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DWP investigation

Help and discussions for strategies to get out of debt
amh4
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DWP investigation

#56570

Postby amh4 » May 29th, 2017, 12:14 pm

*Warning, this is a long post* but I would appreciate some advice about a situation my daughter is in.

As a short back history, my daughter and two young children were in an abusive situation and left the marital home. In 1998 I bought (on mortgage) a small Victorian terrace house for them, after the council advised us that she could claim housing benefit, as long as it was an arm's length contract. She was intending to go to uni, get a degree and from there a career. She knew she had a struggle ahead, but was determined. The reality was however, very different

Since that time she has struggled with drug and drink addiction, debt and bankruptcy. She has worked whenever she has been able, and has been on and off benefits throughout that time. There have been times when I would let her off some of the rent so that she could afford to pay the bills and buy food, and I thought nothing about it.

However, last year, she was diagnosed with ovarian cancer, requiring extreme surgery. When she applied for housing benefit, I was sent a form, as her landlady, and was also asked to provide bank statements and accounts. I was not prepared to give the Council my financial statements, and instead sent a reply by email, answering the quetions. Additionally, I told my daughter that I would waive her rent during the period of her treatment, and we would take it from there, she did not need to go back on benefit. ( I wanted to do this as a parent for my child. Fortunately she has made an incredible recovery, and is now well, needing only 3 monthly checks from here on in. We are so fortunate in this.)

But back to the story. Last October my daughter was told she was being investigated by the Council for overpayment of benefit. She supplied bank statements back to 2010 together with her contract with me, and was then told she was not entitled to any benefit as she was living in my house. She was told she had to repay four years' worth of benefit. She bgan repaying

Then we both heard from DWP; my daughter was called for interview under caution, and I was asked to attend for interview. In my interview, it transpired that because I had not always demanded the full rent, and indeed when my grandson became ill with mental health problems, I let her pay nothing for a couple of months, the contract was not a commerical contract, and therefore invalid. I should have evicted her for non payment of rent. If I had received the rent and then paid money into her account, there would have been no problem, but as it was, she had to repay all the housing benefit she had received, and indeed might be subject to a criminal prosecution. I protested that when I could no longer afford to keep up the level of support, I had indeed issued notices to quit to her and her son and his partner and toddler son, but that was ignored.

Then on Easter Saturday, my daughter was called to a second interview under caution, set for the beginning of May. She attended, and has been told that she may be charged criminally, as during one time she applied to benefits over the phone, when asked whether she rented from a friend or relationship, she replied "only my landlady". I know that is ambiguous, but from the beginning this has been a familial contract, and also in common parlance "relationship" implies something different from "relation". Also, she was in alcohol detox, and on a cocktail of drugs to help, so not in a good place to answer. If only she had been sent a form to fill in. They had gone through the records and transcribed this conversation. She was told she would hear whether she is to be charged.

In the meantime, she had moved house, and a letter from the council was sent to her old address, (she had given her new details) dated 2nd May which I picked up last week, when I went to the empty house. In that letter she was told that she was not considered to have attempted to defraud, although still expected to repay the monies as she and I did not have a valid contract. She now has until the 6th June to appeal this judgement

My questions are:

1. Is the DWP continuing the investigation - she has heard nothing from them on that second interview, even though the Council have said that there was no intent to defraud. If so, for what?
2. Does my daughter have any grounds to appeal theCouncil judgement? We accept that the law supports the decision, but this seems to be an unintended consequence, since if they had not been paying for her to live in my house, they would have had to pay her to live elsewhere. I was only attempting to help give my grandchildren and their mother a more stable existence

Thank you for reading this. Any thoughts will be muuch appreciated.

amh4

Clitheroekid
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Re: DWP investigation

#57233

Postby Clitheroekid » June 1st, 2017, 11:46 pm

The first thing to say is that there is no automatic right to Housing Benefit when someone is renting from a family member.

If they are living with that family member they will not normally be entitled to HB at all, but where they are living in a separate dwelling there is no automatic bar to HB being paid.

However, it’s your responsibility to prove that this is a genuine 'commercial' arrangement and not one of convenience set up simply to claim HB.

The law is contained in Regulation 9 of the Housing Benefit Regulations 2006 which states:

"...9 (1) A person who is liable to make payments in respect of a dwelling shall be treated as if he were not so liable where—

(a) the tenancy or other agreement pursuant to which he occupies the dwelling is not on a commercial basis..."


In other words if the relationship between the landlord and tenant is deemed to be non-commercial – e.g. just a family arrangement - the tenant will be assumed to have no legal responsibility to pay rent and therefore won’t be eligible to receive HB.

In your case I assume from what you’ve said that the Council are saying that even though there is a formal tenancy agreement and that your daughter has been paying rent your relationship is a family arrangement and not a commercial one.

They may also be claiming that the tenancy has been contrived to appear like a commercial relationship in order that your daughter can claim HB.

So in order to defeat the Council you and your daughter have to provide evidence that this is in fact a commercial arrangement and not just a family one.

A lot will therefore depend on the history of rent payment. If your daughter has, in general terms, always paid the rent that was due that will strongly assist your case. However, if you have allowed long periods of time to elapse without any rent being paid that would weigh heavily against you, as a commercial landlord would not normally allow that to happen without taking steps to recover the money and / or evict the tenant.

It seems from the limited information supplied that the Council are saying it’s not a commercial arrangement because you allowed your daughter a `rent holiday’ while she was being treated for cancer and / or that you allowed arrears to build up without pursuing enforcement action.

As I said earlier, it will largely depend on the amount of unpaid rent you allowed to build up and what, if any, steps you took to recover the rent or terminate the tenancy.

However, from my own knowledge and experience there are many commercial landlords who don’t bother to pursue rent arrears simply because they know the tenant has no means of paying them and it would be throwing good money after bad to sue them. Furthermore, many such landlords do not by any means take action to evict the tenant, particularly if, as in your case, the tenant has been a tenant for many years.

In many cases they will quite happily waive payment of rent from a tenant where the tenant has fallen on hard times, taking the view that it’s a long term relationship and that they will take the rough with the smooth.

And even if they don't do it out of kindness they may well take the view that it's cheaper to let some rent go than incur the cost of eviction and finding a new tenant.

The fact that a landlord chooses to act like a decent human being rather than a Rachmanesque thug does not mean that the tenancy is not a commercial arrangement, and this principle must apply to your situation.

You may want to read the part of the Guidance Manual issued to local authorities that covers this point. It starts at paragraph 3-258 - https://www.gov.uk/government/uploads/s ... yments.pdf

In particular paragraph 3.265 states "You must decide whether the arrangement is on a commercial or non-commercial basis as a question of fact based on all the evidence. You must deal with each case on its facts. So be careful to establish the facts before considering whether the provision applies (my emphasis).

It would be helpful if you could copy and paste the full text of the letter from the Council, as that will ensure that I’ve understood exactly what it is they are saying. However, I appreciate this may not be feasible.

In any event, I would recommend that you write to the Council and ask it to explain in writing the full reasons for its decision. They are then legally obliged to give you a statement (called a statement of reasons) in writing to explain how they made their decision.

This does not affect your right to appeal against the decision. You'll be given extra time to challenge it.

It may be that your Council will have an online procedure to deal with this, but you must be careful to ensure that you are asking for an explanation and not for a review as such.

Either way, you must ensure that the request is delivered before the deadline, and obtain proof of this. If you apply by email or through their website that should provide evidence of the date and time it was sent, but if you are sending a physical letter you should either deliver it personally to the Council offices and obtain a timed and dated receipt or send it recorded delivery.

Once you have received a reply if you come back we may be able to offer further help.

Lootman
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Re: DWP investigation

#57244

Postby Lootman » June 2nd, 2017, 6:06 am

Clitheroekid wrote:The first thing to say is that there is no automatic right to Housing Benefit when someone is renting from a family member.

If they are living with that family member they will not normally be entitled to HB at all, but where they are living in a separate dwelling there is no automatic bar to HB being paid.

The definition of what is a "separate dwelling" can vary according to different government agencies. For a number of years I rented out part of my house to my mother-in-law. Her application for HB was approved and that amount was exactly the rent she paid to me during her tenancy.

Her home was accepted as a separate dwelling, and therefore HB was payable, because it was self-contained (i.e. had its own kitchen and bathroom) and it's own internal lockable front door. However there was a unlocked back door that led directly to the rest of the house and, specifically, our childrens' rooms. (She would often babysit for us when we were out or away).

Interestingly when the property was sold, my accountant successfully argued to HMRC that it was not a separate dwelling on account of that open door to the rest of the house. This led to an advantageous CGT determination. HMRC accepted this even though the flat had its own council tax, TV license, water and power bills.

Odd that HMRC and DWP/DSS would use different definitions.

PinkDalek
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Re: DWP investigation

#57279

Postby PinkDalek » June 2nd, 2017, 10:55 am

Lootman wrote:... Odd that HMRC and DWP/DSS would use different definitions.


Aren't they using different definitions for different things?

Housing benefit may be payable on separate dwellings within the same building, as you note. The dwelling should probably include exclusive use of a kitchen and there shouldn't be shared communal rooms. Unless the sharing relates to bathrooms, WCs etc. In your case, the self-contained aspect looks fine.

Whereas the CGT Main or only residence (aka Private Residence Relief) exemption considers the entirety, including gardens, grounds, outbuildings etc., subject to the limits imposed. Maybe Lettings Relief was potentially also in play, such that HMRC didn't see much in it for them. Extracts from the correspondence would always be of interest. Assuming this was shared with you (but probably not on this particular board).

amh4
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Re: DWP investigation

#57310

Postby amh4 » June 2nd, 2017, 12:04 pm

Thank you all for replying, and especially to ClitheroeKid.
I have sent your reply (CK) to my daughter, and will come back to you as soon as I hear from her.

amh4

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Re: DWP investigation

#57479

Postby patrickmacqueen » June 3rd, 2017, 11:58 am

You say that when you bought the house for your daughter in 1998 the council advised that she would be eligible for HB if there was an arm's length contract. It's a long shot I know, but if that advice was given in writing, or if you made a contemporaneous note of it, that could possibly help as a defence to the overpayment and/or in the unlikely event that the DWP press charges.

A doctor or other health professional's letter about the situation she was in when she supposedly applied for benefits over the phone, and the impact that might have had on her, might also be useful in the context of any criminal charges (but probably wouldn't help with the overpayment).

Do make sure your daughter responds to the Council decision by 6th June, as CK says.

amh4
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Re: DWP investigation

#57637

Postby amh4 » June 3rd, 2017, 9:27 pm

Thank you patrickmcqueen, that is good advice
amh4

amh4
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Re: DWP investigation

#71680

Postby amh4 » August 3rd, 2017, 10:12 am

Good morning,

I know it has been a while since I last posted on this, but my daughter has now heard from both the DWP and the Council (both within a few days of each other). The DWP has sent the papers to CPS with a recommendation to prosecute, whilst my daughter's request for an appeal has been referred to be heard by Tribunal, although she has no dates at the moment

I don't know how to advise from here - I feel that she is being treated unfairly, in that I was attempting to help her when she was struggling as a single parent to bring up two children. I accept that, as the written words in law read, by allowing her to pay less rent when she needed money, in law my actions then nullified the contract being "commercial", but I also believe that clawing back every penny they paid in Housing Benefit over four years was an unintended consequence. Had I evicted her and the children, they would have had to pay that money to someone else, and I would still have carried on supporting her financially from time to time. But my pockets were, and are not bottomless, and I could not afford to rent her a house for nothing, which is what their actions seem to be saying I should have done.

The house is now sold and I am going to give my daughter some money to help her start her again. Her children are now adult, although her son is still unable to work, although, thank goodness, at last recovering.

However, she still has to deal with the DWP and the Tribunal, and I shall be so glad if you are able to offer some advice on her best way forward. I am inclined to pay off the whole, supposed overpayment if that would stop this in its tracks, since it is very stressful on all of us. I have downloads of the correspondence between my daughter and the Council, but am not sure how to attach them here - I know that Clitheroe Kid asked me to post them in the first chapter of this correspondence, but it may be better to PM them directly to him.

Again, thank you for all your thoughts and advice to date - they have really helped.

Anne-Marie

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Re: DWP investigation

#77423

Postby LadyGagarin » August 27th, 2017, 8:28 pm

Just bumping this as it looks like AM and her daughter have fallen off the radar.

amh4
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Re: DWP investigation

#77686

Postby amh4 » August 29th, 2017, 1:53 pm

Hi Lady Gagarin
Many thanks for this, but my daughter now has a local solicitor, and is waiting to see what charges are to be brought. She is making repayments every month and is following whatever her solicitor recommends.
I wish there was more I could do, but I cannot see what - it is a matter of sitting patiently to see what happens next.
Thank you for your post.
Anne-Marie


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