Hi. I was speaking to a Housing Association worker who was advised by a HB officer that the diminishing capital rule cannot be applied when capital has been given away rather than spent (because of a Commissioner's decision).

Her client gave £17,000 to her daughter (in the form of government bonds) some time last year after losing her HB due to capital limits. It's too late to appeal the notional capital decision (and I don't think there would have been much of a case). The client is over 60 and does not have Pension Credit (gc or sc) entitlement.

If we apply the diminishing capital rules the client would now have HB entitlement.

Have I missed something? p935 of CPAG does mention pre-1990 rules which emphasis that these relate to how money was SPENT but I don't know of anything else.

Have advised that the client applies and we take it from there but just thought I'd like to know about such a decision if it's correct.

Thanks, Liz

Unless I have missed a Comms decision somewhere, I can only assume that the decision is not that your client has notional capital, but that in reality your client still actually possesses the capital.

I.E - that the transfer of the capital to the daughter is actually a device to try to hide your clients ownership of the capital rather than a genuine gift.

That the only situation that I can think why the diminishing notional capital rule would not apply. I assume we are not talking about an overpayment of benefit here, just a straight non-entitlement?

Ahh, I bet that's what has happened. We haven't seen any decision letters and so on. Thanks for replying.

We are talking about non-entitlement.

The daughter used the capital to buy a house so the money is no longer held by either of them. How can we take this forward? If the client proves it's gone will HB then look at deprivation?

thanks.

As jmembery said its about possession. If he has genuinely ceased to possess it then he has deprived himself of it. That is trite law and by itself amounts to nothing. For the notional capital rule to bite then the intention behind the deprivation needs to be examined. It is here and only here that a decision finding notional capital can be founded.

Once a notional capital decision has been made then, subject to other conditions, then the diminishing capital rule should be applied.

Thanks.

I am puzzling on this one and was talking to a colleague about a previous case also. Housing Benefit are suggesting that once an actual capital decision is made then it will not change - ie. even if the client reapplies say 6 months later they will be assessed as having the same amount of capital.

I felt that the client needs to reapply with proof that the 'actual capital' has been spent by the friend/relative in order to get a notional capital decision made (presuming we lose the deliberate deprivation arguments). The diminishing capital rule could then be applied and the client will be brought below the capital level within a period of time.

But am I using a convuluted process un-necessarily? It occurs to me that if this is how it would work then local authorities are able to delay accepting a reduced capital amount by making an actual capital decision rather than a notional capital decision (and in this way delay paying out HB). In the case my colleague heard about the client had already gone through the appeals process once - but the tribunal had decided it was actual capital even though his ex-wife had spent it.

Thanks to both of you for your help so far. Can you shed further light on this for me?

“Housing Benefit are suggesting that once an actual capital decision is made then it will not change - ie. even if the client reapplies say 6 months later they will be assessed as having the same amount of capital”.

Some HB departments don’t half talk rot sometimes. A fresh claim is a fresh claim and a decision on it must be based on the circumstances obtaining at the time as well as those of the past. If the HB department believe that the claimant has capital at that point then they must prove it.

Are you saying that the decision that the claimant has actual capital was made more than 13 months ago? If so then, as you say, the claimant needs to make a fresh claim.

However the claimant has not necessarily deprived himself of the capital merely by converting it into a different form, i.e. property. You will need to investigate the actual transaction between her and her daughter and what their actual intentions were at the time and just what each of them understood the transaction to signify.

Then you will need to determine who has the legal and beneficial ownership of the property. Was there a genuine gift to the daughter? Was there an understanding that the daughter would buy the house for the benefit of her mother, the daughter holding legal title only? It would seem that there are a lot more facts to be established before you can give accurate advice yet.

Regards
Paul

Thanks for this - good to have clear talking!

This has come to me from a distance and relates to a client who doesn't seem quite clear about applications/decisions made so there's quite a lot of unravelling to do.

The Housing Association worker feels very strongly that it was a gift and made in order to obtain benefit. We've talked it through and I have advised her to discuss it further with her client.

Thanks for your help.

Liz

Might be worth asking the LA concerned why they think there is a diminishing notional capital rule