Incorrect UC review

huckster

Remember that they have referred to a Decision Maker regarding whether a civil penalty should be included.  As part of this process the Decision Maker should review whether the capital has exceeded £6000 at any point. The Decision Maker will look at your journal messages and might conclude that capital has not exceeded £6000 and therefore there has not been any overpayment.

If the decision is that you have been overpaid, then yes ask for written statement of reason before applying for MR.

NedS

There is currently a thread on rightsnet about when income becomes capital on UC:

https://www.rightsnet.org.uk/forums/viewthread/21288/

It will be interesting to follow that discussion if it develops with any advisor's first hand experiences of DWP practice on this matter.

HillStreetBlues

@NedS
It's very interesting, maybe it should have it's own capital v income thread with a link to that thread on this one.

HillStreetBlues

I've been pondering the RN thread and does throw up some interesting questions.
I would go a bit further from my personal experience (UC review).  Where it states the DWP will class as capital being spend from a mixed (capital & income) account  AFAIK the DWP doesn't check which account it's paid from. So even if it's spent from the current account with only income in it that is not checked as it's assumed that it's always capital that is spent.
If does throw up challenges if the DWP decided to change tack. Clearly if paying from the current account with only income in it then can't see how a person would argue that it was capital was spent. Also then there is the mixed account if the DWP started to assume it was income being spend how could a person counter that.

 

Yamor

HillStreetBlues said:

I've been pondering the RN thread and does throw up some interesting questions.
I would go a bit further from my personal experience (UC review).  Where it states the DWP will class as capital being spend from a mixed (capital & income) account  AFAIK the DWP doesn't check which account it's paid from. So even if it's spent from the current account with only income in it that is not checked as it's assumed that it's always capital that is spent.
If does throw up challenges if the DWP decided to change tack. Clearly if paying from the current account with only income in it then can't see how a person would argue that it was capital was spent. Also then there is the mixed account if the DWP started to assume it was income being spend how could a person counter that.

 

That's interesting, and now that you've said that, does accord with what I've come across.

There is another thread on Rightsnet about disregarded capital, which has some similar issues:
https://www.rightsnet.org.uk/Forums/viewthread/21040/
However, the Sweet and Maxwell commentary quoted in that thread, as explained by John Mesher in his last post, does caution that if the disregarded capital was paid into a segregated account, and some of it spent, then it is likely to reduce the amount of disregarded capital.
But I suppose that thread is only concerned with the legislation. It could well be that in practice, DWP will allow the full amount of disregarded capital even if is paid into a segregated account, and spent.

As you say, it could well become an issue if DWP were to change their minds. And even if not, if a particular case reaches a Tribunal (say for some other reason), the fact that DWP practice is to be lenient on this point won't necessarily mean the Tribunal will be. After all, the Tribunal's job is to apply the law, not DWP's guidance!

Now that I've also been thinking about disregarded capital, I've realised that you could have both in one situation. I.e., you could have someone with income, regular capital, and disregarded capital. It would seem that DWP will accept that when money is spent, it is first the regular capital which is spent, then the income, and only then the disregarded capital.

NedS

Indeed, there are multiple ways this could be interpreted.

Yamor said:

Now that I've also been thinking about disregarded capital, I've realised that you could have both in one situation. I.e., you could have someone with income, regular capital, and disregarded capital. It would seem that DWP will accept that when money is spent, it is first the regular capital which is spent, then the income, and only then the disregarded capital.

To me it would seem more logical that any spending would come first from income, then from capital? If I have £1000 of income per month, and £800 of outgoings/bills, surely I'm paying these regular outgoings out of my income and whatever is left over then becomes capital at the end of the month (in the next AP in UC terms). If my outgoings exceed my income, then I spend my income first and once that is exhausted, I fall back on my savings (capital) to pick up the shortfall that month?

I wondered if UC might treat that like so: If I have £1000 of income in the AP and I have £800 of outgoings showing on my bank statement in the AP, they may interpret that I have £200 of income left at the end of the AP to be disregarded. So rather than deducting the full £1000 of income received in the AP from my total balance when calculating my capital, they may only deduct any income remaining after any expenditure, in this example £1000-£800=£200 remaining.

This may then be interpreted that if I have £6500 in capital (after any capital disregards have been applied) on the last day of the AP, I cannot rely on £1000 of income being deducted from that balance leaving me under the £6000 threshold (at £5500), but may only have £200 of unspent income deducted still leaving me over the £6000 threshold at £6300.

Further to any speculation here how DWP may treat income when calculating capital, I am pretty sure that there will be inconsistency in how they calculate capital due to the lack of clarity in the regulations and no clear guidance in the ADM. One thing that is clear is that income is fundamentally different from capital under UC regs.

HillStreetBlues

I suppose all it takes is two DMs (original & MR) to state it's the income that is spent first (I agree what would seem logical) to end up at a Tribunal. I also agree the Tribunal is to apply the law, so simply stating that  how the DWP normally calculate it isn't a legal argument.
 
It has given me food for thought how I arrange my finances as don't think I could defend that I wasn't spending my at least of my income as have income and some outgoings in the same account.