RK v Revenue and Customs (CHB) (Benefits for children : child benefit) [2015] UKUT 357 (AAC)

UKUT-AAC
RK v Revenue and Customs (CHB) (Benefits for children : child benefit)
[2015] UKUT 357 (AAC) · 2015-06-24
[1]This case is about a claim for child benefit in respect of two children, G and A, respectively aged 6 years and 11 months at the time of the Respondent’s [HMRC’s] decision on 26 June 2014. Neither child resided in the United Kingdom but lived with their mother in Poland. Their father, who made the claim for child benefit, was working in the United Kingdom. HMRC initially refused his claim as it said he did not have the right to reside in the United Kingdom but, following receipt of more information from the Appellant, the claim was refused on the basis that the Appellant was not contributing to the cost of providing for his children at a rate at least equal to the current weekly rate of child benefit for two children.[2]The First-tier Tribunal (“the tribunal”) should have allowed his appeal as he was indeed contributing to the cost of providing for his children at a rate at least equal to the current weekly rate of child benefit for two children. HMRC should now make the appropriate award of child benefit, including the payment of arrears.[3]The Appellant, who was unrepresented throughout these proceedings and those before the tribunal, asked for an oral hearing of this appeal. HMRC did not ask for an oral hearing though it observed that it did not appear that this appeal should be dealt with by way of a short decision with limited reasons. The Appellant said he wanted such a hearing to prove to me that he was financially supporting his children. Having considered this request carefully, I decided that an oral hearing was not necessary in order to determine this appeal fairly and justly. Both parties had made submissions in writing and I decided that no useful purpose would be served by holding an oral hearing. Factual Background[4]The Appellant arrived in the United Kingdom on 3 December 2013 and had been employed since 11 December 2013. His wife and two children, G and A, remained behind in Poland. On 9 April 2014 he made a claim for child benefit and stated that he paid £75 each week towards the children’s support.[5]An enquiry form was sent to the Appellant to establish whether he had a right to reside in the United Kingdom. No reply was received in response to this enquiry and thus HMRC’s decision maker was unable to determine if the Appellant satisfied the conditions for entitlement to child benefit. Consequently a decision was made on 26 June 2014 to disallow the claim for child benefit.[6]On 2 July 2014 the Appellant rang HMRC asking for a mandatory reconsideration of the decision. The Appellant said he thought he had sent the enquiry form to the tax credit office as he had received a form from them at about the same time. Further forms were sent to the Appellant and he replied on 22 August 2014 giving details of his circumstances and of the financial support he provided for his wife and children.[7]The Appellant’s expenditure on rent, travel, food and bills for himself and his wife was £1,105 monthly. He stated that he paid about £500 a month towards the support of his children. He said that he either took the money to Poland himself or gave it to a friend to take when that person visited Poland. In addition he said he had purchased clothes and presents for the children and took these back to Poland when he visited his family.[8]HMRC made additional enquiries of the Appellant, seeking information and evidence confirming the amount sent to Poland and details of the dates of any payments. The form was returned on 12 September 2014 but without the information or evidence sought by HMRC. On 25 October 2014, following a mandatory reconsideration, HMRC decided that the Appellant was not entitled to child benefit for G and A as they were not living with him and he was not contributing to the cost of providing for them at the weekly rate of child benefit or more each week. In its submission to the tribunal, HMRC stated that, taking his earnings and expenditure into account, it seemed unlikely that the Appellant had sufficient funds to be able to contribute £500 towards G and A’s support.[9]The Appellant appealed on 25 November 2014. In his letter of appeal he said that he now sent money to his wife for the children using an online payments system called “przekazy pieniezne”. He said this was visible on his bank statements and that he had documents to prove his expenditure on the children. Apart from his living expenses, he stated that the rest of his earned income he forwarded to his children and his wife. The First-tier Tribunal[10]The Appellant opted for an appeal on the papers. Prior to the hearing on 9 February 2015, he sent evidence to support his case by way of photocopies of bank statements and receipts. The receipts covered a period from 12 February 2014 to 6 December 2014 and the bank statements covered the period from 17 June 2014 to 2 December 2014.[11]The tribunal refused the appeal and confirmed HMRC’s decision. It found that the Appellant would have needed to pay contributions to G and A’s upkeep at a rate of £33.70 per week, rising to £34.05 from 7 April 2014. It found that the Appellant was employed as he had stated but examination of his total income for June to December 2014 did not support his claim that he was paying £150 a week for both children (as stated in his initial claim form) or £120 per week (as stated in his later disclosure form). Though the tribunal appears to have accepted that the Appellant had purchased clothing and other items suitable for G and A, its key finding was that:
“ When set against his expenditure, his income would not have allowed him to make such payments claimed or even to pay at the Child Benefit rates referred to above. The Tribunal finds no compelling, persuasive or verifiable evidence to support the claim ”
. The Upper Tribunal’s Grant of Permission to Appeal[12]I gave the Appellant permission to appeal against this decision on 21 April 2015. The grounds on which I did so are as follows:(1) My provisional view is that the tribunal arguably overlooked evidence that the expenditure incurred by the Appellant was “joint” expenditure for himself and for his wife and family [page 41].(2) The tribunal’s reasoning with respect to the Appellant’s income is not set out in detail: there is a bald assertion in paragraph 5(c) that his income is insufficient to make the payments he should be making but no calculation of income received over the period covered by the bank statements (17 June 2014 to 2 December 2014, a period of 23 weeks). My analysis of those bank statements suggests income (including working tax credit) of £7,447.72 or about £323.81 a week. This level of income would comfortably cover a weekly child benefit payment of £34.05.(3) Further I observe that the tribunal’s analysis overlooked the amounts actually leaving the Appellant’s bank account over this 23 week period and being sent to his wife and children in Poland. To satisfy the legal test, the Appellant would have had to have paid £783.15 over this period of time (£34.05 x 23). In fact, on his own figures he paid £2,062.93 but my analysis of the bank statements suggests that the figure for money transfers to Poland (made either via www.przekazypiene or via one money mail) was as much as £3,320.89 over this period.(4) The tribunal appears to have accepted that the receipts provided showed suitable expenditure for young girls. I note that some of the receipts provided cover this 23 week period thereby evidencing that additional monies were spent on the children.(5) For all the above reasons, the tribunal’s decision is arguably erroneous in law.(6) If I am correct about the figures I have cited and the Respondent accepts that the decision is erroneous in law, I am minded to find the facts as to income and expenditure on the children and his family as set out above and remake the decision accordingly rather than remitting the matter to the First-tier Tribunal. I invite submissions as to whether that would be the appropriate course for me to take if I set aside the tribunal’s decision. HMRC’s submission on this appeal[13]HMRC supported the appeal on the basis that the tribunal had erred in law by(a) taking account of “joint” expenditure for the Appellant and his wife when considering that his income was insufficient to make contributions towards the upkeep of his children in Poland at a rate at least equal to the rate of Child Benefit; and(b) taking account of the Appellant’s income for the period from June to December 2014 which was evidence which post-dated the date of the relevant decision on 26 June 2014 [see section 12(8)(b) of the Social Security Act 1998].[14]HMRC submitted that, nevertheless, the tribunal’s decision should not be set aside as the Appellant was not contributing to the cost of G and A at a weekly rate which was not less than the weekly rate of Child Benefit payable in respect of the children.[15]Under domestic law, the Appellant’s claim to Child Benefit could not succeed as G and A resided in Poland and not in the Great Britain [see section 146(1) of the Social Security Contributions and Benefits Act 1992 “SSCBA”]. However, as a member state national, the Appellant could rely on Article 67 of Council Regulation (EC) No 883/2004 which has the effect of waiving the presence condition of section 146 of SSCBA and, the conditions being met, allows for family members to be treated as if they are in the United Kingdom.[16]Article 1(i)(1)(i) of Council Regulation No 883/2004 defines member of a family as any person defined or recognised as a member of the family or designated as a member of the household by the legislation under which benefits are provided. The term “family” is not defined in the regulations relating to Child Benefit and thus HMRC say it is given its normal everyday usage, namely a married or unmarried couple and any children who normally live with them. In conclusion, HMRC accepted that, for the purpose of Article 67 of Council Regulation No 883/2004, G and A were the Appellant’s family members and as such were treated as though they were residing in the United Kingdom.[17]HMRC submitted that the Appellant was responsible for G and A if he contributed towards the cost of providing for them “ at a weekly rate which is not less than the weekly rate of child benefit payable in respect of the child for that week ” [section 143(1)(b) of SSCBA]. At the rate of Child Benefit applicable from 7 April 2014 for two children, the Appellant’s contribution should have been a weekly rate of at least £34.05 as his claim was made on 9 April 2014.[18]HMRC argued that the bank account and receipt evidence submitted by the Appellant showed 7 payments made between 12 February 2014 and 24 June 2014 referable to the upkeep of G and A. HMRC said that these payments did not meet the requirement contained in section 143(1)(b) in that the payments were not being made weekly and 4 were below the appropriate rate, namely £33.70 a week rising to £34.05 a week from 7 April 2014.[19]I note that HMRC’s submission to me did not cast doubt on the Appellant’s assertion that he was contributing to the cost of providing for his children. The issue for HMRC was whether his contributions were being made weekly at the relevant rate. The Upper Tribunal’s analysis[20]I allow this appeal on a number of grounds.[21]First, I find that the First-tier Tribunal erred in law by overlooking evidence that the Appellant’s expenditure was joint expenditure for himself and for his family. Page 19 of the “form to claim Child Benefit for people coming from abroad” which HMRC asked the Appellant to complete in July 2014 and which he returned in August 2014 asks for details of expenditure. It states “ if you have a partner, you should fill in this section as a couple telling us about your joint expenditure ”. This is exactly what the Appellant did as he made clear in his application to appeal the decision of the tribunal. The Appellant’s expenditure on living costs (£1,150 monthly) had persuaded the tribunal that his income was insufficient to pay both those living costs and a contribution towards the upkeep of G and A even at the applicable Child Benefit rate for two children. By failing to appreciate that the expenditure on living costs was joint , the tribunal underestimated the financial resources available to the Appellant to provide for his children.[22]Second, though HMRC submit that the tribunal should not have taken account of evidence which post-dated the date of the decision on 26 June 2014, I have concluded that the tribunal was entitled to do so. Section 12(8)(b) of the Social Security Act 1998 does not prevent a tribunal having regard to either to evidence which was not before HMRC and came into existence after the decision was made, or to evidence of events after the decision under appeal was made for the purpose of drawing inferences as to the circumstances obtaining when or before the decision was made. Though the tribunal took account of such information in the form of bank statements and receipts, its reasoning with respect to the Appellant’s income was inadequate and further it overlooked evidence of the amounts leaving the Appellant’s bank account and being sent to Poland to support his family.[23]The information supplied by the Appellant in the form of bank statements and receipts is relevant to two issues:(a) the adequacy of the Appellant’s income so that he could afford to support his children at a rate at least equal to the Child Benefit rate for two children; and(b) the amounts of money being paid by the Appellant to support his children.[24]When giving permission to appeal, I observed that the tribunal’s reasoning with respect to the Appellant’s income was not set out in adequate detail. There was a bald assertion that the Appellant’s income was insufficient to make the payments he should be making towards the upkeep of his children but no analysis of the material supplied by the Appellant. Making some slight adjustment to the figures quoted in my grant of permission, the period covered by the bank statements (17 June 2014 to 2 December 2014) was 24 weeks during which the Appellant’s earned income including working tax credit amounted to £7,447.82 or about £310.32 a week. This level of income would accommodate a weekly payment of at least £34.05 even allowing for the joint expenses incurred by the Appellant and his wife. The tribunal’s failure to examine the actual sums earned rendered its reasoning on the issue of the Appellant’s income inadequate.[25]Though the bank statements almost entirely post-dated HMRC’s decision on 26 June 2014, I find that the evidence of income contained in the bank statements could properly have formed the basis for an inference that the Appellant was also earning adequate income before 26 June 2014 to support his children at a weekly rate at least equivalent to the rate of Child Benefit for two children. Two additional factors support the making of that inference. First, the Appellant had been employed by Acorn Agency since 11 December 2013 and remained so employed throughout the period commencing with the date of his claim on 9 April 2014 to 2 December 2014, this being the last date on the bank statements. He was paid weekly and received a payment of £253.01 on 19 June 2014, a week before HMRC’s decision. I note that the day after that decision he received a payment of £210.53 on 27 June 2014. Second, the Appellant worked for Bespoke Limited from 18 December 2013 to 27 June 2014 for 16 hours a week and his last payment of earnings [£95.10] from that employer was on 27 June 2014. It is thus reasonable to infer that the income from that employment, when added to that from Acorn Agency prior to 26 June 2014, was sufficient to support his children at the Child Benefit rate.[26]Turning to the issue of the amount actually paid by the Appellant toward the support of G and A and again making some adjustments to the figures mentioned in my grant of permission, I note that the tribunal overlooked the amounts actually leaving the Appellant’s bank account between 17 June 2014 and 2 December 2014 and being sent to Poland. The Appellant’s evidence was that such money was transferred using an online payment system called “przekzy pieniezne” and his bank statements show references to payments being made via this system on 24 June 2014, 8 August 2014, 12 August 2014 and 1 December 2014. The total amount paid via this method was £1,533.96, in excess of the sum of £1,225.80 which would have been the total amount of Child Benefit payable at a rate of £34.05 from 9 April 2014 to 2 December 2014 [a period of 36 weeks]. Had the tribunal not overlooked this evidence, it would have been justified in finding that payments from the Appellant’s bank account were made both prior to 26 June 2014 and thereafter. Additionally this evidence would have justified drawing an inference that the Appellant was supporting both his children at a rate equivalent to the weekly rate of Child Benefit for two children both prior to the decision date and thereafter.[27]That latter inference is further strengthened by the receipt evidence submitted by the Appellant which shows expenditure on children’s clothing from 9 April 2014 to 26 June 2014 of £159.49. In addition I note that the bank statements showed evidence of transfers using the payment mechanism One Money Mail which amounted to £1,576.94. However it is unclear from the evidence whether this was also money sent to Poland by the Appellant to support his family. Thus, though the Appellant might not have been making payments of £120 a week to support his family, I find that the evidence, when read as a whole, did show payments towards G and A’s upkeep at the relevant weekly rate at the time of the decision.[28]On the basis of the matters set out above, I allow this appeal. The tribunal erred in law by overlooking relevant evidence and providing inadequate reasons for its decision. However HMRC submits that the tribunal’s decision should not be set aside because the Appellant was not making weekly payments at the appropriate required rate. The Issue of Weekly Payments[29]Is the Appellant required to make payments each week to support his children in order to be entitled to claim Child Benefit? Section 143(1) in Part IX of SSCBA reads as follows:
“For the purposes of this Part of this Act, a person shall be treated as responsible for a child or qualifying young person in any week if (a) he has the child or qualifying young person living with him in that week; or (b) he is contributing to the cost of providing for the child or qualifying young person at a weekly rate which is not less than the weekly rate of child benefit payable in respect of the child or qualifying young person for that week.”
Section 143(1)(b) thus requires a claimant, whose child or children are not living with him/her, to make contributions towards the cost of providing for them at a weekly rate not less than the weekly rate of Child Benefit he or she might expect to receive for those children. It is clear from the statutory wording that the payments made must be referable to the cost of providing for a child or children.[30]Section 143(1)(b) applies to the Appellant’s circumstances as G and A were not living with him. Section 143(5) states that:
“Regulations may prescribe the circumstances in which a person is or is not to be treated (a) as contributing to the cost of providing for a child or qualifying young person as required by subsection (1)(b) above; …”
The remaining provisions of Part IX do not assist with the interpretation of section 143(1)(b).[31]Regulation 11 of the Child Benefit (General) Regulations 2006 provides for the aggregation of amounts where two or more persons are contributing to the cost of maintaining a child and for either agreement between them or, failing that, a determination by HMRC as to which of them will be treated as entitled to benefit. It does not apply in this particular case save that I note that no reference is made in the wording of Regulation 11(1)(b) either to “ weekly contributions ” or to “ contributions weekly ”. Instead the wording is as follows:
“… the aggregate weekly amount of their contributions equals or exceeds, but the weekly amount of each of their individual contributions is less than, the weekly rate of child benefit which would be payable in respect of that child or qualifying young person had the aggregate weekly amount of their contributions been contributed by only one of them …”
The Child Benefit (General) Regulations 2006 do not otherwise assist with the interpretation of section 143(1)(b) of SSCBA.[32]Having regard to the above, I do not read section 143(1)(b) as requiring the making of weekly payments by a person in the position of the Appellant. If such payments were required, I find that the statutory language would be different so as to provide either for weekly contributions or contributions weekly rather than for contributions at a weekly rate. Put another way, it is not the contribution which needs to be made weekly but rather that the rate of the contribution needs to be made at a weekly rate not less than the applicable rate of Child Benefit. It matters not whether the contribution is made monthly or fortnightly or even more sporadically and unpredictably than that. As long as there is evidence of contributions at the relevant Child Benefit rate towards the upkeep/cost of a child or children during the period under scrutiny, the statutory test will be satisfied.[33]I am fortified in my interpretation by the absence of any provision in the Child Benefit (General) Regulations 2006 which require parental contributions to the upkeep of a child to be made weekly. In addition, it seems to me that there is a practical and flexible purpose to the statutory wording in that it permits parents to contribute to a child’s upkeep at the relevant Child Benefit rate whether they are paid weekly, monthly, or more sporadically than that as many freelance and contract workers may be. In an appropriate case, decision makers will need to determine the period in question and calculate the contributions actually being made towards the upkeep of a child or children in order to ascertain whether section 143(1)(b) is satisfied.[34]I thus reject HMRC’s submission that I should not set aside the tribunal’s decision. Further my interpretation of section 143(1)(b) underpins my analysis of the tribunal’s erroneous fact finding in this appeal.[35]Having allowed the appeal and set aside the tribunal’s decision, I have decided that I can remake the decision on the basis of the facts and reasoning set out in this ruling. Having regard to my analysis in paragraphs 19-25 above, I find that at the time of the decision on 26 June 2014 the Appellant was contributing to the upkeep of G and A at a weekly rate not less than the weekly rate of Child Benefit for two children. He was able to do so as his income was sufficient to meet both his own needs and to make this important contribution. Conclusions[36]I allow the Appellant’s appeal against the decision made by the First-tier Tribunal on 9 February 2015. I set aside the decision of the tribunal [Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)].[37]Pursuant to section 12(2)(b)(ii) of the Tribunals, Courts and enforcement Act 2007, the decision that the tribunal should have made is as follows:
“The Appellant’s appeal is allowed. At all material times the Appellant was contributing to the cost of providing for his children, G and A, within the meaning of section 143(1)(b) of the Social Security Contributions and Benefits Act 1992. HMRC’s decision in relation to his claim for child benefit issued on 26 June 2014 is revised accordingly”
. Gwynneth Knowles QC Judge of the Upper Tribunal 24 June 2015. [signed on the original as dated]

Cited in 2 later judgments