Hi there

I have a client with a huge IS OP due to failure to declare capital and DWP has produced a diminishing capital calculation.

Funnily enough I had been thinking about this only yesterday (don't go there...) and I thought I'd got it straight in my head. It's the business about offsetting overpaid benefit.

I'd always assumed that you diminish the capital by deducting the whole of the previous 13 wks ACTUAL overpayment - ie in this case where the actual capital never drops below £16k, all the benefit paid. The DWP programme does it by calculating pretend entitlement based on the diminished capital, ie with tariff income, and then working out how much would have been overpaid on that basis. They then diminish the capital by the "pretend" overpayments, which are very much less (usually just the amount of the tariff income) than the actual overpayments. This means that instead of, say, reducing the actual capital by 13 lots of £150 per week, they are diminishing it by osmething more like 13 lots of £20 per week. So it goes down very much more slowly.

The regulations say that you take off the overpayment, not the deemed or assumed or notial overpayment, to produce diminishing capital.

Does anyone out there (a) get what I am worried about and (b) know the answer?