DG v HMTC (TC) [2013] UKUT 631 (AAC)

UKUT-AAC
DG v HMTC (TC)
[2013] UKUT 631 (AAC) · 2013-12-13
[1]This appeal concerns the legal test as to whether a married couple are “separated in circumstances in which the separation is likely to be permanent” within section 3(5A)(a)(ii) of the Tax Credits Act 2002. Can this expression cover a married woman who is living in both the same house and in the same household as her estranged husband? I decide that it can. The sequence of events[2]The Appellant (“Mrs G”) is a woman now aged 46, who has two teenage children. She made a tax credits claim as a single person on 11 July 2009. She was paid working tax credit (WTC) and child tax credit (CTC) on that basis for the 2009/2010 tax year. That award appears not to be in dispute in the current proceedings, although logically the same considerations should apply as to the disputed award for the following two years.[3]On 17 June 2010 Her Majesty’s Revenue & Customs (HMRC) made an award of WTC and CTC to Mrs G for the 2010/11 tax year, again on the basis that she was a single person.[4]In July 2011 HMRC confirmed the award of tax credits for 2010/11 and made an initial award for 2011/12 on the same basis as before. Mrs G’s case was then selected for review. Further checks established that a man with the same surname, Mr G, resided at the same address as Mrs G. In January 2012 HMRC not unreasonably sent Mrs G an inquiry letter.[5]On 23 January 2012 Mrs G responded by telephoning an HMRC office. She explained that Mr G “did live at address, but in a separate bedroom. Separated in 2008 but have no legal documents to back this up as it is too expensive to do.” The HMRC officer noted Mrs G’s account that she had telephoned HMRC at the start of her claim, had advised them of the situation and had been told it was “OK for a single claim”. However, the HMRC officer who now fielded her telephone call explained that her tax credits claim as a single person would have to be ended. She also advised Mrs G “to make the separation legal as we would not be able to accept a new single claim”.[6]On 25 January 2012 HMRC issued Mrs G with new decision notices for 2010/11 and 2011/12, declaring her WTC and CTC entitlement to be nil. Typically, copies of those notices are not on the appeal file, but there is no dispute that they were duly sent by HMRC and received by Mrs G.[7]On 9 February 2012 Mrs G sent in a notice of appeal. This included the following statement:
“I have always informed HMRC of my situation and I am in no way in a relationship with my ex-partner. I am actually currently in a[nother] relationship but do not live with him. I sleep in a separate bed to my ex-partner and do not cook for him nor do we go out as a couple. I have been unable to leave the property due to financial restraints and it is not an ideal situation for any of us.”
[8]On 14 March 2012 HMRC responded with a letter detailing why it had reached the decision it had. The letter stated that Mrs G should have made a joint claim together with Mr G for tax credits as from 6 April 2010 as(i) they had two dependent children;(ii) an active joint mortgage was registered at the address;(iii) they had an active joint bank account;(iv) Mr G paid the mortgage, so Mrs G was financially dependent upon him, which “further confirms the ongoing stability of your relationship”; and(v) Mr G had made loan applications from the shared address.[9]In the same letter HMRC stated that “in order for us to possibly change our original decision we would need to see the following as factual documentary evidence”, namely(a) a legal separation order or evidence that such proceedings had been commenced, relating to each of the past four years;(b) Mr G’s car insurance proposal documents; and(c) proof of a formal or informal agreement that Mr G was to pay child maintenance.[10]On 23 March 2012 Mrs G reiterated her intention to appeal. She argued that HMRC’s decision was wrong “as I am not and have not been for many years in a relationship with my ex-partner”. The proceedings before the First-tier Tribunal[11]HMRC prepared a submission and relevant papers for the First-tier Tribunal (“the tribunal”) hearing. This included a clear chronology of the decision-making process. It also referred to the relevant law in section 3 of the Tax Credits Act 2002. In particular, it explained that a tax credits claim could be made either as a single person or jointly and that “members of a couple” had to make a claim jointly (section 3(3) and (4)).

(a) (as amended by the Civil Partnership Act 2004), namely:

“a man and woman who are married to each other and are neither— (i) separated under a court order, nor (ii) separated in circumstances in which the separation is likely to be permanent.”
[12]Unfortunately the rest of the HMRC submission was then devoted to an analysis of the so-called “admirable signposts”, or indicators of cohabitation, developed in the field of social security law for deciding whether or not an unmarried couple were “living together as husband and wife”. This test is highly relevant to the definition of an unmarried couple in section 3(5A)(b) of the Tax Credits Act 2002, but is not directly relevant to the status of a married couple such as Mr and Mrs G for the purposes of section 3(5A)(a).[13]Mrs G’s representative also prepared a written submission for the tribunal. Unfortunately, but understandably given the focus of the HMRC submission, this was also skewed towards addressing the “living together” argument. The representative also provided a letter from Mrs G’s new partner, explaining how he and Mrs G had got together in 2008, how the relationship had developed and concluding rather coyly that “I have been in a full relationship with [Mrs G] and we have been planning our future together”.[14]The tribunal heard oral evidence from both Mrs G and her new partner. However, the appeal was dismissed and HMRC’s decision of 25 January 2012 confirmed. On the face of it the tribunal was not confused by the partly misleading HMRC submission. The statement of reasons correctly identified the issue for decision as being whether or not Mrs G was separated under a court order or separated in circumstances that were likely to be permanent. It was agreed that there was no court order at the relevant time, although divorce papers had been served more recently.[15]So the critical issue was whether or not Mrs G was “separated in circumstances in which the separation is likely to be permanent” within section 3(5A)(a)(ii). The tribunal’s reasoning that she was not so separated ran as follows:
‘4. Under Income Support Regulations “a couple” are stated to be members of the same household. In CIS/671/1992 – there is reference to the existence of “communality, something that can be identified as a domestic establishment.” Although the latter case referred to Income Support issues, the Tribunal accepted that it was likely that there would be a lack of communality if they were separated in circumstances likely to be permanent, and that Income Support definitions are applicable in the present case. 5. The Tribunal considered the nature of the domestic arrangements, and concluded that Mr and Mrs G were not living separately, there was a communality within the domestic arrangements. It is accepted that Mr and Mrs G had separate bedrooms. He often cooked for himself but would on occasion eat a meal Mrs G had cooked if there was something remaining. He sat on the sofa in the only living room. Mrs G stated that she sat opposite him or would go upstairs. There were a few family events with their two children, aged 16 years and 18 years, and they went to social events with Mr G and other friends at the Rugby Club. They went on holiday together with their children each summer in a caravan in France. Mr and Mrs G had a joint mortgage and bank account. Mr G paid all the household bills, although they had been sharing payments since the beginning of 2011. Mrs G paid all food costs. 6. Mrs G told the Tribunal she was having another relationship, and submitted a letter from the person concerned which the Tribunal accepted. 7. Having considered all the evidence, the Tribunal agreed that there was not a separation. There was a communality, a type of domestic establishment. The relationship between Mr and Mrs G was clearly poor, but probably for the sake of the children, and for convenience of running only one household there was a domestic establishment. There was a sharing of events such as holidays, occasional social events, and some living accommodation, and a sharing of responsibilities such as payment of bills and mortgage. 8. The Tribunal noted Mrs G’s attempts to obtain a legal separation. This indicated her dissatisfaction with the current arrangements, however the arrangements during the relevant period did not demonstrate that Mr and Mrs G were separated, and did not at the time indicate what arrangement was to become permanent.’
The proceedings before the Upper Tribunal[16]I subsequently gave Mrs G permission to appeal.[17]Mr D P Eland, for HMRC, has provided a thorough submission. He does not support Mrs G’s appeal to the Upper Tribunal. Having reviewed the legislation and case law, he makes four submissions in relation to the question of whether a married couple are separated for the purposes of section 3(5A)(a)(ii). The first is that the question of whether there is an enduring household is an important and necessary consideration. The second is that the characteristics of a “household” are defined in the case law and can be distinguished from mere joint occupation of the same property (see e.g. SW v Secretary of State for Work and Pensions (IS) [2011] UKUT 145 (AAC) ). Thirdly, the question of whether there is a household is one of fact and degree on the evidence. Fourth, and finally, evidence that there is a common household may also point to there being an enduring relationship of some degree. In summary, Mr Eland argues that the tribunal applied the correct legal test and reached a decision it was entitled to on the evidence before it.[18]The Appellant’s representative refers to a number of factual matters which, it is said, point both to there being a separation and to that separation being permanent. It is said that the fact that the divorce has now gone through, although happening after the time in question, simply demonstrates that the estrangement at the material time was permanent. Mrs G’s representative also argues that the tribunal had failed to consider the emotional aspects of the case. Thus, it was argued, “the Appellant was faced with an extremely delicate situation for which the only situation in the interests of her children was to share the property with a former partner with whom the relationship had broken down irreparably.” Furthermore, Mrs G’s relationship with her new partner “is the crux of the matter. The breakdown of her relationship with her former husband was irreparable. The arrangement with her former husband was one forced on them both by circumstances and financial restraints.” The Upper Tribunal’s analysis The tax credits definition of a couple[19]The starting point must be the relevant statutory test. As noted above, a member of a couple cannot claim as a single person; s/he may only make a joint claim for tax credits with their partner. The full definition of “couple” in section 3(5A) of the Tax Credits Act 2002 (as substituted by section 254 and paragraph 144(3) of Schedule 24 to the Civil Partnership Act 2004) reads as follows:
“(5A) In this Part “couple” means— (a) a man and woman who are married to each other and are neither— (i) separated under a court order, nor (ii) separated in circumstances in which the separation is likely to be permanent, (b) a man and woman who are not married to each other but are living together as husband and wife, (c) two people of the same sex who are civil partners of each other and are neither— (i) separated under a court order, nor (ii) separated in circumstances in which the separation is likely to be permanent, or (d) two people of the same sex who are not civil partners of each other but are living together as if they were civil partners.”
[20]As Mr Eland rightly notes, this definition is different to that which applies for the purposes of the main means-tested social security benefits. Section 137(1) of the Social Security Contributions and Benefits Act 1992 (again, as amended by the Civil Partnership Act 2004) makes the same four-fold categorisation as between married couples, unmarried cohabiting couples, civil partners and those living together as if they were civil partners. However, the first limb of that definition, referring to spouses, defines a couple as “a man and woman who are married to each other and are members of the same household ” (emphasis added).[21]Pausing there for a moment, one must surely start from the position that this difference in the statutory definitions of a (married) couple for the purposes of social security law and tax credits law respectively carries some significance. Those responsible for drafting the Tax Credits Act 2002 could simply have borrowed and recycled the standard social security definition of a married couple. But they did not. As Mr Eland observes, they adopted the revenue law definition, and in particular that used in the income tax code (see e.g. section 282 of the Income and Corporation Taxes Act 1988; and see now Income Tax Act 2007, section 1011). Mr Eland has not referred me to any of the revenue case law, and I am not aware of any such authority in which the particular issue arising for decision here has been under consideration. Typically the cases appear to turn on whether a separation was likely to be permanent, rather than whether there was a separation (see e.g. Holmes v Mitchell (HM Inspector of Taxes) [1991] 2 FLR 301). Previous Upper Tribunal authority[22]The tax credits scheme, in one form or another, has now been in operation for more than a decade. There are, therefore, a number of decisions of the Upper Tribunal (formerly the Social Security Commissioners) which deal with the construction of section 3(5A)(a) of the Tax Credits Act 2002. Two decisions are particularly in point.[23]The first is the decision of Mr Deputy Commissioner (now Judge) Mark in reported decision R(TC) 2/06 (incorrectly referred to as CTC/1629/2005 at p.123 in volume 4 of Social Security Legislation 2013/14 , when its correct file reference was CTC/1630/2005). In that case a married couple had physically separated in April 2003 and the wife had made a claim for tax credits as a single person. The husband moved back into the matrimonial home in October 2003, apparently by way of a trial reconciliation. HMRC and the appeal tribunal both decided that the separation was temporary only, and so the wife should not have claimed as a single person. The Deputy Commissioner took the contrary view. He concluded that on the facts of that case the likelihood was that, at the outset, the separation would indeed be permanent (paragraphs 19-23), as indeed subsequent events proved to be the case.[24]In terms of the correct legal approach to be adopted, the Deputy Commissioner held as follows (emphasis in the original):
“18. While each case must turn on its own facts, it is important to bear in mind that married couples do not separate unless there have been serious problems in their relationship, or other problems, such that continuing to live together becomes unacceptable for at least one member of that couple. Before any conclusion can be drawn other than that the separation is likely to be permanent, the tribunal must consider why the separation has occurred, and what indications there are that the couple may be reconciled. Even then, after balancing those indications against any contra-indications, the tribunal must conclude that there is at least a 50 per cent chance of a reconciliation before it can conclude that a single claimant and his or her spouse are to be treated as a married couple. It is unlikely that such a reconciliation will occur before the parties have taken steps to deal with the problems that led to the separation in the first place, and have actually begun the process of arranging to live together again. A tribunal should be slow to differ from the claimant’s own genuine assessment of the likelihood of a reconciliation, although, of course, that is a subjective assessment and the tribunal is not bound by it.”
[25]Thus the primary issue in R(TC) 2/06 was whether the separation was “likely to be permanent”, and not whether there had actually been a separation. T he tribunal in that case had failed to deal adequately with the wife’s oral evidence about the state of her marriage. The Deputy Commissioner’s decision emphasised in particular the importance of assessing the quality of the relationship between husband and wife in deciding whether the separation was likely to be permanent and according due weight to the claimant’s perspective.[26]The second is the decision of Judge Lane in HMRC v TD (TC) [2012] UKUT 230 (AAC). This was a case in which a married couple were living under the same roof while their relationship was breaking down, although the facts are not entirely clear. As in the present case, the wife made a claim as a single person. However, unlike the present case, there had previously been a joint award of tax credits to the couple which appears to have continued in payment. HMRC later sought recovery of the overpayment from the husband. The tribunal found that at the date of the wife’s claim the couple were not separated within the terms of section 3(5A)(ii), as they were married and sharing the same household, and so the joint claim and award continued. HMRC appealed. Judge Lane set aside the tribunal’s decision for its failure to find sufficient facts and give adequate reasons – it had simply assumed what was required to be proven (paragraphs 7-9). She remade the tribunal’s decision, concluding that the couple were living under the same roof but separated, noting that there was nothing in the correspondence leading her “to believe that they were living together as a couple in a household” (paragraph 11).[27]In doing so,

Judge Lane also remarked as follows:

“6. Section 3(5A)(a)(ii) does not expressly refer to the need for ‘a household’, but in my view, the determination of whether a couple is sharing a household is implicit in determining whether they are separated or living together as a married couple. This follows from well known principles in family law cases in which couples have been held to live apart (and therefore separately) despite living under the same roof. The importance of a household is mirrored in social security legislation, including regulation 2 of the Income Support (General) Regulations 1987, for example. While the language varies from context to context, the nature of a couple is closely allied to the existence of a household bound by a particular kind of tie ( Santos v Santos [1972] 2 All ER 246 at 255).”
The significance of a single household[28]Mr Eland relies on Judge Lane’s decision to support the proposition that it is entirely appropriate to consider whether the married couple are sharing a household. He then refers to the extensive social security case law on what is meant by a “household” (see e.g. R(IS) 1/99 and SW v Secretary of State for Work and Pensions (IS) [2011] UKUT 145 (AAC) ). Significantly, Mr Eland does not seek to argue that a married couple can only be separated if they are living in different households. He describes the existence of a (single) household as “an important and necessary consideration” in making a decision as to whether the parties are separated. He observes, correctly in my view, that the sorts of issues which are relevant to the question of whether there is one household are also “indicative of the state of the relationship”. However, he submits that “in the circumstances of a particular case, a conclusion that a household does exist may, in turn, also require a conclusion that there is no separation. Whether it does or not depends on the accepted facts.”[29]Judge Lane in HMRC v TD (TC) [2012] UKUT 230 (AAC) held that “the determination of whether a couple is sharing a household is implicit in determining whether they are separated or living together as a married couple” (at paragraph 6). This might be read as saying no more than that the question of a common household is a highly significant consideration, as Mr Eland submits. But it may alternatively be read as suggesting that the existence of a single household is determinative of the issue under section 3(5A)(a)(ii). In other words, if a married couple live in a single household then the inevitable conclusion must be that they are not separated, whereas if they live in different households (whether or not in the same house) then they are separated.[30]If Judge Lane was intending to suggest the latter, namely that a finding that the married couple lived in the same household necessarily and inevitably meant that they were not separated, then with respect I must disagree. I say so for the following reasons.[31]First, as noted at paragraph 21 above, the statutory definition of a married couple in section 3(5A)(a) makes no reference whatsoever to “household” as being a necessary element of the test. Parliament has chosen not to use the social security definition in this context – thus the reference to the definition of “couple” in regulation 2(1) of the Income Support (General) Regulations 1987 (SI 1987/1967) is not in point as, just like section 137(1) of the Social Security Contributions and Benefits Act 1992, that definition expressly imports the term “household” as an essential part of the test.[32]Second, the well-known line of family law cases must be viewed with some care. This is because the context and legislative language is different. The two “no fault” criteria for the granting of a divorce (or at least for the basis of a finding of irretrievable breakdown of the marriage) turn on whether “the parties to the marriage have lived apart” for the requisite period of two or five years (Matrimonial Causes Act 1973, s.1(2)(d) and (e)). Furthermore, section 2(6) of the same Act expressly provides that “ For the purposes of this Act a husband and wife shall be treated as living apart unless they are living with each other in the same household” (emphasis added).[33]Certainly the authorities show that for the purposes of divorce law “living apart” has both a physical aspect and a mental element. As regards the former there must be two households, even if they are in the same property, but this follows necessarily from the stipulation in section 2(6) (see e.g. Mouncer v Mouncer [1972] 1 WLR 321). The well-known case of Santos v Santos [1972] Fam 247 , where the Court of Appeal struggled to identify the statutory purpose behind section 2(6), is primarily a case about the mental element in “living apart”. Furthermore, matrimonial case law demonstrates that a married couple may live in the same household yet be living apart. For example, in Fuller v Fuller [1973] 1 WLR 730 the wife and her new partner lived under the same roof and (by necessary implication, on the facts) in the same household as her estranged husband, an invalid lodger. The Court of Appeal held that the wife and her estranged husband were not “ living with each other in the same household” (emphasis added).[34]Third, when construing section 3(5A)(a)(ii) it is important to read section 3(5A)(a) as a whole. The first limb of section 3(5A)(a) refers to a husband and wife being a married couple unless they are “separated under a court order”, in other words a separation recognised by a formal legal process short of divorce. The obvious example is a decree of judicial separation under section 17(1) of the Matrimonial Causes Act 1973. Traditionally this has been a remedy for those who either do not want or cannot get a divorce, but wish to access the courts’ powers to grant ancillary relief. The only requirement is that the petitioner proves one of the five “facts” for divorce (without showing irretrievable breakdown). This might be thought as incorporating by reference the household test in section 2(6) – however, it is perfectly possible to obtain a decree of judicial separation on the basis of e.g. adultery or behaviour. As a matter of law, therefore, a wife can apply for an order of judicial separation without showing that she lives in a separate household. Historically speaking, one reason for applying for a decree of judicial separation was precisely because the petitioner could not afford to move out of a shared home (and household). The principal legal effect of a decree of judicial separation is that “it shall no longer be obligatory for the petitioner to cohabit with the respondent” (Matrimonial Causes Act 1973, section 18(1)). However, continuing to live in the same household does not make the order ineffective or cause it to lapse. That being so, it cannot be right that living in a separate household is a necessary precondition to showing that one spouse is “separated in circumstances in which the separation is likely to be permanent”, if the two limbs of section 3(5A)(a) are to be construed in broadly similar terms. Section 3(5A) is thus focussed on the state of the relationship between an ostensibly still married couple, not exclusively on whether they live in the same household.[35]Fourth, while living in different households may in practice often be a very good indicator that a married couple’s separation is likely to be permanent, it will not invariably be so. For example, ‘living apart together’ is a well-recognised modern social phenomenon, in which a married (or indeed unmarried) couple share an intimate relationship but live at separate addresses. For obvious reasons this tends to be a lifestyle choice confined to those who can afford to maintain separate households, including a number of ‘celebrity’ couples. Putting aside such financial considerations, as a matter of principle a member of such a couple, if married, could hardly be said to qualify under section 3(5)(a)(ii) so as to make a claim for tax credits as a single person. They are not “separated” in the sense envisaged by the statute. So where a married couple operate out of two households, it does not automatically follow that either of them can claim tax credits as a single person. Conversely, and logically, where a married couple operate a single household, it does not automatically follow that one of them cannot claim tax credits as a single person. The question is not whether they share a common household but rather whether they are separated within the terms of the legislation.[36]Where does this leave Mr Eland’s four central submissions (see paragraph 17 above)? The answer is they are good as far as they go. I have no difficulty in accepting his second, third and fourth propositions. However, his first proposition requires some elaboration. The question of whether there is an enduring household is often an important and necessary consideration, but it is by no measure a determinative consideration. There are some married couples who do not share a single common household but, because they are ‘living apart together’, are not separated within the terms of section 3(5A)(a)(ii). Rather, the test of separation must focus on the relationship between husband and wife, and a married couple may be separated whilst living in the same household, whether or not they have a court order to that effect. Ultimately, neither limb of section 3(5A) is conclusively determined by physical separation, although in the typical case physical separation in terms of living apart at different addresses will be very good evidence of the separation required. Instead, section 3(5A) is at root concerned with emotional separation or estrangement. HMRC’s guidance[37]HMRC issues guidance to its staff, which of course is precisely that, guidance, and not a source of law. Understandably, therefore, it was not cited to or relied on by the tribunal. However, the Tax Credits Technical Manual (TCTM) recognises the fine distinctions that may need to be made in such cases. TCTM09320 ( Decision Making, Joint or Single claims: Definition of a couple ) gives the following example:
“Example - joint claim, married couple A married couple with children have grown apart and rarely spend time together. He eats most of his evening meals at the pub but still lives in the family home and occasionally contributes towards the household bills. They decided not to separate until their children have grown up so they should make a joint claim as they are still married and not separated legally or in circumstances where the separation is likely to become permanent.”
[38]TCTM09350 ( Decision Making, Joint or Single claims: Former partners living at the same address ) then gives this further illustration which falls the other side of the line drawn by section 3(5A)(a)(ii):
“Example - married couple, separated A married couple whose relationship has broken down continue to live in the same house as they are currently unable to sell it and neither can afford to rent or buy other accommodation. In the meantime they live separate lives, no longer socialise together and their friends do not consider them to be a couple. They continue to jointly pay some household bills but pay for their own food and other personal items. They haven’t yet started divorce proceedings but do not intend to resume living together as husband and wife. Despite living in the same house, they should no longer claim jointly from when they became separated in circumstances likely to be permanent.”
[39]The difference between the two scenarios set out in the TCTM is a very fine distinction, a distinction that can be obscured by exclusive focus on whether there is a common household, rather than asking the question which the statute directs us to ask, namely whether the husband and wife are separated. The tribunal’s decision in this case[40]The tribunal in this case erred in law. It erred in law primarily because it applied the wrong legal test. It is plain from paragraph 4 of the tribunal’s statement of reasons that it started from the position that the income support test applied, when as a matter of law that is not so. In effect, the tribunal assumed that the income support test and the tax credits test for a married couple were the same. It is also clear from paragraph 7 that the tribunal regarded a finding that the couple shared a common household, however unhappily, as being incompatible with a finding that they were separated. For the reasons explained above, that assumption is based on a false premise.[41]This error of law as regards the proper test was compounded by the tribunal’s approach to fact-finding. Mr Eland submits that the tribunal “accepted everything the claimant said” and “only departed from the claimant in the conclusion which was that the claimant was not separated from her husband”. I have to disagree. Certainly the tribunal accepted some aspects of Mrs G’s evidence which suggested that she and her husband were separated – e.g. that they slept in separate bedrooms and that they did not usually eat together. However, when making findings on other matters the tribunal overlooked some important nuances in Mrs G’s evidence. For example, the tribunal found that Mrs G and the children “went to social events with Mr G and other friends at the Rugby Club.” What Mrs G actually said, according to the record of proceedings, was that “We go out as a big group with Mr G e.g. to the rugby club because there are joint friends; we do not go out as a couple.. our friends are aware we are separated”. Likewise, the tribunal found that “they went on holiday together with their children each summer in a caravan in France”. Again, what Mrs G actually said was “Holidays – together in France – each summer – in caravan – boys’ end and girls’ end”.[42]Furthermore, the significance of Mrs G’s new partner was simply ignored. The tribunal accepted his letter (statement of reasons, paragraph 6), but no more. There was no reference to any of his evidence at the hearing. Indeed, judging from the record of proceedings, he was barely asked any questions. In his letter he had said that “I have recently purchased a property last year which we are currently renovating” (emphasis added). That issue was not explored; had it been so, it might well have answered the question as to why Mrs G was not living with her new partner.[43]There is a further possible difficulty with the tribunal’s decision. HMRC had previously accepted Mrs G’s initial claim for tax credits as a single person and so that she was separated. Thus as regards the in-year decision on 25 January 2012 to change her 2011/12 tax credits award to nil, the burden of proof was on HMRC to justify its decision under section 16 of the Tax Credits Act 2002 (HMRC accepts that the burden of proof lies on it under section 16: see HMRC’s Claimant Compliance Manual CCM3025 ( Liaison: Third Party Contacts ). The tribunal made no reference to the basis of HMRC’s original decision or the burden of proof. However, as I have not invited submissions on this matter, I need say no more about it.[44]I therefore conclude that the tribunal’s decision involves an error of law and should be set aside. The Upper Tribunal’s options for the disposal of the appeal[45]Having set aside the tribunal’s decision, I must either remit it for re-hearing or re-make the decision myself. There is sufficient evidence available for me to re-make the decision. Nothing is to be gained by sending it back to a new First-tier Tribunal for re-hearing. The decision that the First-tier Tribunal should have made[46]In my view the tribunal was entitled to take the view that there was, just about, a single albeit unhappy domestic establishment or household in existence. Mr G was paying the mortgage and of necessity the couple had to share the living accommodation. In those circumstances it might be highly artificial to decide that they were living in separate households under the same roof. But there was plenty of evidence to suggest that they were in practice a separated couple. They barely spoke to each other. They were in the process of disentangling their finances and each paying their own way. They slept in separate bedrooms. Meals were mostly taken separately. When they did activities with their children, e.g. going to the rugby club or going on holiday, they did them as parents, and not as a married couple would. Mrs G meanwhile had a relationship with another man which involved active planning and steps being taken for their life together. In a nutshell, at the material time Mr and Mrs G were “separated in circumstances in which the separation is likely to be permanent”. In my view, therefore, the tribunal should have made the following decision: The Appellant’s appeal against the decision dated 25 January 2012 is allowed. Mrs G was entitled to claim working tax credit and child tax credit as a single applicant for the period 06/04/2010 to 05/04/2011.[47]I note that the HMRC submission to the tribunal stated that the tax credit awards for 2009/10 and previous tax years were not in dispute. The decision under appeal relates only to the 2010/11 tax year, but the same consequences should follow for 2011/12.[48]In closing I simply make two further observations as to HMRC practice. First, Mrs G was advised (see paragraph 5 above) that she should “make the separation legal as we would not be able to accept a new single claim”; that advice was wrong because it relied on section 3(5A)(a)(i) and ignored sub-paragraph (ii). Second, the further evidence which HMRC said would be needed in order to change its decision (see paragraph 9 above) could only ever tell part of the story. All the evidence has to be considered in the round before deciding whether a couple have “separated in circumstances in which the separation is likely to be permanent”. Paperwork alone can neither prove nor disprove that state of separation. Conclusion[49]I conclude that the decision of the First-tier Tribunal involves an error of law for the reason 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)). The decision that the FTT should have made is as set out at paragraph 46 above (section 12(2)(b)(ii) . Signed on the original Nicholas Wikeley on 13 December 2013 Judge of the Upper Tribunal

Cited in 2 later judgments