DWP say paying back an overpayment to THEM is deprivation of capital is this right?

handlewithcare

Hi i really really need some advice for a friend of mine.

Ok a bit of background story my friend is blind and has been on benefits for a while IS, DLA, HB and CTB . Earlier this year he had an interview under caution because he had savings over £16,000 and didn't declare it. ( this is partly down to him not getting any support so wasn't managing his money / paperwork and also because he can't get out much because of disabilities his money accumlitated )

Anyway he has recently received his overpayment letter from the DWP for Income Support which is around £23,000. He wanted to pay this all off so he can start afresh with his benefit claim and go back on IS legally. The DWP have now said that if he pays this off to them then this will be classed as deprivation of capital EVEN THOUGH HES PAYING THEM!! is this right and can they do that?. They have told him that the decision maker will class it as deprivation of his cash so therefore not approve him for any future claims of IS. This all seems a bit bonkers to me. He really wants to pay them back and do the right thing but he's in a catch 22 situation of either he pays them back and then he's broke and can't get on IS again or they take him to court.

Any advise would be great as i haven't got a clue on this one how to help him. Thanks in advance:)

midnight_express

How much is the overpayment ?

handlewithcare

The overpayment is £23,000 and he's got about 25£ in savings

Cpt.Scarlet

Deprivation of capital can occur if you clear a debt that you are not required to clear at that time, for example paying of a mortgage early.

I think there are rules regarding how an over payment can be recovered which mean that they can only take a weekly amount. This being the case, clearing the debt in one would be classed as deprivation, especially as it would be done with the intent of claiming benefits.

somethingcorporate

£9k is a lot to be over the threshold without knowing.

If the expectation is to pay back the overpayment weekly / monthly from benefits then I am guessing I can understand their position but it is a bit perverse really. I would double check what they say with a manager.

princessdon

They are correct - over payment (more than expected) of debts is classed as depravation of assets.

Eg if you owed £5000 on a car loan - you can't pay it off, you pay the agreed sum and once money has gone legitimitely you can claim.

If you had baliffs at your door for council tax demanding the whole year - you can pay this - is is necessary.

Most people who pay HMRC/DWP have a payment plan - they will be judging against this.

What is their preferred payment terms?

handlewithcare

But surely they want their money back is it not easier for them to get it back asap. He doesn't want this hanging over him for years and he has the money ready to give them.

handlewithcare

princessdon wrote: »

They are correct - over payment (more than expected) of debts is classed as depravation of assets.

Eg if you owed £5000 on a car loan - you can't pay it off, you pay the agreed sum and once money has gone legitimitely you can claim.

If you had baliffs at your door for council tax demanding the whole year - you can pay this - is is necessary.

Most people who pay HMRC/DWP have a payment plan - they will be judging against this.

What is their preferred payment terms?

They want to take a weekly amount of £100 pounds until its all paid up. i just find this really odd i never knew they could do this

princessdon

handlewithcare wrote: »

But surely they want their money back is it not easier for them to get it back asap. He doesn't want this hanging over him for years and he has the money ready to give them.

But he is doing it to claim benefits again - from THEIR point of view it is collect £23 K now and pay the same out in benefits or take it montly and save on paying the benefits.

They win this way - so you can see why they are doing it. You even say they are doing this so he can claim again.

If they said - We won't pay for 5 years any benefits - he wouldn't be so quick to pay them back.

As harsh as it sounds you can see their view - this saves them money.

rogerblack

It's worth also looking at if the overpayment decision is correct.
For example, have they simply stopped the benefit (reteroactively) once the capital hit 6K?
Or have they properly computed that the amount overpaid was (for example) 1/week for IS at 6250, ...

handlewithcare

somethingcorporate wrote: »

£9k is a lot to be over the threshold without knowing.

If the expectation is to pay back the overpayment weekly / monthly from benefits then I am guessing I can understand their position but it is a bit perverse really. I would double check what they say with a manager.

He has double checked with a manager and also a manager for the decision makers. As i say he was not getting the required support. He knows what he did was wrong whether knowingly or unknowingly he just wants to do the right thing and pay them back now