JP v HM Revenue and Customs (TC) [2013] UKUT 519 (AAC)

UKUT-AAC
JP v HM Revenue and Customs (TC)
[2013] UKUT 519 (AAC) · 2013-10-18
[1]This is an appeal by the Claimant, brought with the permission of a Judge of the First-tier Tribunal, against a decision of a First-tier Tribunal sitting at Liverpool on 3 August 2012. For the reasons set out below that decision was in my judgment wrong in law and I set it aside. In exercise of the power in section 12 of the Tribunals, Courts and Enforcement Act 2007 I re-make the First-tier Tribunal’s decision by making the findings of fact set out in this decision and substituting a decision as follows: The Claimant’s appeal against the decision of HMRC made on 8 September 2010 is dismissed, in so far as that decision related to the Claimant’s entitlement to child tax credit in respect of the year 2009/10. In so far as that decision related to the award of child tax credit under s.14 of the Tax Credits Act 2002 in respect of the year 2010/2011, the matter is remitted to HMRC for reconsideration in the light of this decision. The Claimant may, within one month from the date of any further decision by HMRC, refer that aspect back to me for further directions or decision. Introduction[2]This appeal in substance concerns the Claimant’s entitlement, in respect of one of her children, to the child disability element of child tax credit in respect of the period 1 December 2009 to 2 June 2010. She has been in receipt of the child disability element from 3 June 2010. The facts[3]The Claimant was in receipt of income support as a lone parent down to about 1 December 2009. The Claimant has two children. The older child, Jonathan, attained 16 some time in 2010. The daughter, Claudia, has had an award of the middle rate of the care component of disability living allowance since 2006, and the income support award included the disabled child premium.[4]As I understand it HMRC now does not dispute the following account, set out in the written submission by the Claimant’s representative to the First-tier Tribunal, of what happened on or about 1 December 2009:
“[The Claimant] was invited to the local DWP office for a work focused interview and she was informed by the JCP adviser that she was no longer entitled to income support and that she had to move onto JSA and Child Tax Credits. The local DWP Jobcentre plus office made a fast track child tax credits claim on [her] behalf. The local office unfortunately omitted to put the details of the child DLA award on to the tax credit claim. The omission of the disabled child element was only established when [the Claimant] attended the CAB over an unrelated matter.”
[5]On 3 December 2009 HMRC sent to the Claimant an “award notice”, stating the amount of child tax credit which had been awarded under s.14 of the Tax Credits Act 2002. No copy of that award notice is in the papers. With the notice was sent a check list, of which a specimen is at p.9, which advised the Claimant to check various matters shown on the award notice, including “the number of children who are disabled”, and to notify HMRC if they were not correct.[6]The HMRC records note that on 15 December the Claimant spoke to an adviser on the tax credit helpline and confirmed that the details on the award notice were correct.[7]On 14 April 2010 HMRC issued to the Claimant an Annual Declaration and associated documents, for the purposes of sections 17 and 18 of the 2002 Act. These documents were relevant to(i) an entitlement decision under s.18 in respect of the year 2009/10 and(ii) the amount to be awarded under s.14 in respect of the year 2010/11. The relevant statutory provisions, and the nature of the documents routinely sent after the end of a financial year in relation to them, are described fully in my decision in SG v HMRC (TC) [2011] UKUT 199 (AAC) . No copies of the documents actually sent in this case were in evidence before the First-tier Tribunal, but a specimen of the lengthy Guidance Notes (being one of the documents sent) is now attached to HMRC’s submission in this appeal.[8]On 26 April 2010 the Claimant returned the Annual Declaration to HMRC, stating that the details were correct.[9]On 10 May 2010 HMRC made, as I understand it, 2 decisions. First, it made an entitlement decision under s.18 of the 2002 Act in respect of the year 2009/10. Secondly, it made an award under s.14 in respect of the year 2010/11. Notification of those two decisions was sent on 10 May. Again, neither of those documents is in evidence. The notice in respect of the year 2010/11 stated that CTC would be paid for two children until 31 August 2010, and then for one child only, as Jonathan had reached the age of 16. Neither decision of course included the child disability element in the calculation.[10]On 3 September 2010 the Claimant telephoned the Helpline to state that her son was continuing in full-time non-advanced education and that her daughter was in receipt of DLA.[11]On 8 September 2010 the s.14 decision in respect of the year 2010/11 was revised so as to award the disability element with effect from 3 June 2010, 3 months prior to the notification by the Claimant that Claudia was in receipt of DLA. It is this decision which was under appeal to the First-tier Tribunal. Again, no copy of this revised decision is in evidence.[12]On 1 October 2010 the CAB wrote to HMRC on behalf of the Claimant requesting that the tax credit decisions in respect of both the years 2009/10 and 2010/11 be revised to include the disabled child element. It was contended that this had not been included by reason of an official error.[13]There was no response by HMRC to that request, which prompted the person who wrote the submission to the First-tier Tribunal on behalf of HMRC to state that he apologised unreservedly for that error.[14]On 7 March 2011 HMRC received an appeal form signed by the Claimant. It stated that the date of the decision letter appealed against was 12 October 2010. It appears that the Claimant must have received some document with that date on it, although it is not clear what that document was. (It seems possible that HMRC may in substance have replied to the request for revision by sending a decision letter which did not include the child disability element – i.e. in effect refusing revision). The appeal has been treated as being against the decisions made on 8 September 2010 (and in its submission to the First-tier Tribunal HMRC expressly stated that, although out of time, it accepted the late appeal for consideration). The grounds for the appeal were stated to be(i) that the tax credit claim form in December 2009 had in effect been completed by a DWP officer on the Claimant’s behalf, so that the decisions were wrong by reason of “official error” and(ii) that HMRC had not responded to the CAB’s request for revision in the letter of 1 October 2010.[15]HMRC’s written submission to the First-tier Tribunal contended that the decisions under appeal were correct because(i) there was no “official error” in that (a) the DWP had not acted on behalf of HMRC in relation to the making of the claim in December 2009 and in any event (b) the Claimant had had a number of opportunities to point out the error, but had not done so until 3 September 2010; and(ii) the award of the disabled child element had been backdated by the maximum possible, namely 3 months before the notification of the change of circumstances: see reg. 25 of the Tax Credits (Claims and Notifications) Regulations 2002.[16]The First-tier Tribunal essentially dismissed the appeal on the grounds contended for by HMRC.[17]HMRC’s representative in this appeal (Mr Eland) in effect accepts that some of the submissions made on behalf of HMRC to the First-tier Tribunal, and therefore some of its reasoning, was incorrect. Analysis and conclusions[18]In my judgment the correct analysis of the position is as follows. (i) The year 2009/10.[19]I accept Mr Eland’s submission, based on the analysis of Mr Commissioner (as he then was) Jacobs in CTC/2662 and 3981/2005, that once the s.18 entitlement decision had been made, on or about 10 May 2010, the previous s.14 award decision in respect of this year was in effect replaced and could no longer be revised or appealed. What the Claimant needed to have revised or to appeal against, from 10 May 2010 onwards, was the s.18 entitlement decision.[20]The decisions made on 8 September 2010 included, in effect, a decision refusing to revise the s.18 entitlement decision of 10 May 2010 so as to add the disabled child element in respect of the year 2009/10. I proceed on the footing, without deciding, that the First-tier Tribunal had jurisdiction to decide whether that refusal was correct.[21]The only possible basis, by 8 September 2010, for revising the s.18 decision was that in reg. 3 of the Tax Credits (Official Error) Regulations 2003, which provides that a decision under (inter alia) sections 14 and 18 “may be revised in favour of the person or persons to whom it relates if it is incorrect by reason of official error …” The power to revise in s.16 of the 2002 Act was not applicable in that it can be exercised only in respect of a s.14 award and only during the period in respect of which the s.14 award is made.[22]Mr Eland accepts that, by reason of arrangements made under s. 58 of the 2002 Act and the Tax Credits (Administrative Arrangements) Regulations 2002, the DWP was acting on behalf of HMRC in assisting the Claimant with the making of her tax credit claim in December 2009. I accept that concession, and the further concession that HMRC must therefore be treated as having made an error at that stage in not ensuring that the claim included the disability element. I observe, however, that in any event the definition of “official error” in reg. 2 of the Tax Credits (Official Error) Regulations 2003 is “an error relating to a tax credit” made by specified persons, who include an officer of the DWP.[23]The question is then whether the s.18 entitlement decision made on or about 10 May 2010 was “incorrect by reason of an official error”. The definition of “official error” in reg. 2 of the 2003 Regulations goes on to say that the error must be one “to which the claimant, or any of the claimants, did not materially contribute.”[24]It is unfortunate that none of the award and other notifications which were sent to the Claimant are in evidence. It may be that they were not attached to HMRC’s submission to the First-tier Tribunal because it was not thought that their precise form could be material to the issues in the appeal, as HMRC then understood them to be. That understanding seems to me to have been, on any footing, wrong. This is not the first occasion on which I have noted what appears to be a reluctance on the part of HMRC to put before the First-tier Tribunal, with its submission, all potentially material documents. I do not of course attribute this to any sinister motive. It may have been done for what were thought to be reasons of economy and simplicity. This is likely to prove a false economy if it results either in appeals being decided without relevant information or in adjournments so that additional information can be provided. In a social security case the DWP would routinely put before the Tribunal copies of relevant decisions, and notifications of them were relevant. HMRC should in my judgment routinely do so, unless there is some good reason for not doing so in the particular case.[25]I assume that the notification of the initial s.14 award sent on 3 December 2009 did not in terms state that the child disability element was not included in the award. (I assume, therefore, that there was not a box labelled “child disability element”, or something similar, which was simply left blank). However, the Form TC602 (SN) which was sent with the award was a “checklist for you to use to help make sure that the information on your award notice about your personal circumstances is correct and complete.” It asked:
“If shown on your award notice, are the following details correct?”
One of the questions was:
“The number of children who are disabled?”
It ought in my judgment to have been apparent to the Claimant that the award notification did not show either of her children as being disabled, and that that was wrong.[26]Mr Eland states, in para. 30 of his submission in this appeal, that since HMRC was unaware that the Claimant’s daughter was in receipt of DLA, there will have been nothing in the documents sent to the Claimant on 14 April 2010 “to suggest that the disability element of child tax credit had been included in the award”. That must certainly be so. I assume in the Claimant’s favour that there was, further, nothing on the face of the annual declaration or the review form which expressly indicated that a child disability element was one of the elements which could have been awarded and that it had not been. Even if that was so, however, the Explanatory Notes clearly showed (see p.68) that one of the things which should be checked was whether a child disability element had been included. The Notes showed, in an extract from a specimen example of the review form, how this would look. It was argued, in the initial written submission to the First-tier Tribunal on behalf of the Claimant (p.10), that “to expect the Claimant to check for omissions and HMRC mistakes on an award when they have little or no understanding of the complex new benefit is too great an expectation and is unreasonable.” However, in my judgment, in the light of the express provisions of the explanatory notes, HMRC was entitled to expect that the Claimant would check matters such as whether the child disability element ought to have been included.[27]In the supplementary submission on behalf of the Claimant (p.19) it was further argued that, in failing, at some time or times after the initial award on 1 December 2009, to realise that the child disability element had not been included, the Claimant cannot have “contributed to” the initial error, which by then had already occurred. I am prepared to assume, again without deciding, that that is correct, notwithstanding the contrary approach taken by Judge Wright QC in para. 15 of CSTC/628/2011. It seems to me well arguable that an error by a relevant official is only prevented from being an “official error” if the Claimant has contributed to the actual error made by the relevant official, in this case the officer of the DWP who completed or helped the Claimant to complete the tax credit claim in December 2009. There is no sufficient evidence that the Claimant contributed to that error. Contribution to the subsequent consequences of the error by (for example) failing to make checks may well not take the error out of the definition of “official error”.[28]However, the question still remains whether the s.18 entitlement decision was “incorrect by reason of official error”, within the wording of reg. 3(1) of the 2003 Regulations. I find that it was not. In my judgment, having regard to the steps which the Claimant had been invited to take to check for errors, it was by the date of the decision of 8 September 2010 which was under appeal to the First-tier Tribunal no longer correct to say that the original error by the DWP was the cause of the s.18 entitlement decision being wrong. In my judgment the substantial cause of the error by that stage was the Claimant’s failure to make the checks which she had been advised on at least two occasions to make. In my judgment a commonsense approach to causation is appropriate in this context: cf. R (Sier) v Cambridge CC HBRB [2001] EWCA Civ 1523 (relating to the cause of an overpayment for housing benefit purposes).[29]If the Claimant had appealed within time against the s.18 entitlement decision of 10 May 2010, on my understanding of the legislation a First-tier Tribunal on such an appeal would have been required to allow the appeal and award the disabled child element in respect of the whole of the year 2009/10. The references in HMRC’s submission to the First-tier Tribunal, and in the First-tier Tribunal’s decision in the present case, to the (then) 3 month backdating limit in the case of notification of a change of circumstances, were misplaced. This was not a case of change of circumstances: the Claimant’s daughter had been in receipt of DLA at all material times.[30]However, the appeal before the First-tier Tribunal was of course not against the decision of 10 May 2010, but at most against the decision of 8 September 2010, which in effect refused to revise the revising the decision of 10 May in respect of the year 2009/10. (ii) The year 2010/11[31]HMRC’s decision on 8 September 2010 in respect of this year was to revise the initial s.14 award by adding the disabled child element, but only from 3 June 2010, 3 months before the date on which the Claimant telephoned to point out the error.[32]In my judgment, for the reasons already given, the application of that 3 month time limit was incorrect: this was not a change of circumstances of which late notification had been given. On my understanding of the legislation HMRC ought to have revised the s.14 award, under s.16 of the 2002 Act, so as to add the disabled child element with effect from the beginning of the tax year 2010/11.[33]However, I assume that, by the date of the First-tier Tribunal’s decision in this case (3 August 2012) a s.18 decision had been made in respect of the year 2010/11. I assume that the s.18 decision also provided for the disabled child element with effect only from 3 June 2010. If that is the case, the Claimant’s appeal against the part of the decision of 8 September 2010 which consisted of a revised award under s.14 in respect of 2010/11 had lapsed: see para. 19 above and para. 42 of CTC/2662 and 3981/2005. If that was so, then the First-tier Tribunal had no jurisdiction to deal with the appeal against this element of the decision of 8 September 2010.[34]However, HMRC has at all times, I think, proceeded on the footing that there is a valid appeal still on foot. In those circumstances, if the Claimant were now to appeal (out of time) against the s.18 entitlement decision for 2010/11 (whenever that was made), it may well be that HMRC could only properly take the view that that appeal ought to be admitted out of time. On my present understanding of the legislation, the Claimant ought to succeed in such an appeal. This concerns of course only a period (6 April 2010 to 2 June 2010) of a little less than 2 months.[35]In these circumstances what I have done in paragraph 1 above is to remit this aspect of the First-tier Tribunal’s decision to HMRC for reconsideration. It may be that HMRC will consider it appropriate to award the disabled child element in respect of the additional period to which I referred in the previous paragraph. Charles Turnbull Judge of the Upper Tribunal 18 October 2013

Cited in 1 later judgment