Notional capital
28.—(1) An applicant is to be treated as possessing capital of which the applicant has deprived himself or herself for the purpose of securing entitlement to a reduction or increasing the amount of that reduction except to the extent that that capital is reduced in accordance with paragraph 29 (diminishing notional capital rule).
(2) An applicant who is a pensioner who disposes of capital for the purpose of—
(a)reducing or paying a debt owed by the applicant; or
(b)purchasing goods or services if the expenditure was reasonable in the circumstances of the applicant’s case,
is to be regarded as not depriving himself or herself of it.
(3) Where an applicant stands in relation to a company in a position analogous to that of a sole owner or partner in the business of that company, the applicant may be treated as if the applicant were such sole owner or partner and in such a case—
(a)the value of the applicant’s holding in that company must, notwithstanding paragraph 25 (calculation of capital) be disregarded; and
(b)the applicant must, subject to sub-paragraph (4), be treated as possessing an amount of capital equal to the value or, as the case may be, the applicant’s share of the value of the capital of that company and the foregoing provisions of this Chapter apply for the purposes of calculating that amount as if it were actual capital which the applicant does possess.
(4) For so long as the applicant undertakes activities in the course of the business of the company, the amount which the applicant is treated as possessing under sub-paragraph (3) is to be disregarded.
(5) Where an applicant is treated as possessing capital under sub-paragraph (1), the foregoing provisions of this Chapter apply for the purposes of calculating its amount as if it were actual capital which the applicant does possess.