This was one of the consequential amendments to the Child Benefit ruels to allow CH B to be paid to the parents of certain young people in particular sorts of education and training. This had knock-on results for elegibility for other benefits, certainly for IS (by the estrangement route) and JSA. Reg 56 (?) of the HB regs covers students and deals with those who are exempt from the no-claim rule for full time students. The definitions are amazingly circular and have produced some anomalies but I anc't see why it shouldn't apply - it looks to be in the same terms as the IS regs.
It's silly to say someone must be claiming Ch B for them. They wouldn't be claiming HB in their own right if they were living with soemone who was claiming ChB. Mybe your LA is thinking of qualifying young people living with their parents and being included on the parents' claim for HB, in which case they're probably right.
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