SB v Her Majestys Revenue & Customs (CHB) [2013] UKUT 24 (AAC)

UKUT-AAC
SB v Her Majestys Revenue & Customs (CHB)
[2013] UKUT 24 (AAC) · 2013-01-14
[1]This case is about the right hand of Her Majesty’s Revenue and Customs [or HMRC] (the Child Benefit Office) not knowing what the left hand of HMRC (the Tax Credits Office) was doing. More worryingly, it is a case about the right hand not taking the very simple step of accessing highly relevant information held by the left hand (or at least held on a shared HMRC computer system). To compound that problem, the First-tier Tribunal (FTT) then failed to exercise its inquisitorial function properly. As a result the Appellant has been kept out of her child benefit entitlement for the past three years.[2]The Appellant (Ms B) made a claim for child benefit for her daughter (W), which HMRC refused, stating that she had not shown that she was responsible for her daughter. The FTT should have allowed her appeal as Ms B was, and is, responsible for W. HMRC should now work out her entitlement to child benefit and make the appropriate award, including the payment of arrears. The factual background[3]The factual background is not complex. Ms B is a Polish national. She arrived in the UK on 7 August 2009 as a lone parent with her daughter, then aged 4. Ms B started work a week later on 15 August 2009. A few weeks later, on 26 November 2009, Ms B claimed child benefit for W. On 1 March 2010 HMRC wrote to her asking for documents showing that W was attending school and was registered with a GP. On 17 May 2010 HMRC decided that, as Ms B had not replied, she had not shown that she was responsible for W. Her claim for child benefit was accordingly rejected.[4]In November 2010 Ms B appealed (her late appeal was accepted). On her notice of appeal she wrote “I send you back all necessary documents and I didn’t get any answer from you”. She ticked the box on the form to show that she was also appealing a tax credits decision. The First-tier Tribunal[5]A year later, in November 2011, the FTT heard her appeal. Ms B attended along with W (now aged nearly 7) and with her uncle (who was also her landlord). A Polish interpreter was present. Ms B handed in an attendance record and a letter on official headed notepaper from W’s school, dated 25 May 2011, which read simply (removing identifying details):
“To whom it may concern This letter is to confirm that W B [date of birth given] has been attending [this] School since the 7 th September 2009. Yours faithfully pp Mrs C N Acting Headteacher”
[6]The FTT oral hearing does not appear to have lasted very long. I say that as the tribunal judge’s record of proceedings reads, in its entirety, as follows:
“Interpreter – Polish – OK. App .: We get note re attendance every quarter day. All parents. By “quarter day”
I mean quarter day. [Unable to explain – not term]. W does attend school regularly. [GP letter] No, not with me. [Letter 1/3/2010 HMRC] [Read to Appellant by interpreter]. I sent them to HMRC. They haven’t returned them. I sent them twice and HMRC say not got them. I called them and they said they had found documents. They said to appeal. So I did.”[7]The FTT dismissed the appeal and confirmed HMRC’s disallowance decision. In her statement of reasons, the FTT judge referred to the school’s letter and the attendance note, observing that she was unable to establish what Ms B had meant by a “quarter day”. She also noted that Ms B had said she had a GP’s letter, confirming W’s registration with the practice, but “had not brought it with her today”. She decided that Ms B had not shown that she had responsibility for W at the time of the claim. The central passage in her reasoning read as follows:
“5. I regret that I did not find Ms B to be a credible or reliable witness. I think it unlikely that she sent the requested documents to HMRC as she claims today. HMRC has no record of them and, when the HMRC queried with her the absence of documents, Ms B told HMRC that she could not get them [Upper Tribunal note: this was a reference to a somewhat garbled HMRC summary note of a telephone conversation in May 2010]. I also think it unlikely that Ms B has a letter from her GP. If she had, I think she would have brought it today together with the letter from the School. As to this letter from the school, I note that it is addressed “To whom it may concern” and not to Ms B at her home address, and is not signed by Mrs C N, the Acting Head, from whom it purportedly comes. Furthermore, as already noted, the “Attendance” document, while stating 100% attendance, does not anywhere state the date of issue or the period of attendance covered.”
The Upper Tribunal’s grant of permission to appeal[8]I gave Ms B permission to appeal against this decision. In doing so, I commented thus:
“1. The grounds of appeal are arguable. I make the following provisional observations. They do not reflect a decided view at this stage. 2. First, did the tribunal ask itself the correct question in law? Entitlement to child benefit is based on responsibility for a child. The law states that the usual way for this to be shown is by the claimant having the child “living with” them – see section 143(1)(a) of the Social Security Contributions and Benefits Act 1992. The tribunal seem to have focussed solely on the documentary evidence. There appear to have been no questions about the child’s living arrangements and the role (if any) of any other family members in caring for the child. There appears to be no actual finding of fact about whether the child was living with the appellant at the material date. 3. Second, this may also reflect a failure by the tribunal to adopt a truly inquisitorial approach to establish the facts of the case. The tribunal appear to have regarded the confusion over what was meant by a “quarter day” as a matter that undermined the appellant’s account. It is not clear how this could be so, given (a) that she is not a native English speaker and (b) the school’s attendance sheet states at the end that attendance reports are sent every half term. 4. I note, however, that the tribunal formed an adverse view of the appellant’s credibility. It is certainly the case that on the papers before the tribunal – which appear to be on the thin side – the appellant may not have co-operated fully with requests for supporting evidence. On the other hand, it is not unknown for papers to go missing in large government offices. I note that the appellant stated on her child benefit appeal form dated 25.11.2010 (page 1) that she had appealed against a separate tax credits decision (10.11.2010). HMRC’s representative is requested to produce copies of the papers for that decision and appeal as an annex to its submission on this child benefit appeal.”
The HMRC submission on this appeal[9]Mr John Best has provided an extremely comprehensive and helpful submission on behalf of HMRC, supporting Ms B’s appeal to the Upper Tribunal. However, he was not able to provide copies of the papers from the parallel tax credit appeal. This was partly because any such papers were archived in remote storage, and were taking time to retrieve. More importantly, however, Mr Best had established that the tax credit appeal had been settled by HMRC in Ms B’s favour.[10]Mr Best also explained that where a tax credit claim was identified as meriting further investigation, as in Ms B’s case, the HMRC compliance officer created an “electronic case book” to store details about the case. This included the nature of enquiries made, the claimant’s replies, any decision made and details of any further action. The electronic case book revealed that Ms B had made a claim for tax credits in December 2009, shortly after her child benefit claim, and in June 2010 had appealed against a tax credits disallowance decision.[11]The electronic case book also established that by January 2011 the compliance officer had sight of(i) two (duly authenticated) Polish passports for Ms B and for W;(ii) two letters from the GP practice confirming W was registered with them;(iii) a letter from W’s school confirming her attendance record; and(iv) a rental agreement between Ms B and her uncle, naming only Ms B, W and the uncle. The compliance officer concluded that W was in the United Kingdom and that Ms B was responsible for her. On that basis HMRC decided Ms B was entitled to tax credits, paid her arrears and Ms B withdrew her appeal. As Mr B rightly points out, the similarities between the child responsibility test in child tax credit and child benefit respectively are “inescapable”. Furthermore, “it simply cannot be the position that the Claimant was responsible for her child for child tax credit purposes by reason of the child normally living with her and at the same time not responsible for the same child for child benefit purposes by reason [of the alleged fact that] the child was not living with her.”[12]Mr Best further advises that the information held in the electronic case book on Ms B’s tax credit claim “would have been readily available to the child benefit decision maker on HMRC’s internal information systems”. He concedes that the child benefit submission writer should also have directed the FTT’s attention to the tax credits issue. I note here that HMRC’s Child Benefit Office referred Ms B’s appeal to the tribunal in March 2011, two months after the Tax Credits Office had all the necessary documentation. Therefore Mr Best correctly points out that Ms B’s answer at the oral hearing, namely that she had sent her papers to HMRC, was indeed accurate – she may not have sent them to the HMRC Child Benefit Office, but she had certainly sent them to the HMRC Tax Credits Office. I interpose that one obvious reason why Ms B may not have sent the required papers to the Child Benefit Office is because the Tax Credits Office had them. The Upper Tribunal’s analysis[13]I have no hesitation in allowing this appeal. I agree with Mr Best that the FTT erred in law for the following two reasons.[14]First, the FTT failed to focus properly on the real question before it. That question was whether or not Ms B met the responsibility test for child benefit purposes. However, the FTT treated that question as though it was purely one to do with the production of appropriate documentation (effectively an information requirement) – and in doing so based its decision on a purportedly forensic examination of perceived inadequacies in that paperwork. In effect, the FTT decided that Ms B was not responsible for W on the basis of(i) the quality of the School’s letter (a matter to which I return below, at paragraph 19) and(ii) her inability to explain what a “quarter day” was. However, the meaning of a “quarter day” was simply irrelevant to the central issue, not least as the attendance reports clearly stated they were produced every half term; this appears to have been a case of something simply getting lost in translation.[15]Second, compounding that first problem, the FTT failed to exercise its inquisitorial function and failed to make sufficient findings of fact. The record of proceedings reveals no questions being asked about Ms B’s domestic arrangements or how W was looked after – for example, whether or not anyone else helped look after W. Furthermore, the existence of the tax credits appeal was apparent on the face of the notice of appeal. Yet Ms B was not asked about this related appeal which (as it happens) had already been settled in her favour. It is unrealistic to say that she should have mentioned this fact – Ms B was an unrepresented appellant having to deal with an unfamiliar bureaucracy and a foreign legal system in a second language. As far as she was concerned, she had sent her papers to HMRC and they had told her to appeal. So she had. The onus was very much on the tribunal to ask the right questions, which it simply failed to do. The need for tribunals to take a reality check[16]FTTs are perfectly entitled to make robust findings about the credibility of those who appear before them. Where those findings have a sufficient evidential basis, the Upper Tribunal will not intervene. The FTT is the prime judge of the facts.[17]However, where such findings are built on what appear to be flimsy foundations, the Upper Tribunal should scrutinise them carefully in appropriate cases. It may help if, before reaching a final conclusion on a credibility issue, a tribunal steps back and looks at the case in the round. Thus tribunals may need to take a reality check. There are three examples in the current case where a reality check might have prevented this FTT from falling into error.[18]First, the FTT attached great weight to the non-native speaker’s inability to explain what she meant by a “quarter day”. As Mr Best wryly notes, it is “unlikely” that Ms B was using that term in the narrow legal sense of one of four specific dates on which rents are traditionally due for payment (e.g. Midsummer Day on June 24th). Ms B used the term in connection with the school’s attendance record, a document which, the FTT found, “is undated and bears nothing to show what period it covers”. True, but it did also state clearly that “Each half term we will be sending home the attendance for your child for the half term. Your child’s attendance so far is 100%”. One explanation is that Ms B simply had difficulty with English fractions. Another, and perhaps more likely explanation, is that she thought that half terms in England always fell on religious holidays.[19]Second, it is easy to envisage how the School’s letter was obtained. Ms B was told by HMRC that she needed a “letter from the school confirming the child’s attendance” (not, I note, a letter signed by the Head Teacher). Presumably one morning she would have asked at the school’s reception desk for some form of official confirmation of W’s attendance, whilst dropping her off; a school administrator doubtless said something to the effect “yes, we’ll do that letter for you, pop by tomorrow afternoon and it should be ready for you at the front desk”. The letter was addressed “To Whom It May Concern” as the school obviously knew that its purpose was to be produced to some official third party – the school was hardly going to write to Ms B at her home address telling her what she already knew (W’s date of birth and her existing placement at the school). Furthermore, busy primary school head teachers have more important things to be doing than personally signing such letters – any well-organised school will have a system in place where a secretary simply signs off such letters “pp” the Head.[20]Third, the FTT seems not to have thought through both its narrow treatment of this appeal as one relating to information requirements and the implications of its credibility findings as to what were actually tangential issues (in the absence of any questions about how W was cared for). There were really only three factual scenarios in this case:(1) W was Ms B’s child and she was looking after her;(2) W was Ms B’s child and someone else, and not Ms B, was looking after her (if so, who?);(3) W was not in fact Ms B’s child at all, but had been “borrowed” for the purposes of the hearing as part of some scam in order to substantiate a fraudulent claim for benefit. Neither (2) nor (3) were very likely on the little evidence available in this case – hence the need for the tribunal to step back, take a reality check, and explore whether there was indeed any further evidence supporting (1). If it had asked, the tribunal would have uncovered that evidence. Conclusion[21]I conclude that the decision of the First-tier Tribunal involves an error of law for the reasons set out above. I therefore allow the appeal and set aside the decision of the tribunal (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)).

(b) (ii)):

“The Appellant’s appeal is allowed. At all material times the Appellant was responsible for her child within the meaning of section 143(1)(a) of the Social Security Contributions and Benefits Act 1992. The case is remitted to HMRC’s Child Benefit Office for the entitlement and award period to be determined afresh on the basis that the Appellant was and is responsible for the child she claimed for and that the child was and is in Great Britain. HMRC’s decision in relation to her child benefit claim issued on 17 May 2010 is revised accordingly.”
Signed on the original Nicholas Wikeley on 14 January 2013 Judge of the Upper Tribunal

Cited in 1 later judgment