Hi, I have a client, single mother with three kids. She left marital home in 2004 and claimed I.S. The DWP urged her to get marital home sold so ex bought her out and she was awarded £36,000 in July 05. I.S ceased as expected. Client bought a second hand car for £8500 and paid off arrears of CTax and Rent. She also paid back her mother to whom she owed £10,500. She lived off the rest and came to me in Sept 06 as she'd reclaimed I.S but been turned down due to capital. Client had not appealed within timescale so we submitted a fresh claim. I sent off a letter from mother re the repayment of the loan. Also receipt for car. Client supplied full bank statements from 2005 to date, which showed regular withdrawals of money...perfectly reasonable seeing as she was bringing up three children.

Anyhow, she has just been turned down again, same reasons, the DWP want more clarification on how money was spent. I don't know what else to send. I feel this client is genuine, as does a contact i have in the I.S office. Unfortunately the DM didn't agree.

Client has built up huge rent and CTax arrears and has been in court re repossession of home. She has been given 8 weeks to resolve benefits and is due back in court Jan 18 where judge says he will have no choice but to grant possession order. The LA have been really good so far, also fully believing client to be genuine.

Surely the DWP must see her as being below the capital limit, if not having no savings at all. Any one have any ideas on how to go forward with this one, time is short. I plan a reconsideration but have no 'new' evidence to send.

It appears that the DM is assuming a notional capital. In order to do so they have to establish that on balance of probability the client has delibarately deprived themselves of capital in order to take advantage of the benefit system. Many DMs do not realise that they have to make this causal link, and apply deprivation rules just because capital has been spent.
My advice is not be distracted by their agenda. Your reconsideration request should focus on the reasons for the expenditure. In your case, the fact that the capital has been spent over a period of time makes the case for delibarate deprivation weak, as does what she spent the money on and the pattern of expenditure. We have won all our appeals in these types of cases with the consequence that our local DMs decision making has improved dramatically! We also requested that these appeals were expedited because of the hardship caused to the client and potential impact on HB/CTB.
You say that the LA are supportive. Can you not get them to assess HB and CTB on the basis of nil income until the IS is resolved? (Also if she if she is an LA tenant the DJ does have a choice as to whether or not possession is granted! The eight week adjournment period may give you a lever to use with JC+ to force an urgent recon.)