CICA Compensation and UC

Hi

Client is currently the appointee of her daughter’s benefit is thinking about whether she needs to claim UC - currently only claiming PIP.

Client’s daughter received a CICA payment for approx £8000 and she has a couple of questions regarding this and UC:

1. If left as it is, would this be counted as capital or is it disregarded as some personal injury payments are?

2. She looking at putting this in a “trust fund” for her to access either at a later date or have it paid as and when she needs it? If she put this in a trust fund before claiming UC, is that counted as depriving income?

3. If the “trust fund” is paid to her monthly or “when required”, is that counted as regular income and then deducted from her UC?

Any help much appreciated.

Thanks

Payments made under the Criminal Injuries Compensation Scheme are “personal injury payments” under reg 75 (1) and (4) and (5) of the UC Regs 2013 if:

held in trust
administered by a court etc
It appears that the capital is not going to be held in trust so will be counted as capital unless a discretionary trust fund is created.  Any capital or income from the trust fund is ignored as it is discretionary. 
Deprivation may be an issue.  If the client has asked the question about timing of and deprivation and a UC cliam then, prima facie, it would appear that the purpose is to secure UC or increase the amount of UC.

I don’t think that is quite right.  reg. 75 (4) provides,

(4) If the sum is held in trust, any capital of the trust derived from that sum is to be disregarded in the calculation of the person’s capital and any income from the trust is to be disregarded in the calculation of the person’s unearned income.

(my emphasis)

That same wording in relation to legacy benefits has been held to mean that if the source of the capital sum was originally compensation for personal injury, then it is disregarded once placed in trust - and that is the case even where there has been an intervening period (perhaps of several years) where the funds were not held in trust and so counted as capital. In those specific circumstances - because the regs. make express provision for them - deliberate deprivation doesn’t arise.

Yes - reg.75(4) does the job so far as the actual capital is concerned, once it is “held in trust”. And there is the decision in Q v SSWP (JSA) [2020] UKUT 49 (AAC) (on the IBJSA disregard that applied where “the funds of a trust” were derived from a personal injury compensation payment) that those words did not require the use of any special form of personal injury trust or what would be produced by a high street solicitor, but applied to any situation in which there was a split between the legal ownership of the funds and the beneficial ownership. So when such funds in the claimant’s own name were transferred into joint bank or building society accounts with one or other of her parents, a resulting trust came into existence because she remained the sole beneficial owner of those funds. I can’t see that the words “held in trust” would produce any different result on that.

However, there is still an apparent problem for UC over deprivation of capital under reg.50 on notional capital. That is because the UC Regs do not have a provision like reg.51(1)(a) of the Income Support (General) Regulations 1987 (and equivalents for ESA and JSA) specifically taking the placing on trust of funds derived from a personal injury payment out of the deprivation rule. So potentially it could be argued that if a claimant holding the capital absolutely in their own name (where the disregard under reg.75(6) only lasts for 12 months from the date of the initial payment) places the funds on trust, by whatever method, knowing of the effect of reg.75(4) they have done so for the purpose of securing or increasing entitlement after the 12 months runs out. But I know of no evidence that a less favourable position was intended for UC claimants as compared with the legacy benefits rules and there is no mention of the issue in the ADM. There is a strong case for regarding reg.75, with its clear policy of disregarding personal injury compensation in whatever form held (with the sole exception if a claimant chooses to keep the capital solely in their own hands for more than 12 months), as constituting a complete code on such compensation, thus excluding consideration of reg.50 on notional income. That would perhaps involve saying that reg.75(1) (reg.75 applies where a person has been awarded (or there has been agreement) a sum in consequence of a personal injury to that person) means that only reg.75 applies.