SECTION 13 - TRANSITIONAL PROVISIONS

From April 1996 all residents who were paying a protected amount calculated under the Transitional Provisions should have their charges assessed under the current rules.

Local authorities should keep archive copies of Transitional Provisions guidance to refer to should any resident query his past assessments.

ANNEX 1

AMENDMENTS TO SCOTTISH OFFICE GUIDANCE

ON NATIONAL ASSISTANCE (ASSESSMENT OF RESOURCES) REGULATIONS 1992

ANNEX 2

AMENDMENT TO PAGE 3 OF CIRCULAR SWSG13/1995:

(NATIONAL ASSISTANT (ASSESSMENT OF RESOURCES) AMENDMENT REGULATIONS 1995)

CIRCULAR NO SWSG13/1995 Desk Officer: 5455

18 August 1995

Chief Executive Regional/Islands Council

Copy to: Directors of Social Work

General Managers of Health Boards

Chief Executives District Councils

Directors of Housing

Appropriate Professional and

Voluntary Bodies

Dear Colleague

COMMUNITY CARE: NATIONAL ASSISTANCE (ASSESSMENT OF RESOURCES) AMENDMENT REGULATIONS 1995 - REGULATIONS AND GUIDANCE

Summary

1. This Circular encloses amendment regulations to the National Assistance (Assessment of Resources) Regulations 1992 which local authorities are required to apply to the financial assessment of adults placed in residential and nursing home accommodation, together with consequential amendments to the guidance on the regulations. The Circular also contains new advice which is not covered in the guidance. The amendment regulations came into effect on 13 April 1995.

Action

2. Local authorities should substitute the guidance amendments at the Annex to this Circular for the corresponding pages already in the guidance and should initial and date the Record of Amendments Sheet at the back of the guidance to indicate that they have been done. Authorities should also add the amendment regulation (attached to this circular) to the National Assistance (Assessment of Resources) Regulations 1992, and subsequent amendments, for ease of reference.

Amendments to 1992 Regulations

3. An amendment to the National Assistance (Assessment of Resources) Regulations 1992 has been made in order to maintain alignment with the Income Support rules. This takes account of the introduction of a new benefit - Incapacity Benefit - which replaces Invalidity Benefit and Sickness Benefit. References to Invalidity Benefit and Sickness Benefit have been replaced in the enclosed amendment to the guidance.

4. The other amendment to the Regulations has been made to clarify charging policy intention. This introduces a disregard of income for a temporary resident to meet housing costs where their previous home is up for sale and it is intended that the proceeds be used to purchase more suitable accommodation for the resident to live in. Details of this disregard are addressed at paragraph 3.012 of the amendment to the guidance.

Amendments to guidance only

Arrears of benefits

5. Current guidance on benefit arrears suggests that such payments should be treated as capital (and as a result the local authority cannot charge against them as they are instructed to ignore such payments for 52 weeks). A DSS Commissioner's Decision states that such payments are, in fact, income and can be taken into account immediately - for the period for which the benefits should have been paid. An amendment to paragraph 6.029 of the guidance has been made to bring it into line with the Commissioner's Decision.

Charges for non-residential services provided for people in residential care

6. Draft SWSG guidance on charging for adult non-residential sector care services, which issued in February 1995, gave advice on charges for this type of service provided to people in residential or nursing home accommodation. The final version will issue shortly. Paragraph 1.017A of the attached guidance now contains similar advice on this issue.

Capital limits for couples

7. Local authorities are reminded that they have no powers to assess couples jointly and that the £8,000 capital limit applies solely to the resident. Therefore, the resident must have in excess of £8,000 capital (or their share of jointly held capital must exceed £8,000) before being charged the full cost for their accommodation. See paragraph 4.003A of the amended guidance.

Housing Benefit, Council Tax Benefit and Income Support for Housing costs

8. An amendment to Housing Benefit (HB), Income Support (IS) and Council Tax Benefit (CTB) Regulations was introduced in April 1995. The changes limit, in certain circumstances, the length of the period for which HB, IS (for housing costs) and CTB can be paid in respect of an empty property, including the homes of people who enter residential accommodation, for a "trial period".

9. Previously people entering residential sector care for a "trial period" may have received benefit for housing costs for up to 52 weeks, if there was an intention to return to their own home and the period of absence was unlikely to exceed 52 weeks. The new DSS Regulations define a "trial period" as applying to people who enter residential accommodation initially on a temporary basis during which it is decided whether they need to stay in residential accommodation or can return home. Their stay in residential accommodation is generally a conditional one with a number of factors influencing whether or not they will return home or eventually stay permanently in residential accommodation.

10. The changes mean that any single householder in receipt of HB, IS for housing costs or CTB who enters residential accommodation purely on a trial basis will be able to receive these benefits for 13 weeks only, instead of up to 52 weeks whilst they are in the residential accommodation.

Example: A person is admitted into hospital and is therefore entitled to continue receiving Housing Benefit, Council Tax Benefit and Income Support for housing costs for up to 52 weeks. After 10 weeks in hospital he enters residential accommodation for a trial period. He can receive benefit under the trial period for up to a further 13 weeks.

11. The changes will not affect:

a. people receiving care in residential accommodation temporarily other than on a "trial" basis, eg for convalescence or respite care. This will also cover people who are receiving care in residential accommodation for a temporary period and intend to return to their own home;

b. married residents, or those with a partner, as their partners will be able to receive the benefits instead.

Local authorities should note how application of the new HB, CTB and IS Regulations will affect residents' ability to meet assessed charges for residential care, or the amount charged for periods of less than 8 weeks. If, during the course of the "trial period" it is decided that the circumstances are no longer that of a trial period (eg it has been decided that a resident will definitely return home at a future date), the local authority should advise the resident to notify the Housing Benefit office and/or the Benefits Agency of their change of circumstances. The Housing Benefit office or Benefits Agency may require verification from the social work department of this change in circumstances.

ENQUIRIES

12. Please direct any enquiries about this Circular or enclosures to Trevor Hall, Social Work Services Group, Room 426, 43 Jeffrey Street, Edinburgh, EH1 1DN, or telephone 0131 244 5455.

Yours faithfully

GAVIN ANDERSON

ANNEX 3

AMENDMENT TO GUIDANCE ON HEALTH AND SOCIAL SERVICES AND SOCIAL SECURITY ADJUDICATIONS ACT 1983 (ISSUED UNDER COVER OF CIRCULAR SWSG15/1993)

HEALTH AND SOCIAL SERVICES AND SOCIAL SECURITY ADJUDICATION’S ACT 1983 (HASSASSA)

Introduction

19. Three Sections of this Act are relevant to the recovery of charges for residential accommodation provided by a local authority under the Social Work (Scotland) Act 1968 or Section 7 of the Mental Health (Scotland) Act 1984.

- Section 21

- Section 23

- Section 24

Sections 21 and 24 also apply in England and Wales. Section 22 applies in England and Wales only.

Section 21

20. This Section applies where a resident has transferred an asset to a third party knowingly and with the intention of avoiding or reducing his liability for charges for accommodation. It provides that the third party shall be liable for the difference between the amount assessed as due to be paid by the resident and the amount which the LA receive from him for his accommodation.

Deprivation of assets

20.1 In order for Section 21 to apply the LA must have decided that the resident has knowingly and with the intention of avoiding charges transferred an asset to someone else with the intention of avoiding charges for accommodation. The transfer must have taken place no more than 6 months before admission to residential accommodation (or under Section 21(3) 6 months before resuming occupation in the case of a resident who has been absent from such accommodation). Also, the resident must either have received no consideration for the transfer or any consideration must have been less than the value of the asset. This paragraph of the guidance should be read in conjunction with paragraphs 6056 and 6066 of the guidance on the National Assistance (Assessment of Resources) Regulations 1992.

Section 21(1)

20.2The 6 month rule for disposing of assets can only be applied from the date a local authority has assessed a person as needing residential or nursing home care and has arranged a placement in a local authority home or independent sector home. The 6 month rule does not apply where a resident is self funding in an independent sector home, has not been assessed, nor had their placement arranged by a local authority.

Examples

A resident transferred his house to his daughter with the intention of avoiding a charge for accommodation and the daughter gave the father nothing in return. The powers of Section 21 of HASSASSA can be used to make the daughter liable for the father’s charges.

A resident sold his right to receive a income of £5,000 a year for a single payment of £200 with the intention of avoiding or reducing the charge for accommodation. The return for the transfer is less than the value of the asset and liability under Section 21 of HASSASSA arises.

A resident paid for his own accommodation for 2 years. He then gave £20,000 to his daughter in March and continued to self fund until December of that year. The resident then approached the LA for support. The 6 month rule does not therefore apply. Although Section 21 of HASSASSA does not apply in this case, the LA does still have recourse to Regulation 25(1) of the National Assistance (Assessment of Resources) Regulations 1992 (see paragraph 6.056 of the guidance on the Regulations).

Assets to be considered

20.3 The LA should only consider using these powers if the asset disposed of is one which would have been taken into account for the purposes of assessing the charge.

Section 21(2)

20.4 Other than cash, the value of any asset shall be the amount which would have been realised had the asset been sold at the time of transfer on the open market by a willing seller. The value should take into account any debts secured on the asset and a reasonable amount in respect of the expenses of sale. The term "reasonable amount" is not defined in the legislation. it would therefore be for authorities to make a judgement as to what constitutes a reasonable amount in respect of expenses arising from the sale of a particular asset.

Section 21(6) and (7)

Transfer of liability

20.5 The amount for which the person who has received the asset should be held liable should be restricted to the benefit accruing to that person from the transfer.

Section 21(5)

For example

A resident transferred his former home, valued at £65,000, to his son with the intention of avoiding a charge for accommodation. After the expenses of sale and the clearing of a debt secured on the property the value of the property is assessed as £40,000. The son can be held liable for charges up to a total of £40,000.

20.6 If the asset has been transferred to more than one person, each person can be held liable in proportion to the benefit accruing to that person from the transfer.

Section 21(4)

20.7 The amount of liability to be transferred to the third party should be the difference between the charge assessed and the amount actually received by the authority from the resident.

Section 23

21. This Section applies where a resident fails to pay an assessed charge for accommodation and has a beneficial interest (entitlement to receive profits or proceeds) in land. It enables a local authority to secure a debt in this regard in terms considered at paragraph 3.3.1 to 3.5.2.

The Charging Orders (Residential Accommodation) (Scotland) Order

21.1 In terms of Section 23(3) of HASSASSA, the effect of a Charging Order made and recorded in the Register of Sasines or registered in the Land Register as appropriate, is to secure for the local authority in Scotland (as well as England and Wales) and debt due or to become due, together with any interest in terms of Section 24 of HASSASSA, in respect of unpaid residential accommodation charges against the debtor’s interest in land in Scotland. This statutory effect is reflected in the form of the Charging Order prescribed in the Schedule to the Order.

21.2 In accordance with HASSASSA the provisions of Part II of the Conveyancing and Feudal Reform (Scotland) Act 1970 shall apply to a Charging Order as if it was a Standard Security in a form presented in Scheduled 2 to the 1970 Act, subject to the exceptions specified in Article 5(2) and modifications specified at 5(3) of the 1993 Order.

Placing a charge on land

3.3.1 If a resident has more than one interest in land the local authority can decide which piece to place a charge on.

Section 23(2)

3.3.2 The amount of the debt due, and any interest thereon, secured under a Charging Order are as described in Article 4 of the Order and must be certified by the Director of Finance of the authority in whose favour an Order is made. He may also substitute an amended certificate on cause shown.

3.3.3 If the local authority is placing a charge on residents interest in land, the resident should be advised or assisted to consult a solicitor about this procedure.

Ranking (Priority of Charging Order: Section 13 of the 1970 Act

3.4.1 On recording or registering, a Charging Order will rank after a security in respect of the same interest inland recorded or registered at an earlier date, but will rank ahead of any security over the same interest in land recorded or registered subsequent to it.

3.4.2 Section 13(1) of the 1970 Act makes provision in relation to the preference in ranking of the security of a creditor in a Standard Security duly recorded, where that creditor receives notice of the creation of a subsequent security over the same interest in land or any part of the subsequent assignation or conveyance of that interest, being a security, assignation or conveyance so recorded.

3.4.3 In the circumstances, it is provided that the preference in ranking of the security of that creditor shall be restricted to security for his present advances and future advances which he may be required to make under the contract to which the security relates, and interest or future due thereon, and any expenses or outlays in connection with the exercise of any power conferred on any creditor by the deed expressing the existing security.

3.4.4 For these purposes, Section 13(1)(a) provides that the creditor is an existing Standard Security shall not be held to have had any notice by reason only of the subsequent recording of the relevant deed in the Register of Sasines.

3.4.5 Where a local authority makes and records or registers a Charging Order, therefore, and there is already an existing Standard Security registered or recorded in respect of the same interest in land, to obtain the benefit of the provision of Section 13(1) the local authority may wish to give notice of the creation of the Charging Order to the creditor in the existing security. This will ensure that the preference in ranking of that Standard Security is restricted as described as security for his present advances, or future advances which he may be required to make under the relevant contract, and interest and expenses as described.

3.4.6 Where a Standard Security is recorded over an interest in land against which a Charging Order has already been recorded the securities would tank in accordance with their dates of recording, in the absence of any other agreement.

Calling up a Charging Order

3.5.1 A local authority may only call up a Charging Order once the resident has died or, if he is still alive, in the event of:

a. the resident’s insolvency;

b. the sale or transfer of the interest in land;

c. the calling up of a Standard Security by another creditor who has recorded or registered a security over the same interest.

3.5.2 The above arrangements constitute a proviso to Section 19(1) of the 1970 Act applied by Article 5(3)(a) of the Order to the provisions of Section 19 with regard to the calling up of a Standard Security.

3.5.3 Authorities should note that Section 14 of the 1970 Act with regard to the assignation of a Standard Security to a third party does not apply to a Charging Order made under Section 23 of HASSASSA.

Discharging a Charging Order

Where the debt has been redeemed on payment, the Charging Order should be discharged. The form for this is prescribed in Form 2 to the Schedule of the Order.

Section 24

22. This Section applies where a resident, over whose interest in a property a charge has been created, dies. Section 24(2) was amended by Section 45(3) of the NHS and Community Care 1990 which empowers a local authority to charge a reasonable amount as it may determine. It also gives the Secretary of State the power to direct in this regard.

Charging interest

22.1 Where the LA has created a charge over property, they can charge interest on the sum, at a reasonable rate, from the day after the resident for whom they have provided accommodation dies.

Example

A resident owned a property valued at £60,000; he refused to sell that property and, as a result, was unable to pay the £200 per week which was the standard charge. He was in the accommodation for 20 weeks and the LA placed a charge for £4,000 on the property. The resident died on 01/11/93. The LA can charge interest on the £4,000 from 02/11/93 to the date on which the property is sold and the debt is paid.