BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
Northern Ireland - Social Security and Child Support Commissioners' Decisions |
||
|
You are here: BAILII >> Databases >> Northern Ireland - Social Security and Child Support Commissioners' Decisions >> KP v Department for Social Development (TC) (Tax Credits ) [2012] NICom 256 (21 February 2012) URL: http://www.bailii.org/nie/cases/NISSCSC/2012/256.html Cite as: [2012] NICom 256 |
||
[New search] [Printable RTF version] [Help]
KP-v-Department for Social Development (TC) [2012] NICom 256
Decision No: C2/11-12(TC)
SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992
SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998
TAX CREDIT
Application by the claimant for leave to appeal
and appeal to a Social Security Commissioner
on a question of law from a Tribunal’s decision
dated 27 August 2009
DECISION OF THE SOCIAL SECURITY COMMISSIONER
1. I grant leave to appeal and proceed to determine all questions arising thereon as though they arose on appeal.
2. The decision of the appeal tribunal dated 27 August 2009 is not in error of law. Accordingly, the appeal to the Social Security Commissioner does not succeed. The decision of the appeal tribunal to the effect that the appellant is not entitled to tax credits (TC) as a single claimant for the period from 6 April 2007 to 5 April 2008 is confirmed.
Background
3. The background to this appeal before the Social Security Commissioners is set out in some detail in the helpful and thorough observations prepared by Ms Dinham on behalf of the Commissioners of HM Revenue and Customs (HMRC), as follows:
‘(The claimant) made a single claim for tax credits on 17/06/05 on behalf of herself and then one dependant child, (T).
(The claimant) continued to claim tax credits in a single capacity for the periods 2005-2006, 2006-2007 and 2007-2008.
(The claimant’s) annual declaration for the period 2006-2007 was treated as a claim for the period 2007-2008. Her annual declaration was completed by phone. The information provided an award of £18545.21 for 2007-2008 and this award was increased to £19102.16 on 22/09/2007 following a reported increase in her child care charges.
On 11/01/08 HMRC notified (the claimant) that they intended to enquire into the circumstances surrounding this claim, 2007-2008. Tax Credit Act 2002 section 19. At this point (the claimant) was asked to provide HMRC with various documents to support her claim.
The Claimant Compliance Officer (CCO) investigating (the claimant’s) single application determined that based on the balance of probability (the claimant) was in fact living with … as “husband and wife” and as such are a “unmarried couple” within the meaning of section 3(5A)(6) of the Tax Credit Act. HMRC decision was that (the claimant) was not entitled to claim as a single claimant on this basis.
On 22 May 2008 (the claimant’s) tax credit award was ended. A decision notice to this effect dated 26 May 2008 was issued to (the claimant), containing appeal rights.
(The claimant) first appealed against the decision of 22 May 2008.’
4. The legal basis upon which the HMRC had the power to initiate an enquiry in the appellant’s entitlement to TC and the legal basis upon which the appellant’s existing TC award terminated will be examined in further detail below.
5. A written submission was prepared for the appeal tribunal hearing. In this written submission, the HMRC appeals officer submitted that the decision which had been made on 22 May 2008, and which had been issued to the appellant on 26 May 2008, was incorrect. The appeals officer set out what was submitted to be the correct decision.
6. Following an earlier postponement, an appeal tribunal hearing took place on 27 August 2009. The appellant was present as was a presenting officer from HMRC. The appeal tribunal disallowed the appeal and confirmed the decision dated 22 May 2008, but importantly, as corrected in the appeal submission prepared for the appeal tribunal hearing.
7. On 19 November 2009 an application for leave to appeal against the decision of the appeal tribunal dated 27 August 2009 was received in the Appeals Service. On 16 December 2009 the application for leave to appeal was refused by the legally qualified panel member.
Proceedings before the Social Security Commissioner
8. A further application for leave to appeal was received in the Office of the Social Security Commissioners on 7 January 2010. On 2 March 2010 written observations on the application for leave to appeal were sought from HMRC and these were received on 22 April 2010. Written observations were shared with the appellant on 14 May 2010. In these written observations, Ms Dinham, for HMRC, opposed the application for leave to appeal on the grounds submitted by the appellant. On 11 June 2010 written observations in reply were received from the appellant which were shared with Ms Dinham on 17 June 2010.
9. On 27 July 2010 Ms Dinham was requested to provide additional observations on the following question:
‘To what extent was the appeal tribunal obliged to consider whether the applicant had any entitlement, to tax credits, as a member of a joint couple, for the year 6 April 2007 to 5 April 2008?’
10. On 17 August 2010 further observations in connection with the submitted question were received which were shared with the appellant on 9 September 2010.
11. On 6 October 2010 I directed an oral hearing of the application. Due to unfortunate and unavoidable circumstances connected to the appellant it was not possible to arrange the oral hearing of the application until 28 March 2011. At the oral hearing, the appellant was present but was unrepresented. The appellant indicated that she was unable to secure representation but wished to proceed with the oral hearing. HMRC were represented by Mr Sharpe of Counsel instructed by the Crown Solicitor’s Office.
12. There then followed a delay in the promulgation of this decision, occasioned, in part, by the fact that certain of the issues which arose in the present case, more particularly the issue of ‘living together as husband and wife’ were the subject of consideration by a Social Security Commissioner in another appeal. In the event, the further appeal was determined without there having to be a detailed analysis of the issues arising in the present appeal.
Errors of law
14. In R(I) 2/06 and CSDLA/500/2007, Tribunals of Commissioners in Great Britain have referred to the judgment of the Court of Appeal for England and Wales in R(Iran) v Secretary of State for the Home Department ([2005] EWCA Civ 982), outlining examples of commonly encountered errors of law in terms that can apply equally to appellate legal tribunals. As set out at paragraph 30 of R(I) 2/06 these are:
“(i) making perverse or irrational findings on a matter or matters that were material to the outcome (‘material matters’);
(ii) failing to give reasons or any adequate reasons for findings on material matters;
(iii) failing to take into account and/or resolve conflicts of fact or opinion on material matters;
(iv) giving weight to immaterial matters;
(v) making a material misdirection of law on any material matter;
(vi) committing or permitting a procedural or other irregularity capable of making a material difference to the outcome or the fairness of proceedings; …
Each of these grounds for detecting any error of law contains the word ‘material’ (or ‘immaterial’). Errors of law of which it can be said that they would have made no difference to the outcome do not matter.”
Was the decision of the appeal tribunal in the instant case in error of law?
The relevant legislative background
15. Section 3 of the Tax Credits Act 2002, as amended, provides that:
‘3. Claims
(1) Entitlement to a tax credit for the whole or part of a tax year is dependent on the making of a claim for it.
(2) Where the Board-
(a) decide under section 14 not to make an award of a tax credit on a claim, or
(b) decide under section 16 to terminate an award of a tax credit made on a claim,
(subject to any appeal) any entitlement, or subsequent entitlement, to the tax credit for any part of the same tax year is dependent on the making of a new claim.
(3) A claim for a tax credit may be made-
(a) jointly by the members of a [couple] both of whom are aged at least sixteen and are in the United Kingdom, or
(b) by a person who is aged at least sixteen and is in the United Kingdom but is not entitled to make a claim under paragraph (a) (jointly with another).
(4) Entitlement to a tax credit pursuant to a claim ceases-
(a) in the case of a joint claim, if the persons by whom it was made could no longer jointly make a joint claim, and
(b) in the case of a single claim, if the person by whom it was made could no longer make a single claim.
(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.
…
(7) Circumstances may be prescribed in which a person is to be treated for the purposes of this Part as being, or as not being, in the United Kingdom.
(8) In this Part-
"joint claim" means a claim under paragraph (a) of subsection (3), and
"single claim" means a claim under paragraph (b) of that subsection.’
16. Section 16 of the Tax Credits Act 2002, as amended, provides that:
‘16. Other revised decisions
(1) Where, at any time during the period for which an award of a tax credit is made to a person or persons, the Board have reasonable grounds for believing-
(a) that the rate at which the tax credit has been awarded to him or them for the period differs from the rate at which he is, or they are, entitled to the tax credit for the period, or
(b) that he has, or they have, ceased to be, or never been, entitled to the tax credit for the period,
the Board may decide to amend or terminate the award.
(2) Where, at any time during the period for which an award of a tax credit is made to a person or persons, the Board believe-
(a) that the rate at which a tax credit has been awarded to him or them for the period may differ from the rate at which he is, or they are, entitled to it for the period, or
(b) that he or they may have ceased to be, or never been, entitled to the tax credit for the period,
the Board may give a notice under subsection (3).
(3) A notice under this subsection may-
(a) require the person, or either or both of the persons, to whom the tax credit was awarded to provide any information or evidence which the Board consider they may need for considering whether to amend or terminate the award under subsection (1), or
(b) require any person of a prescribed description to provide any information or evidence of a prescribed description which the Board consider they may need for that purpose,
by the date specified in the notice.
17. Sections 18 and 19 of the Tax Credits Act 2002, as amended, provide that:
18. Decisions after final notice
(1) After giving a notice under section 17 the Board must decide-
(a) whether the person was entitled, or the persons were jointly entitled, to the tax credit, and
(b) if so, the amount of the tax credit to which he was entitled, or they were jointly entitled,
for the tax year.
(2) But, subject to subsection (3), that decision must not be made before a declaration or statement has been made in response to the relevant provisions of the notice.
(3) If a declaration or statement has not been made in response to the relevant provisions of the notice on or before the date specified for the purposes of section 17(4), that decision may be made after that date.
(4) In subsections (2) and (3) "the relevant provisions of the notice" means-
(a) the provision included in the notice by virtue of subsection (2) of section 17,
(b) the provision included in the notice by virtue of subsection (4) of that section, and
(c) any provision included in the notice by virtue of subsection (6) of that section.
(5) Where the Board make a decision under subsection (1) on or before the date referred to in subsection (3), they may revise it if a new declaration or statement is made on or before that date.
(6) If the person or persons to whom a notice under section 17 is given is or are within paragraph (a) or (b) of subsection (8) of that section, the Board must decide again-
(a) whether the person was entitled, or the persons were jointly entitled, to the tax credit, and
(b) if so, the amount of the tax credit to which he was entitled, or they were jointly entitled,
for the tax year.
(7) But, subject to subsection (8), that decision must not be made before a statement has been made in response to the provision included in the notice by virtue of subsection (8) of section 17.
(8) If a statement has not been made in response to the provision included in the notice by virtue of that subsection on or before the date specified for the purposes of that subsection, that decision may be made after that date.
(9) Where the Board make a decision under subsection (6) on or before the date referred to in subsection (8), they may revise it if a new statement is made on or before that date.
(10) Before exercising a function imposed or conferred on them by subsection (1), (5), (6) or (9), the Board may by notice require the person, or either or both of the persons, to whom the notice under section 17 was given to provide any further information or evidence which the Board consider they may need for exercising the function by the date specified in the notice.
(11) Subject to sections 19 and 20 and regulations under section 21 (and to any revision under subsection (5) or (9) and any appeal)-
(a) in a case in which a decision is made under subsection (6) in relation to a person or persons and a tax credit for a tax year, that decision, and
(b) in any other case, the decision under subsection (1) in relation to a person or persons and a tax credit for a tax year,
is conclusive as to the entitlement of the person, or the joint entitlement of the persons, to the tax credit for the tax year and the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year.
19. Power to enquire
(1) The Board may enquire into-
(a) the entitlement of a person, or the joint entitlement of persons, to a tax credit for a tax year, and
(b) the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year,
if they give notice to the person, or each of the persons, during the period allowed for the initiation of an enquiry.
(2) As part of the enquiry the Board may by notice-
(a) require the person, or either or both of the persons, to provide any information or evidence which the Board consider they may need for the purposes of the enquiry, or
(b) require any person of a prescribed description to provide any information or evidence of a prescribed description which the Board consider they may need for those purposes,
by the date specified in the notice.
(3) On an enquiry the Board must decide-
(a) whether the person was entitled, or the persons were jointly entitled, to the tax credit, and (b) if so, the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year.
(4) The period allowed for the initiation of an enquiry is the period beginning immediately after the relevant section 18 decision and ending-
(a) if the person, or either of the persons, to whom the enquiry relates is required by section 8 of the Taxes Management Act 1970 (c. 9) to make a return, with the day on which the return becomes final (or, if both of the persons are so required and their returns become final on different days, with the later of those days), or
(b) in any other case, one year after the beginning of the relevant section 17 date.
(5) "The relevant section 18 decision" means-
(a) in a case in which a decision must be made under subsection (6) of section 18 in relation to the person or persons and the tax year to which the enquiry relates, that decision, and
(b) in any other case, the decision under subsection (1) of that section in relation to the person or persons and that tax year.
(6) "The relevant section 17 date" means-
(a) in a case in which a statement may be made by the person or persons in response to provision included by virtue of subsection (8) of section 17 in the notice given to him or them under that section in relation to the tax year, the date specified in the notice for the purposes of that subsection, and
(b) in any other case, the date specified for the purposes of subsection (4) of that section in the notice given to him or them under that section in relation to the tax year.
(7) A return becomes final-
(a) if it is enquired into under section 9A of the Taxes Management Act 1970 (c. 9), when the enquiries are completed (within the meaning of section 28A of that Act), or
(b) otherwise, at the end of the period specified in subsection (2) of that section in relation to the return.
(8) An enquiry is completed at the time when the Board give notice to the person or persons of their decision under subsection (3); but if the Board give notice to the persons at different times the enquiry is completed at the later of those times.
(9) The person, or either of the persons, to whom the enquiry relates may at any time before such notice is given apply for a direction that the Board must give such a notice.
(10) Such an application is to be heard and determined in the same way as an appeal against a decision under subsection (3); and the General Commissioners or Special Commissioners hearing the application must give the direction applied for unless satisfied that the Board have reasonable grounds for not making the decision or giving the notice.
(11) Where the entitlement of a person, or the joint entitlement of persons, to a tax credit for a tax year has been enquired into under this section, it is not to be the subject of a further notice under subsection (1).
(12) Subject to section 20 and regulations under section 21 (and to any appeal), a decision under subsection (3) in relation to a person or persons and a tax credit for a tax year is conclusive as to the entitlement of the person, or the joint entitlement of the persons, to the tax credit for the tax year and the amount of the tax credit to which he was entitled, or they were jointly entitled, for the tax year.’
What did HMRC decide?
18. In the background narrative set out in the written observations on the application for leave to appeal, Ms Dinham submits that on 11 January 2008 HMRC notified the appellant that they intended to enquire into the circumstances surrounding her claim to TC for the tax year 2007-2008. Ms Dinham submits that the legal basis for the enquiry was section 19 of the Tax Credit Act 2002. In the written submission which was prepared for the appeal tribunal hearing, at paragraph 4 of section 5, the appeals writer submitted that:
‘4. Provision to examine entitlement for the period 06/04/07 to 05/04/08
Where at any time during the period of award, the Board believes there may never have been entitlement to tax credit, the Board may give notice to the claimant to provide information or evidence necessary to determine if the award should be amended or terminated.
Tax Credit Act 2002 Section 16’
19. Accordingly, the appeals writer was submitting that the legislative basis for the instigation of the enquiry was section 16 of the Tax Credits Act 2002 while Ms Dinham submitted that it was section 19.
20. In my view, the correct legislative basis for HMRC’s power to instigate an enquiry into the appellant’s entitlement to TC was section 16 of the Tax Credits Act 2002.
21. On 21 May 2007 the appellant had been awarded an entitlement to TC for the period from 6 April 2007 to 5 April 2008. The enquiry into her entitlement was instigated on 11 January 2008 during the period of the award. Section 19(1) of the Tax Credits Act 2002 gives HMRC the power to enquire into a claimant’s (or claimants’) entitlement to TC for a tax year provided that notice is given to the claimant ‘during the period allowed for the initiation of an enquiry’. Section 19(4) provides that ‘… the period allowed for the initiation of an enquiry is the period beginning immediately after the relevant section 18 decision …’. A section 18 decision is a ‘final notice’ decision given at the end of a tax year. In the instant case it appears that no section 18 decision had been made at the date of the instigation of the enquiry. Accordingly the period for a section 19 enquiry had not commenced. The enquiry which was instigated on 11 January 2008 must, therefore, have been a section 16 enquiry.
22. A decision was made by an officer in HMRC on 22 May 2008. There is no copy of a decision dated 22 May 2008 within the appeal submission which was prepared for the appeal tribunal hearing. What is contained within the appeal submission, as Tab No 32, is a copy of a letter which was issued to the appellant on 20 May 2008. In that letter the appellant is informed that an examination into her claim to TC for the tax year 2007/2008 is complete and that it has been decided that the appellant’s TC award for that period should be ‘terminated’. The reason given for the termination is the claim to TC for the relevant period should have been made as a joint claim rather than as a claim as a single person.
23. Also contained within the appeal submission, as Tab No 33, is a copy of a letter dated 26 May 2008 to the appellant. In this letter the appellant is informed that the TC which are due to her for the tax year 2007/2008 are £51.44. As was noted above, in the narrative of the written submission, the HMRC appeals officer submitted that the decision which had been made on 22 May 2008, and which had been issued to the appellant on 26 May 2008, was incorrect. The appeals officer set out what was submitted to be the correct decision. The correct decision was that the TC award for 2007/2008 should be £0.00. The reasons given for that decision were that the appellant was ‘… living as part of a couple when you made your claim. Therefore a joint claim should have been made.’ Section 18(1) of the Tax Credits Act 2002, as amended, was cited as the legislative basis for this decision.
24. I have no doubt that the intention of HMRC in May 2008 was to make a section 18 decision which would have the effect that the appellant’s entitlement to TC for the tax year 2007/2008 should be nil. Further, I am satisfied that the evidential basis for that decision was that HMRC was satisfied that the appellant was not entitled to an award of TC on foot of a claim as a single person because, on the balance of probabilities, she was living as part of an unmarried couple. Accordingly, any claim to TC for the relevant period should have been made as a joint claim under section 3(3)(a) of the Tax Credits Act 2002 as amended.
What did the appeal tribunal decide?
25. The appeal tribunal began by accepting the submission that there was an error in the decision dated 22 May 2008. Further, the appeal tribunal concluded that it could rectify the error in the decision. Was it correct in that conclusion? The duties of an appeal tribunal, in determining an appeal against either a revision or supersession decision, were comprehensively analysed and reviewed by a Tribunal of Social Security Commissioners in Great Britain in R(IB)2/04. That decision is clear authority for the proposition that where an appeal tribunal identifies defects in a decision which purports to change the effect of a previous decision (eg failure to use the terms ‘revise’ or supersede’, failure to indicate that a previous decision is being revised or superseded, failure to identify the previous decision being revised or superseded, failure to specify the ground for revision or supersession, or reliance on the wrong ground for revision or supersession), the appeal tribunal has the jurisdiction to remedy those defects and make the decision which the Department ought to have made.
26. The appeal tribunal then set out what it thought was the principal issue for consideration, namely, ‘… whether the appellant was entitled to Tax Credits as a single claimant and whether she was living together as husband and wife with … throughout the relevant period.’ The appeal tribunal then set out the relevant legislative background with respect to claims to TC, and considered that it should have regard to the decision of the Social Security Commissioner in R(SB) 17/81 in deciding the question as to whether the appellant was living together as a husband and wife.
27. R(SB) 17/81 was concerned with the rules of entitlement to what was then supplementary benefit. A claim had been made to that benefit as a single person when there was evidence that the claimant was sharing accommodation with someone else. The Commissioner in his decision has given guidance as the factors to be taken into account when deciding whether two people were living together as husband and wife. That guidance has been accepted and followed in the jurisprudence of the Social Security Commissioners, the Upper Tribunal and the appellate courts – see the annotation to regulation 2 of the Income Support (General) Regulations 1987, as amended, in Volume II of Social Security Legislation 2011/2011 (London: Sweet & Maxwell) at pages 218 to 225.
28. The social security principles on cohabitation have been accepted in the context of claims to TC – see the decisions of the Deputy Commissioners in CTC/3864/2004 at paragraph 10 and CTC/3059/2004 at paragraph 12. It seems to me, however, that there should not be a routine citation of the principles in R(SB) 17/81, or parallel decisions, in appeals where cohabitation is a specific issue. Guidance may be derived from such jurisprudence as to the factors to be taken into account in deciding whether a claimant is living together as husband and wife with another but they should not be taken as conclusive. It seems to me that when one considers the guidance which has been offered to HMRC decision-makers those factors are given a context in the period since they were first developed – see paragraphs CCM15000-CCM15290 of the Tax Credits Claims Compliance Manual.
29. The appeal tribunal then assessed the evidence which was available to it and decided, that for the purposes of section 3(5A) of the Tax Credits Act 2002, the appellant was part of a ‘couple’ and, more particularly, for the purposes of section 3(5A)(b) the appellant was, on the balance of probabilities, living together with another as husband and wife.
The appellant’s challenge to the appeal tribunal’s decision
30. In the application for leave to appeal to the Social Security Commissioner, the appellant’s cited ground for submitting that the decision of the appeal tribunal was in error of law was that:
‘From reading the decision I do not understand why I was disallowed. I think that all the circumstances, particular circumstances pertaining to my case were not fully taken into account.’
32. More particularly, it is clear that the appeal tribunal undertook a rigorous and rational assessment of all of the evidence before it. The appeal tribunal gave a sufficient explanation of its assessment of the evidence, explaining why it took the particular view of the evidence which it did. Any conflict in the evidence before the appeal tribunal has been clearly resolved and explained. The appeal tribunal made sufficient findings of fact, relevant to its decision, all of which are wholly sustainable on the evidence, and all of which are supported by relevant evidence. None of the appeal tribunal’s findings are irrational, perverse or immaterial.
33. All issues raised by the appeal, either expressly or apparent from the evidence were fully examined by the appeal tribunal in conformity with its inquisitorial role. Contrary to what has been submitted by the appellant. When read as a whole, the statement of reasons for the appeal tribunal’s decision provides a detailed explanation of the basis on which the appeal tribunal arrived at its conclusions on the issues before it.
35. In her written submissions in reply to the observations made by Ms Dinham on the application for leave to appeal, and in further oral submissions made at the oral hearing of the application before me, the appellant made a further challenge to the appeal tribunal’s assessment of the evidence which was before it. In particular, the appellant challenged the accuracy of ‘Experian’ reports which had been obtained by HMRC as part of its investigations. It is clear to me that the evidence in the ‘Experian’ reports was part of the evidence which was before the appeal tribunal. The appeal tribunal considered that evidence as part of its overall assessment of the evidence which was before the appeal tribunal. The decision of the appeal tribunal that the appellant was living together as husband and wife was not just based on the evidence contained within the ‘Experian’ reports but was based on its assessment of all of the evidence. That evidence included the oral evidence of the appellant which the appeal tribunal did not accept, in parts, as being credible or reliable. That was a conclusion which the appeal tribunal was entitled to arrive at, having heard from and seen the appellant.
The possibility of a joint claim to TC
36. As was noted above, as part of the proceedings before the Social Security Commissioner, Ms Dinham was asked to provide additional observations on the question of the extent to which the appeal tribunal, having found that the appellant was not entitled to make a claim to TC as a single person for the tax year 2007/2008, was obliged to consider whether the applicant had any entitlement to TC, as a member of a joint couple, for the same period. In reply to this request, Ms Dinham submitted that there was no such obligation on the appeal tribunal, citing the decision of the Social Security Commissioner in Scotland in R(TC) 1/07 in support of that submission.
37. In R(TC) 1/07, the claimant had made a claim for TC as a single person on behalf of herself and her child. Evidence subsequently emerged that the claimant was living as part of an unmarried couple and as a result it was decided that she was not entitled to TC. The claimant appealed to an appeal tribunal, which upheld the appeal to a limited extent and remitted the case to HMRC to recalculate her entitlement as part of an unmarried couple. HMRC appealed to the Social Security Commissioner. The submissions of the parties were set out by Commissioner May QC at paragraphs 14 and 15 of his decision, as follows:
‘14. It was Mr Mowat’s submission that the tribunal erred in law in deciding that the claimant was entitled to a tax credit for the period 18 April 2003 to 5 April 2005 on the basis of the claim submitted by her as a single person. In doing so, he relied upon what was said by Deputy Commissioner Green in CTC/3864/2004. There she said:
“15. … If she was entitled to claim as a single claimant, her award of tax credit should not have been terminated.
16. If the claimant is found to have been part of an unmarried couple, then according to section 3(3)(a) of the 2002 Act, such a claim should have been made jointly. It appears from section 3(1) that entitlement to a tax credit is dependent on the making of a claim for it. The wording of section 3(3)(b) makes it clear that a claim can only be brought under (b) if that person is not entitled to make a claim under section 3(3)(a). The two claims are mutually exclusive. Thus, if the claimant’s claim fails under section 3(3)(b) or is terminated for failing to meet the criteria of a single claim, it appears that there has to be a claim under section 3(3)(a) for the claimant to receive an award. Section 3(2)(b) of the Act provides that where the Board have decided under section 16 of the Act (as here) to terminate an award of a tax credit made on a claim, (subject to any appeal) any entitlement, or subsequent entitlement, to the tax credit for any part of the same tax year is dependent on the making of a new claim. In the absence of a new claim, there would then appear to be no entitlement.”
15. It was his submission that the same approach should be adopted in respect of decisions under section 19 as with decisions under section 16 in this regard. Whilst Mrs Bernard was prepared to concede an error in law on the part of the tribunal by virtue of the fact that, on the face of it, it appeared to consider that it was dealing with a decision under section 16 of the Act as opposed to section 19 of the Act, it was her submission that there was room for it to make the decision which it did. She submitted that Deputy Commissioner Green had only indicated, at the end of paragraph 16, that in the absence of a new claim there would “appear” to be no entitlement. Mrs Barnard also submitted that her interpretation of section 3, that claims were not mutually exclusive and that a joint claim could be substituted for a single claim, was supported by the letter written to the claimant on 19 October 2005, recorded at page 91, in which the appellants had indicated that they may be able to waive some of the overpayment if evidence could be produced of the claimant’s cohabitee’s income. Mr Mowat pointed out that the exclusivity between joint claims and single claims in section 3 was a deliberate one and did have to have the mutual exclusiveness referred to by Deputy Commissioner Green. This was on the basis that, if entitlement was found to be on a joint basis, then both the claimant and her cohabitee would not only have joint entitlement but they would also have joint and several liability for any overpayments, notwithstanding that the cohabitee had never been a party to the claim.’
38. Commissioner May set out his conclusions and findings on these arguments at paragraphs 16 and 17, as follows:
‘16. I find myself in agreement with the position adopted by Deputy Commissioner Green that claims made under section 3(3)(a) and 3(3)(b) are mutually exclusive. I follow her decision. I am persuaded by Mr Mowat’s argument as to why this is the case. In my view a cohabitee who has not been an applicant in a claim cannot acquire the right to a potential tax credit when he was not a party to the claim in the first place and acquire potential liabilities arising therefrom. I also do not consider that the provisions contained in section 3, in either the form it was in at the time of the claim or in its amended form from 5 December 2005, allow for the course adopted by the tribunal. In these circumstances, I am satisfied that the tribunal erred in law in deciding the appeal before it on the basis which it did.
17. I do not consider that Mrs Barnard’s submission in relation to the letter of 19 October 2005 is sound. That letter concerns the waiving of an overpayment which is due from the claimant. It does not impose any joint and several liability upon the claimant’s cohabitee.’
39. I accept and adopt the conclusions of the Commissioner in R(TC) 1/07. His reasoning, based on the potential liability to the joint claimant where that joint claimant is not a party to the claim, when the claim is, in fact, ‘created’, as part of the decision-making process in appeal proceedings, to which he is not a party is pertinent. Adopting the language of the Deputy Commissioner in CTC/3864/2004, ‘… the wording of section 3(3)(b) makes it clear that a claim can only be brought under (b) if that person is not entitled to make a claim under section 3(3)(a). The two claims are mutually exclusive. Thus, if the claimant’s claim fails under section 3(3)(b) or is terminated for failing to meet the criteria of a single claim, it appears that there has to be a claim under section 3(3)(a) for the claimant to receive an award.’. Applying those principles to the instant case, the appellant’s claim as a single person was terminated for failing to meet the criteria for a claim as a single person. The only possible course of action was the making of a further claim as a joint couple under section 3(3)(a) of the Tax Credits Act 2002.
A possible overpayment?
40. During the course of the oral hearing of the application for leave to appeal I was informed by Mr Sharpe that an overpayment decision had been raised in connection with the award of TC which had been awarded to the appellant for the relevant period as a single claimant and to which she was deemed not to be entitled. Mr Sharpe indicated that enforcement of that overpayment decision had been stayed pending the resolution of proceedings before the Social Security Commissioners. I asked Mr Sharpe whether the amount of any overpaid TC, paid to the appellant as a single claimant, would be reduced by any entitlement which she might have had as a joint claimant, for the same period, if such a claim had been made. In asking this question, I drew Mr Sharpe’s attention to the parallel position in social security where any amount of overpaid benefit would be reduced by any further amount which had been due to the claimant. Mr Sharpe submitted that there was no such parallel rule or policy. He did, however, suggest, that in exercising its discretion under section 28(10) to recover an overpayment, or in determining the amount of that overpayment under section 29, HMRC would be content to receive representations on those issues. The question of whether there is an overpayment of TC, the amount of any overpaid TC and whether those TC should be recovered is not before me. It seems to me, however, that the factor that the appellant might have had an entitlement to TC as a joint claimant for the tax year 2007/2008 is one which should be taken into account in determining the amount of any overpaid TC awarded to the appellant as a single claimant.
Disposal
41. The decision of the appeal tribunal dated 27 August 2009 is not in error of law. Accordingly, the appeal to the Social Security Commissioner does not succeed. The decision of the appeal tribunal to the effect that the appellant is not entitled to TC as a single claimant for the period from 6 April 2007 to 5 April 2008 is confirmed.
(signed): K Mullan
Chief Commissioner
6 February 2012
