SDP Gateway Conundrum

Hello

Sorry in advance for the long winded explanation. It’s rather a mess this one.

We have a client who was in receipt of IRESA, who came into some capital well over £16k (money, not property) in February of this year from an inheritance. She got the SDP on her claim as she was a PIP recipient.

She intended to use the money to purchase a house, which she did. She told ESA as soon as she got the money in Feb. They told her that her claim would be suspended until she had disposed of the capital, but that when she had spent the money on the house, her ESA could be reinstated. As there was no entitlement to CBESA, this appears to us to be incorrect advice, as the receipt of the capital terminated the ESA entirely, rather than suspending it. The only way back onto ESA then would be if she spent the capital within a month, in which case she could benefit from the SDP gateway rules and reclaim ESA as she would have had the SDP in the last month.

She was issued with a decision in February 2020 terminating her IS, but suggesting that the question of ESA entitlement could be revisited if and when she has spent the capital. Due to Covid-19, the house purchase was delayed and finally went through in late May 2020, so she had been without ESA for around 3 months at that point. She contacted ESA in late May and told them that she had capital under £16k and they reinstated her IRESA. They then realised that perhaps they shouldn’t have and a couple of weeks later, they terminated ESA again.

The further complication in all of this is that she continued to receive HB throughout (including the SDP) and continues to do so.

She only came to us for very recently. We have informed her of her duty to inform HB of the change in circs - she seems to have been given some misleading advice about her duties in this regard by the DWP (I think someone got confused about the rules where capital from the sale of a previous property in which a claimant lived can be disregarded if it’s earmarked for the purchase of another property).

Our advice was to make a claim for UC, as she was not entitled to reclaim legacy benefits (because although she had been paid HB including the SDP in the last month, she was not in fact entitled to it since February). As far as we were concerned, being entitled to a benefit including the SDP means being entitled to a benefit including the SDP, not being ‘wrongly paid’ a benefit including the SDP.

She has now tried to claim UC, but the UC system isn’t allowing her to, because it’s saying ‘you get the SDP, or did get it in the last month’ (which she did, wrongly, in respect of both ESA and HB, so she got it but wasn’t ‘entitled’). 

So, my question is this. If she now reclaims ESA and is awarded it, is the claim valid even though it should never have been made, because she should have never been gatewayed out of UC? In other words, can the whole ESA claim be invalidated by a subsequent conclusion that the client should have claimed UC, or can the question of entitlement to ESA be divorced from that (as she fits all the other criteria at present - incapable of work, no other income, no capital etc.), allowing her to remain on ESA?

Bit of a rock and a hard place. 

Cheers

Alex

Capital intended for the purchase of a new home is surely disregarded?

Mike Hughes - 01 July 2020 02:10 PM

Capital intended for the purchase of a new home is surely disregarded?

Isn’t that only if you’ve sold a house and are going to buy another? This is an inheritance.

Has she moved into the purchased house yet, or is she still renting?

Paul_Treloar_AgeUK - 01 July 2020 02:14 PM

Mike Hughes - 01 July 2020 02:10 PM

Capital intended for the purchase of a new home is surely disregarded?

Isn’t that only if you’ve sold a house and are going to buy another? This is an inheritance.

Doh. Good spot Paul. Long week :(

I think you’re correct Alex. The capital couldn’t be disregarded and so both IR-ESA and HB entitlement ended. The fact that HB continued in payment doesn’t help, because there wasn’t actually any entitlement (which is how the gateway rules are expressed).

However, if she was still receiving HB (even though not entitled) and still renting, and then spent the capital and then notified HB, it would be a closed period and so she would be entitled to HB again now, and that would close the SDP gateway for UC. I think that’s probably why Charles is asking whether she has moved out of rented.

EDIT: not when - that’s irrelevant as this only works if still renting

Timothy Seaside - 01 July 2020 02:52 PM

However, if she was still receiving HB (even though not entitled) and still renting, and then spent the capital and then notified HB, it would be a closed period and so she would be entitled to HB again now, and that would close the SDP gateway for UC. I think that’s probably why Charles is asking whether/when she moved out of rented.

Precisely.

Charles - 01 July 2020 02:53 PM

Timothy Seaside - 01 July 2020 02:52 PM

However, if she was still receiving HB (even though not entitled) and still renting, and then spent the capital and then notified HB, it would be a closed period and so she would be entitled to HB again now, and that would close the SDP gateway for UC. I think that’s probably why Charles is asking whether/when she moved out of rented.

Precisely.

But thinking about this, wouldn’t the HB end anyway because of the capital - as a house it’s disregarded for ESA but I don’t think it is disregarded for HB is it?

EDIT: sorry I haven’t put that very well. The house is disregarded for ESA only if it’s her home, yes? Which would mean the rented property can’t be her home any more, so it is the end of HB.

EDIT 2: ...unless there was an unavoidable liability for rent on the rented home (i.e. notice period) and she’s still within that period

So to tidy up my posts a bit, I’m saying that I think the only way she could open the UC gateway would be if she has moved into her new home within the past 28 days, and still has an unavoidable rent liability on her old home and notifies HB now of all the changes that have taken place. Then it would be a closed period with continuing (resumed) entitlement, so she could claim IR-ESA again.

I hope I don’t reread this after I post it and realise I have to edit it again.

I was thinking perhaps Schedule 6 Paragraph 2 could apply?

http://www.legislation.gov.uk/uksi/2006/213/schedule/6

Edit: And Schedule 9 Paragraph 2 for ESA:

http://www.legislation.gov.uk/uksi/2008/794/schedule/9

Charles - 01 July 2020 03:56 PM

I was thinking perhaps Schedule 6 Paragraph 2 could apply?

http://www.legislation.gov.uk/uksi/2006/213/schedule/6

Edit: And Schedule 9 Paragraph 2 for ESA:

http://www.legislation.gov.uk/uksi/2008/794/schedule/9

That does seem to cover it, doesn’t it?

I had thought that disregard had to be justified, but now I think the conditionality only applies to extending the 26 weeks. So you can wait up to 26 weeks after acquisition in all cases (intention is the only condition), and extend that time if necessary to take up occupation. It’s more generous than I thought.

So we have two time-limited ways the gateway could be closed - up to 26 weeks if she hasn’t moved yet, and up to 28 days if she has.

Hello folks

Thanks for all your responses.

Just to respond to Mike’s post, the money she had couldn’t be disregarded as it was an inheritance, not the proceeds from the sale of a property.

Currently, she intends to move into the property so it’s value should be disregarded now she’s purchased it, as per the HB regs and ESA regs kindly posted by Charles above. She hasn’t moved yet.

My concern with the housing benefit is that the decision will be made to terminate it from February. Even though she technically re-qualifies now, as the value of the property is disregarded, if a HB decision is made to terminate from February, that ends the HB claim from Feb. Does that not mean that she would have been required to make a new claim from the date of the purchase of the property in May, which she hasn’t done/couldn’t do? Once entitlement to HB ended from Feb, is that not the end of the HB award? Can an overpayment be created for a past period but then the claim resurrected for a current period (when she would qualify) without a new claim? If so, what is the legal mechanism for this? I hope this makes sense.

Cheers

Alex

Put simply, yes, the claim can be resurrected. This is due to the closed-period supersession rule.

If you want to see the guidance for HB DMs about this, look here (paras 6.662-6.664):

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/236974/hbgm-c6-reconsidering-revising-superseding.pdf#page=30

Many thanks Charles, as always that’s really useful.

Cheers

Alex