, it is commonly argued by the DWP that the name on the account is not only the legal owner, but also the beneficial owner of the capital therein - it is beneficial interest which is relevant. People can be legally and beneficially entitled to an asset, but equally the legal owner and beneficial owner can be totally different.

If the only source of funds in the account is the daughter’s DLA, then I fail to see how your client can be beneficially entitled to the money herself. If the funds are from both the daughter’s DLA and the client’s own income/resources, I would think it is still arguable that there is no joint beneficial interest if you could show that all the daughter’s money that had been paid in was still there, unused by the client

As ever, though, I stand to be corrected by someone more knowledgeable