Alan, forgive what may appear to be a relatively terse response; but the legislation is clear.
It is not a question of "difficulties" in getting the arrangement accepted. If the arrangements do not satisfy the provisions of Reg 10 of the Amendment Regs 1995, it is not exempt accommodation.
Either the arrangements satisfy the legislation, or they do not.
As for the "contrived" argument, the LA would potentially have strong arguments if they were satisfied that a dominant purpose of creating the liability (& that would include the basis of the arrangement) was to take advantage of the HB scheme. The idea of contrivance in these circumstances is not so far fetched as it appears. More than one LA is looking at the "arrangements" related to exempt accommodation in this context.
Sorry if the above isn't seen as being particularly helpful to reaching the conclusion you are looking for, but it would be misleading to suggest either your case is straight forward or that it was just another bolshy LA (of which, I readily acknowledge, there are too many).
It may also be of interest that at least two recent(ish) Tribunals have firmly found against claimants where it was claimed by the L/L that care etc was provided on behalf of the L/L. Both were high rent cases. The respective Tribunals found emphatically that such care had nothing to do with the L/L. I don't know if those cases have been, or will be, appealed to Commissioners.
Regards
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