Look at Reg 20 (1) of the HB Regs, which indicates that a person only has to be responsible for a child or young person. If there is a doubt as to whom the child or young person lives with paragraph 2 of the same reg comes into play and it is only then that entitlement to CB is looked at.
I had a similar scenario with one of my clients, where she had custody of her granddaughter but had not claimed CB. The LA agreed to include the granddaughter as a dependant child, before CB was awarded as the client had responsibility for the child, who was "normally" living with them.
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