UC and if you go over 16k?

NedS

HillStreetBlues said:

NedS said:

Yes, it potentially lessens it's relevance to UC and I would not want to depend on it applying to UC at a tribunal.

A better question to ask is what is what point of law was that guidance based upon? Is there a regulation in legacy benefits that addresses the order in which income or capital are spent?

If there is a regulation in the legacy benefit legislation that covers spending from income/capital, and an equivalent regulation has been omitted in the UC Regs, then one could base arguments around that fact.

Otherwise, in the absence of any relevant legislation, it is probably reasonable to assume that generally income is spent before capital.

I've done as much research as I can,  and it might be from case law CIS/515/2006 https://administrativeappeals.decisions.tribunals.gov.uk//judgmentfiles/j1970/CIS 0515 2006-00.doc

Evidence

 

42         The next issue, as illustrated by that random example, is the question of evidence of expenditure. The question is put in this form: how is it to be shown that a payment out is properly made as a deduction from capital? But the assumption behind the question is wrong. In an ordinary account into which someone pays earnings, pensions or benefits, the routine payments out are not payments out of capital at all. They are payments out of income. Once the error in the current approach in the schedules is realised, much of the substance of this problem disappears.  It is a complete waste of time chasing every single receipt of a claimant in order to see if this is a justified payment out of capital if it was not paid out of capital at all. The papers in this case reveal the absurd detail into which the case has gone because of these errors. The receipts – each of which has been copied into the papers and has been the subject of an individual decision on behalf of the Secretary of State - vary from till receipts from ASDA for salad bought cheap for 15p, from Macdonald’s for a double cheeseburger, and from Tesco for groceries totalling £1.79 (and many other small receipts of those kinds) to a diamond solitaire ring bought for £875 and one or two other large expenses, with items in between such as taxi receipts from Tenerife, items of clothing and household goods, a theatre ticket for the Grand Theatre, Blackpool, the account for a holiday in Presthaven Sands, and a course of Spanish lessons for Mrs S’s son.

Thank you. So for now, lets assume that spending comes from income unless it can clearly be shown otherwise.

Para's 32 onwards make interesting reading.

Para 38 is very interesting:

38 I also reject the proposition that if she holds over some benefit from one month to another (perhaps saving for a holiday two months ahead) that those short term savings left over at the end of each month become capital. A longer view must be taken than that. A good practical rule may be the 52 weeks allowed in paragraph 7(1). Or the matter may be looked at by identifying total capital from time to time as suggested above, with a view to identifying increases in sums held from one date to another for which there is no clear explanation. So if the sums are paid into accounts such that they cannot be withdrawn without a penalty in the short term (such as fixed term or tax privileged savings) then they may become capital on payment in. If the sums accumulate in an account over a period, but for a specific reason (such as saving over a longer period to afford an overseas trip to see relatives) and the expenditure is made for that purpose, then that would not be capital. But if sums accumulate from one year to the next, and the claimant has no specific plans to spend them in the short term, then they will at some point become capital. When precisely that point occurs is a question of fact.

As we know ADM H1050 says income becomes capital if it has not been spent by the end of the AP after the one in which it was received. However, unlike much of the ADM guidance, there is no UC Reg citation for this (I've searched the UC Regs and couldn't find anything to this effect). Hmm, and you have provided case law rejecting exactly this treatment of income.

Sometimes DWP have to write guidance for things that are not defined in legislation, and the legal department just come up with what they consider is reasonable and they think they can reasonably defend in court, until a tribunal tells them otherwise. Perhaps whomever wrote H1050 was not familiar with para 38 above.

HillStreetBlues

@NedS
The trouble I find with the DMG it often quotes the regs, but not the case law.
It's possible that the guidance of what is spent being income before capital comes from this case law, but the ADM H1050 comes from a later case law where Para 38 view has been overruled.
Looks like a bit more digging in on the cards for me.

HillStreetBlues

@NedS
Tthere is CH/852010 https://www.rightsnet.org.uk/?ACT=39&fid=8&aid=122_8oikf3771HyHwVZf05Sv&board_id=1

12.  The general rule (see (R)IS) 3/93; R(IS) 9/08; R(PC) 3/08) is that a payment is treated as income for a period equal to that for which it is attributable, and, after that period has expired, it can become part of the claimant’s capital.  In R(PC) 3/08 the Commissioner, having commented that R(IS) 3/93 was based on the general proposition, supported by R(SB) 2/83 and R(SB) 35/83, that payments received as income were not capital merely because of their receipt into a claimant’s current account, but only after their transformation into capital, went on to consider when income would become capital as follows:

‘The main indicator of the metamorphosis into capital of income paid in respect of a period will be the expiry of a length of time equal to that period. I accept that there may be different indicators. For instance, if the income were paid directly into or transferred into something obviously identifiable as a savings vehicle (like an ISA or a savings account with a notice period or perhaps a broader category), it might become capital at that point

It seems the consensus of opinion is that it's income in the period paid, then it becomes capital.
It does go on to say there might be times income can be turned into capital straight way, but it's only a might, there was no firm ruling on if it does or not.
As there is no mention in the guidance, I expect that there was either there hasn't been a firm ruling on that issue, or there was and it was ruled income doesn't become capital simply because of a transfer.

blackstar

UPDATE

We got a letter today which was the results of our Mandatory Reconsideration.

It said 
"We have reviewed the orginal evidence you provided and any new information you may have given us

We have changed our orginal decision 

The reason for this decision is
I have established that your capital should be considered as:

£x amount 29th may - 28th June 2025 AP

£x amount 29th June - 28th July 2025 AP"

The above amounts were almost identical to what we calculated them to be using H1050. They were only a few pence off our calculations. 

There was no explanation as to how they came up with their figures. I can only presume they looked at all pur evidence and bank statements and spreadsheets of how we worked out based on H1050 and agreed. Or they did their own calculations and came up with almost identical figures as we did. 

It would have been helpful if they had told us how they came up with it and a easier solution for the future rather than weeks of delays and MR and sending off papers and documents etc....but nothing. .....

So guess this is what we will have to do every month from now on too....

NedS

blackstar said:

UPDATE
...

The above amounts were almost identical to what we calculated them to be using H1050. They were only a few pence off our calculations. 

Really pleased you got a good outcome.

Please can you confirm how you calculated them using H1050? Did you deduct ALL income received in the AP, or only the income remaining after any regular outgoings?

This would be useful to know exactly how DWP have applied H1050 in your case (although others should note DWP may not apply the same reasoning on all other cases)

blackstar said:

So guess this is what we will have to do every month from now on too....

Going forward it's up to you to accurately declare your capital on the last day of each AP, assuming it's over £6,000. If there's any messing around, I would refer them to the outcome of your previous MR on how to calculate the capital correctly.

If it were me, I think I'd take a holiday and/or do some home improvements. Get my capital under £6,000 and the issue goes away.

blackstar

Thank you Ned.

I had requested in my MR 

1) A simpler solution going forward with regards to Income and Capital.

2) An explanation as to how they have made their decision when they make it and a breakdown of it all. They didn't do that. 

Although it maybe obvious that they have used how we have done it based on H1050 and done the same.

Yes we just added up all our monies which included income and capital on the last day of the AP and then declared it all on money savings and investments then we calculated all income ie salary and Benefits we had received  in that AP and wrote in the journal that we believe based on H1050 our income which comes to X amout should be subtracted from that total figure we declared as this not capital but income received in that AP.

It should have been straight forward but unfortunately it took weeks of a delay and a MR and sending off and waiting for bank statements and then uploading them only for UC to state they were not the correct dates or not proper statements and more delays and so on and so forth. And ofcourse no UC for weeks and weeks. 

I dont see why we cant just do what they did and just only declare our capital and just subtract our income from our capital on the last day of every AP ourselves as after all we only need to declare capital and not income. And clearly they agreed with what we did as they came to the same figure, other than a few pence. 
UC tell us to declare our money, savings and investments. Which doesnt include income received in that AP does it? If not then we shouldn't declare it then should we and then that saves them having to subtract our income and weeks of delays and hours and hours of getting documents together? Surley?

I was also hoping they would say that in the MR then that would have solved the issue. 

So do we now go though the same thing every month for them to subtract our income from our money savings and investments? 

Yes I hear you about the under 6k option.

HillStreetBlues

Glad the MR worked, but without how they came to their decision it does leave questions unanswered, which going forward is unhelpful.
Hopefully the next AP will just look at that MR and rubber stamp your figures.

blackstar

Thanks.

Hope so. Any idea of places I can make a complaint too about this unreasonable process? Ive already made a complaint via their website and my MP and they never replied. 

This issue needs to be addressed and made simpler for all. Any idea anyone else? A Lord?

huckster

Is this continued arguing about savings whilst on benefits, evidence that benefits being paid are too generous?

Government are looking to deal with the UK Government's financial budget difficulties and cutting benefits is one of the areas of spending they appear to be constantly reviewing. I suspect an MP receiving letters about accumulated savings whilst on benefits must have some influence on their view of whether benefit levels can be cut. And most likely why they have not responded, when there are probably constituents going through major crisis moments such as being made homeless etc.

DWP have a responsibility under legislation to have robust processes in place, where they constantly scrutinise benefit claims to ensure that they are on the correct basis. 

I think you have to take the MR as your win. It is permanently recorded on your claim records now and if there are Decision Maker queries on future savings being reported, they are likely to look at the previous MR decision.

HillStreetBlues

blackstar said:

Thanks.

Hope so. Any idea of places I can make a complaint too about this unreasonable process? Ive already made a complaint via their website and my MP and they never replied. 

This issue needs to be addressed and made simpler for all. Any idea anyone else? A Lord?

They could make it simpler by removing the tariff between £6k & £16k and just have one limit, but that risks a reduction of the current upper limit.
The DWP don't like to apologise, I've never had a sorry we got it wrong after my wins at tribunal.
In the DWP view I expect they will say that the system worked as it should, with the MR revision (they ignore how it affects the claimant)