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.

Spoonie_Turtle

This has slightly spooked me - if I'm wrong in law then I'll accept that, but I'm filled with slight horror that I may have been advising people incorrectly based on flawed understanding from the guidance and what I learned from this board.

How does that work if income is spent first, how does one work that out with various payments in at different times of the month?  I suspect it's beyond what my foggy brain can do (if I were up to it I wouldn't be so ill to be needing to claim UC in the first place!).


I still haven't had the decision about those APs but I have had my July statement and of course they're saying I have over £6k in capital and making a deduction.  They are definitely wrong as I didn't even have over 6k in total, but I can't do the MR until I have the bank statements at the end of the month because online banking doesn't show past balances during the month, only transactions.  (I checked back and I posted on the 8th that my total was below 6k and it didn't suddenly increase before the end of that day.)

Can/should I request a WSOR for the decision that I have over 6k in capital for this past AP?  Is there any point, since it will be clear to anyone with a braincell that I can't possibly have had that amount of capital when I didn't have that amount of money at all?

Edit: if I should request it, does this work?:

"Hello,

I would like to request a written statement of reasons for the decision determining that I have £xxxx.yy capital  for the Assessment Period ending 9th July 2025, including a full breakdown of the calculations used to reach this decision.

Thank you"

NedS

Spoonie_Turtle said:

This has slightly spooked me - if I'm wrong in law then I'll accept that, but I'm filled with slight horror that I may have been advising people incorrectly based on flawed understanding from the guidance and what I learned from this board.

How does that work if income is spent first, how does one work that out with various payments in at different times of the month?  I suspect it's beyond what my foggy brain can do (if I were up to it I wouldn't be so ill to be needing to claim UC in the first place!).


I still haven't had the decision about those APs but I have had my July statement and of course they're saying I have over £6k in capital and making a deduction.  They are definitely wrong as I didn't even have over 6k in total, but I can't do the MR until I have the bank statements at the end of the month because online banking doesn't show past balances during the month, only transactions.  (I checked back and I posted on the 8th that my total was below 6k and it didn't suddenly increase before the end of that day.)

Can/should I request a WSOR for the decision that I have over 6k in capital for this past AP?  Is there any point, since it will be clear to anyone with a braincell that I can't possibly have had that amount of capital when I didn't have that amount of money at all?

As they appear to have made the decision and the capital is now showing on your claim and causing a deduction in ongoing payments, I would now report a change effective today to declare your current capital as under £6,000 (assuming it is below £6000 once CoL payments are disregarded). That should at least resolve the issue of any ongoing deductions moving forward. They may ask you to provide statements showing your current capital to verify that as of right now it's less than £6,000. You can do this any time before the end of the current AP, but keep in mind it may take them some time to verify it if a DM decision is required to disregard the CoL payments.

Rectifying all previous mistakes can be dealt with by your MR.

WRT their reasoning and how they calculated your capital, lets wait and see any response (WSOR) they provide.

I've never seen an example of income being considered (or even being asked to be considered), so I've no idea how they will interpret that. I think the point of the previous discussions was to highlight that there may be more than one reasonable interpretation. If I were arguing it at tribunal, I think I'd argue that there is no specific legislation or guidance that states how income should be treated, only that it doesn't become capital until the end of the following AP if it remains unspent. I would simply argue that in the AP under consideration it's income, not capital so DWP should not be including it (simple, and something the legislation is clear upon), and let them try to argue something to the contrary. I would take the clear, easy to understand position and then let DWP try to argue a more complex interpretation that is not specifically supported by legislation or their own guidance, and is to the detriment of the claimant. Tribunal magistrates like clear arguments they can understand.

Spoonie_Turtle

Thank you, I've now done that. 

For the record, they ask for the current totals and don't allow for any of it to be income in the automatic calculation (but it did take off the COL as I declared it as Welfare Support payment, which is the closest category I could see on the list.  For people not as familiar with the system [all thanks to members here] even that list would be confusing, I'm sure).

Edit: ohhh I wish I'd taken a screenshot of the page where it asks if you have any of the list, because one of the options included Tax Credits and I'm now not sure if that list item was potentially an income option.  But I can't go back to check.