Gutteridge v Revenue & Customs [2005] UKSPC SPC00534 (11 April 2006)

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United Kingdom Special Commissioners of Income Tax Decisions

You are here: BAILII >> Databases >> United Kingdom Special Commissioners of Income Tax Decisions >> Gutteridge v Revenue & Customs [2005] UKSPC SPC00534 (11 April 2006)
URL: http://www.bailii.org/uk/cases/UKSPC/2006/SPC00534.html
Cite as: [2005] UKSPC SPC00534, [2005] UKSPC SPC534

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SPC00534

National Insurance - appeal against a decision under section 8 of the Social Security Contributions (Transfer of Functions) Act 1999 - whether married woman had made an election not to pay contributions - the onus of proof - Regulation 2 National Insurance (Married Women) Regulations 1948 - the deemed continuity of elections previously made - Regulation 2 of the National Insurance (Married Women Regulation) 1973 - Regulation 100 of the Social Security (Contributions) Regulation 1975 - Regulations 100 and 108 of the Social Security (Contribution) Regulations 1979.

THE SPECIAL COMMISSIONERS

MRS DAPHNE CAROL GUTTERIDGE Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Special Commissioner: CHARLES HELLIER

Sitting in public in London on 8 December 2006

Mr Derek Gutteridge for the Appellant

Mr Barry Williams and Mrs Nicola Parslow, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

DECISION

In an age when the hot water taps in public lavatories bear a warning to users to exercise caution because the water may be hot, the systems which existed in the last century for letting married women know from time to time the extent and nature of the provision they had made via the National Insurance scheme for their retirement seem archaic.

From 1948 until 1977 a married woman could make an election which reduced her liability to make contribution payments. Once made, the election generally continued in force until it was expressly revoked or disrupted by prescribed events. The effect of an election, concomitant with the reduction in contributions, was to reduce or eliminate the taxpayer's entitlement to certain National Insurance Benefits, and those included for many women their right to their own state pension.

Because an election continued in force from year to year without the need for renewal it would be easy to forget it had been made. HMRC suggested that the taxpayer would have been aware of the continuing of the election because she would see from the deductions from her salary or from the stamps on her National Insurance card (before 1975) that she was paying at a lower rate. For the average taxpayer I find this fanciful. I do not believe that the ordinary taxpayer either knew what the full contribution rate would have been or would have been aware that her contributions were lower than that rate. Most people look at the bottom line. If it looks about right then they accept it. They do not look at the detail of the calculations.

Not only did the election continue from year to year for many years but also no reminder was sent to the taxpayer of the election she had made. A taxpayer who made an election in 1968 might not be reminded of the existence of her election - let alone its effect - for 20 years. An election made at the age of 18 could remain effective for more than 20 years. What a person does at 18 they may well not remember at 38; and (if they recalled the event) may regret it at 50.

An election was made on a form CF9. This form was at the back of a booklet which explained clearly and sensibly the effect of the election. The effects of the election were clearly spelled out, but it was a long and, without doubt for some, a difficult and boring read.

As I have said, the election was made by signing the form (CF9). The form, once received by the relevant local office of the government department, was used to complete a card which was sent to the records department at Longbenton, Newcastle upon Tyne where it was used to update a central record. The form was destroyed a few years (normally six) later. The only record of the signing of the form became that central record. The system did not provide for direct evidence of an election of enduring and significant effect to be retained. Taxpayers are expected to rely upon secondary evidence - the third hand central record.

It is against this background that this appeal arises. HMRC have given a decision that Mrs Gutteridge was liable to make reduced contributions only in the period 1968 to 1981, and if this is right I understand that her pension will be less than it otherwise would have been.

The history of the dispute between Mrs Gutteridge and HMRC is unfortunate. It displays what appeared to Mr and Mrs Gutteridge, and what, had I been in this position, I suspect would have appeared to me, to be bureaucracy at a low ebb.

Following, I believe, some earlier correspondence, in August 2003 when Mrs Gutteridge was nearly 56, the Pension Service sent Mrs Gutteridge a calculation of her expected pension. The calculation showed that Mrs Gutteridge's contributions qualified for only 26 out of 38 years. Apart from two very short spells when she was unemployed, and 8 years when she had been looking after her child she had worked continuously since she was 15. As a result she had expected the fraction to be higher. When she asked why the fraction was lower, Mrs Gutteridge was told it was because she had made an election.

When asked for evidence that she had made this election nothing but an assertion of the fact and that it was supported by the department's records was forthcoming. This was despite the fact that the officers dealing with the case had access to the relevant records. Indeed in 2003 copies were made of some of those records for internal purposes, but those were not shown to Mr and Mrs Gutteridge until July 2005.

This approach led Mr and Mrs Gutteridge to be suspicious of these documents when they were eventually shown them. The most relevant documents were produced only after Mr and Mrs Gutteridge brought this appeal. Naturally this last minute production made Mr and Mrs Gutteridge suspicious of their authenticity.

As a result, when this appeal commenced Mr Gutteridge made an application that these documents should not be admitted in evidence. He said that they had been produced too late and that he would submit that they were not good evidence of what it was said they showed.

I rejected Mr Gutteridge's application. I did so for these reasons:

(i) first the issues Mr Gutteridge raised about the usefulness or accuracy of the documents were issues that went to the question of the weight to be attached to them. If it were to appear that, for example, they were fraudulent, then having examined them I would attach no weight to them; if it were to appear that they were full of errors, or prone to error then I should attach little or less weight to them. But it was only fair to the Respondents to permit the Respondents to put them forward and to be given the opportunity to show their accuracy or authenticity, whilst permitting the Appellant to attack their usefulness or truth.

(ii) second, so far as the question of timing went, the documents had been disclosed to Mr and Mrs Gutteridge in July. The Appellant had therefore had several months to consider them. It would not be unfair on the Appellant in the context of this appeal to permit them to be given as potential evidence;

(iii) the duty of this tribunal is to determine whether the decision appealed should be upheld or varied. It can only discharge that duty with fairness to all if it is able to consider all the evidence which may be made available to it. To exclude evidence because of its timing should, in my judgement, be done only in very exceptional circumstances where to admit it would unfairly prejudice one party in the conduct of the hearing.

Having said that, in the wider context, the late disclosure of these materials was unfair to Mr and Mrs Gutteridge. It was not clearly the action of a person with nothing to hide. It does not seem to me to be good administrative practice.

I held that I would admit the documents on the basis that I would give my decision on two bases. First, on the basis of all the evidence which in fact had been presented, and the other on the basis that I had excluded these documents from being given in evidence. In that way, should Mrs Gutteridge wish to consider appealing on the basis that my decision as to whether or not the documents should be admitted as evidence was wrong, he would have some indication of what my decision on the facts on the alternative basis would have been. I have therefore included an Appendix to this decision setting out what I would have decided had the documents not been admitted.

The handling of the dispute between Mr and Mrs Gutteridge and HMRC gave rise to some friction. Mrs Gutteridge made an election for this appeal to be heard before the Special Commissioners rather than the General Commissioners. That election was made on the basis of advice from HMRC. Mr and Mrs Gutteridge came to doubt the wisdom of their election.

Mr Gutteridge wanted the appeal to be heard by a judge and jury: a jury which would take a reasonable ordinary view of the facts; not a single Commissioner who would act both as judge and jury and who might adopt a more legalistic or establishment approach. Mr Gutteridge said that he had been told that a hearing before the Special Commissioners would be more like a hearing before a judge and jury than a hearing before the General Commissioners. He had come to the view that this was not the case: the Appellant had swapped the informality of the General Commissioners for the formality of the Special Commissioners. The procedure of the Special Commissioners was more legalistic, more formal and more foreign to him than he had wanted or expected.

I said to Mr Gutteridge that it was my hope and expectation that he would get the same decision before me as he would before the General Commissioners, and that one small advantage of a hearing before the Special Commissioners might be that if technical legal points were raised by HMRC which the Appellant could not easily address himself a Special Commissioner might be better able to consider those legal issues in an even handed way. I also explained to Mr Gutteridge that I had no power to remit this appeal to a judge and jury. It was possible that I might have a power to remit it back to the General Commissioners but that was all.

Mr Gutteridge said that he was not happy with this forum for the resolution of the appeal. He agreed to go ahead with the appeal before me and did not wish me to remit it to the General Commissioners, but he said that this tribunal was not suitable or right for the hearing of the appeal.

I directed that the appeal should go ahead. Jurisdiction in the appeal was given to the Special Commissioners. The election had been validly made and I was not being asked to consider remission to the General Commissioners.

I now turn to the detail of the matter in dispute.

The Decision under Appeal

On 10 March 2002 Mrs Nossiter, an officer of the Board of the Inland Revenue, wrote to Mrs Gutteridge with the following decision:

"For the period from 10 March 1969 to 5 April 1975 you were not liable to pay National Insurance Contributions and from 6 April 1975 to 5 April 1981 you were liable to pay reduced rate contributions."

After 3 years of correspondence that decision was varied, and on 21 March 2005 Mrs Nossiter wrote to Mrs Gutteridge with the following varied decision:

"The decision issued to you on 10 March 2005 is varied to the following:

For the period from 10 March 1969 to 5 April 1975 you were not liable to pay National Insurance contributions.

You were entitled to pay married woman's reduced rate contributions from 6 April 1975, and that entitlement continued to have effect until 5 April 1981.

During the period you were employed in 1978/79 tax year you were liable to pay reduced rate National Insurance contributions."

(I note in passing that the 10 March 2005 decision appears to have been erroneously dated 10 March 2002).

Mrs Gutteridge appealed against that decision on 29 March 2005 electing to have her appeal heard by the General Commissioners. Following a discussion between Mr Gutteridge and Mr Williams, Mrs Gutteridge elected by a letter of 4 June 2005 for the case to be heard by the Special Commissioners. That election was accepted by the chairman of the Grays and Brentwood division of the General Commissioners and on 21 June 2005 the Respondents were notified of this. I have referred to the concerns which Mr and Mrs Gutteridge had with this election above.

My jurisdiction in this appeal is limited solely to the question of whether the decision of 21 March 2005 is correct. That has two consequences:

First, I have no jurisdiction in relation to the issues surrounding HMRC's communications with Mr and Mrs Gutteridge or its, or its predecessors' administration of the National Insurance system.

Second, since the decision relates to whether Mrs Gutteridge was liable to pay National Insurance contributions, and to whether she was entitled and liable to pay at a reduced rate, it does not relate to the question of what contributions were actually made. As a result I have no jurisdiction to determine that question.

Thus the question I have to decide is whether or not Mrs Gutteridge was so liable. That issue is almost solely a factual issue. It is the question of whether or not Mrs Gutteridge made an election. That question I have to decide on the balance of probabilities: whether it is more likely than not that Mrs Gutteridge made such an election.

The Statutory Background

The liability to pay contributions and exemptions from making contributions were created by successive Acts of parliament and regulations made by Ministers. In relation to the period of the decision the relevant Acts were enacted in 1946, 1965 and 1975. Details of these regimes were not provided to me at the hearing but in later written submissions. The path through these provisions is not straight and a number of questions arose in relation to them. Those reading this decision who are interested in the outcome rather than the journey should move swiftly to paragraph 91 pausing only for a brief stop at paragraph 60.

Mr Gutteridge expressed concern that the pursuit of the legislative issues discussed in this section would prejudice Mrs Gutteridge's case. The reason for my pursuit of them was to determine whether or not there was a legal basis, as was alleged by the Respondents, for their contention that if an election was made in 1969 it would continue in force throughout later years. This testing of the Respondents' contention could not prejudice Mrs Gutteridge in this appeal.

The 1946 Act and the 1948 Regulations

The National Insurance Act 1946 provided for a liability for employees to pay flat rate national insurance contributions. Section 59 of that Act gave the Minister power to make regulations modifying the provisions of the Act in their application to married women and to provide for excepting a woman if she so elected from insurance contributions.

In pursuance of that power, regulation 2(1)(a) of the National Insurance (Married Women) Regulations 1948 S1 1948/1470 provided that:

"…(a) A woman may elect not to be, and thereafter (subject to the provisions of paragraph (2) of this regulation) shall not be, liable to pay contributions under the [National Insurance Act 1946] in respect of any employment as an employed person for any period during which she is married."

Regulation 2(2)(a) provided that such an election might be made in writing to the Minister.

The effect of the election was thus to remove the woman's liability to pay contributions under National Insurance Act 1946. A liability remained however to pay smaller amounts of industrial injury contributions under the Industrial Injuries Act.

Regulation 2(2)(a) also provided that the election was operative from the beginning of the week next but one following the week in which it was given or from such earlier date as the Minister might allow. Regulation 2(2)(b) permitted the election to be cancelled by notice in writing.

Regulation 2(3)(a) provided for the issue of a certificate by the Minister if an election had been made. It provided that a married woman who was employed at the time of making an election:

"shall, at that time… make application for certificate of such election, which shall be issued to her by the Minister… and the married woman shall produce such certificate to her employer forthwith."

I shall return later to the manner in which the Respondents said these obligations were fulfilled.

The 1965 Act and the 1973 Regulations

The 1965 Act replaced the 1948 Act. Section 102 of the National Insurance Act 1965 gave power to the Minister to make regulations.

" for exempting a woman, if she so elects or if she does not elect otherwise (as may be provided by the regulations) from liability to pay contributions… as an insured person for any period during which she is married".

The National Insurance (Married Women) Regulations 1973 (the '1973 regulations') were made inter alia under this power. Regulation 2 of those regulations provided that:

"(1)(a) A woman may elect not to be and thereafter (subject of the provisions of paragraph (2) of this regulation) shall not be, liable to pay contributions under the [National Insurance Act 1965] in respect of any employment as an employed person for any period during which she is married.

(b) Nothing in this regulation shall relieve an employer of any liability imposed on him by the Act in relation to employer's contributions.

(2)(a) Any such election by a married woman not to pay contributions as en employed person may be made by her at any time by giving notice in writing to the Secretary of state to that effect, and the election shall be operative from the beginning of the week next but one following the week in which the notice was given or from such earlier date as the Secretary of State may allow.

(c) Any such election by a married woman may be cancelled by her at any time by giving notice to the Secretary of State to that effect, and such cancellation shall be operative from the beginning of the week next but one following the week in which the notice was given or from such earlier date as the Secretary of State may allow:

Provided that such cancellation shall be without prejudice to the right of the person concerned again to make any such election from time to time.

(3)(a) A married woman who has elected not to pay contributions in accordance with the provisions of this regulation, and who is at the time of the election in an employed contributor's employment or thereafter enters such employment, shall at that time or at the commencement of the subsequent employment, as the case may be, make application to the Secretary of State for a certificate of such election, which shall be issued to her by the Secretary of State on any such application, and the married woman shall produce such certificate to her employer forthwith."

Regulation 21 provided that:

"(1) The regulations specified in column 1 of Schedule 2 to these regulations are herby revoked to the extent mentioned in column 3 of that Schedule.

(2) anything whatsoever done under or by virtue of any regulation revoked by these regulations shall be deemed to have been done under or by virtue of the corresponding provision of these regulations, and anything whatsoever begun under any such regulation may be continued under these regulations as if begun under these regulations."

In Schedule 2 the whole of the National Insurance (Married Women) Regulations 1948 were specified and thus revoked.

It seems to me that the parts of the 1973 regulations set out above were made within the powers given to the Minister by section 102 of the National Insurance Act 1965 and in particular that the deeming in Regulation 21(2) was within the Minister's powers because of the words "if she does not elect otherwise" in that section.

Thus if Mrs Gutteridge had made a valid election under the 1948 Regulations, that was treated by virtue of regulation 21(2) of the 1973 regulations as an election under regulation 2(1)(a) of the 1973 regulations.

The 1975 Acts

In 1975 the legislative framework changed. The change was brought about by the Social Security Act 1975 and the Social Security Pensions Act 1975. Employees' contributions became earnings related. Contributions were collected under (or alongside) the PAYE arrangements. The record system was also computerised. The married woman's ability to elect not to pay national insurance contributions was replaced by an ability to elect to pay contributions at a reduced rate.

Section 5(2) of the Social Security Act 1975 provided that:

"A married woman… shall be liable to contribute at the reduced rate if she has elected in accordance with regulations under section 130(2) of this Act, to contribute at that rate and has not revoked her election."

Section 130(1) of the Social Security Act 1975 permitted the Secretary of State to:

"make regulations modifying any of the following provisions of this Act, namely Part I…in such manner as he thinks proper, in their application to women who are or have been married."

Section 130(2) provided that:

"(2) Regulations under this section shall provide (subject to any prescribed conditions and exemptions) for enabling a married woman or widow to elect that in any tax year -

(a) her liability in respect of Clause 1 contributions shall be a liability to contribute at the reduced, instead of the standard rate,…

and to revoke any such election." [My emphasis].

Regulation 91(1) of the Social Security (Contributions) Regulations 1975 (1975/492) (the 1975 Regulations) provided that a married woman could make an election so that the liability to primary Class 1 contributions should be at the reduced rate. Regulation 92 provided that an election made in one year was to continue until revoked on the termination of her marriage or on the death of her husband, and Regulation 93 provided that the election could be revoked by written notice.

It is clear to me that regulations 91, 92 and 93 were made in exercise of the power given to the Secretary of State by section 130(2) of the 1975 Act. These regulations "enabled" an election to be made.

Regulation 100 of the 1975 Regulations provided that where as respects a woman there was:

"current an election under regulation 2(1)(a) of the [1973 Regulations] (married women who are employed persons)… then that woman shall be deemed to have made an election under regulation 91…"

Therefore if this regulation was validly made, and if Mrs Gutteridge made an election under the 1948 Regulations, that election was deemed to be an election for the purposes of the 1973 Regulations, and in turn that was deemed by regulation 100 to be an election under Regulation 91 of the 1975 Regulations.

Regulation 100 deems a woman to have made an election that she had not made. It was not immediately clear to me that Regulation 100 was made in pursuance of the power given to the Secretary of State by section 130 of the 1975 Act. Among other reasons that was because section 130(2) related to "enabling" a woman to make an election for the purposes of that Act whereas Regulation 100 deems an election to have been made. Deeming is not the same as enabling. This issue did not arise in the course of the hearing which was concerned principally with matters of evidence. The clerk accordingly sought written submissions on the issues and the remainder of this section takes account of the submissions received.

Before turning to these matters it is convenient to consider the later legislative history.

Section 130(2) (but not section 130(1)) of the Social Security Act 1975 (under which the 1975 Regulations were made) was repealed by section 65(3) and Schedule 5 of the Social Security and Pensions Act 1975 with effect from 6 April 1977. Replacement provisions were in the Social Security Pensions Act 1975.

Section 3 of the Social Security Pensions Act 1975 provided:

"(1) The provisions of the principal Act whereby primary Class 1 contributions may be paid at a reduced rate and Class 2 contributions need not be paid by a married woman or widow shall cease to have effect.

(2) As respects any woman who is married or a widow when subsection(1) above comes into force regulations shall provide –

(a) for enabling her to elect that her liability in respect of primary Class 1 contributions shall be a liability to contribute at such reduced rate as may be prescribed: and

(b) either for enabling her to elect that her liability in respect of Blass 2 contributions shall be a liability to contribute at such reduced rate as may be prescribed or for enabling her to elect that she shall be under no liability to pay such contributions; and

(c) for enabling her to revoke any such election.

(3) Regulations under subsection (2) above may -

(a) provide for the making or revocation of any election under the regulations to be subject to prescribed exceptions and conditions;

(b) preclude a person who has made such an election from paying Class 3 contributions while the election has effect;

(c) provide for treating an election made or revoked for the purpose of any provision of the regulations as made or revoked also for the purpose of any other provision of the regulations;

(d) provide for treating an election made in accordance with regulations under section 130(2) of the principal Act as made for the purpose of regulations under this section…"

I note in particular the specific power given by section 3(3)(d) to deem elections made under section 130(2) of the principal Act (the Social Security Act 1975) as made under section 3 of the Social Security Pensions Act 1975. There are two features I note in particular: first that such provision appeared in section 130 of the Social Security Act 1975 in relation to elections made under the earlier 1975 Act; and second that it refers to an election made in accordance with the regulations rather than an election made or deemed to have been made in accordance with those regulations.

The Social Security (Contribution) Regulations 1979 (SI 1979/591) (the 1979 Regulations) were made under that Act. Regulation 102 of those regulations is offered to me as authority for the continuity of elections previously made. It provided that:

"where but for the former regulation 91 ceasing to have effect on 6^th April 1977 (being the date on which section 130(2) of the Act (married women and widows) was repealed) an election made under that regulation before that date would have continued to have effect on [6 April 1977], that election shall be treated as made under regulation 100 of these Regulations."

Regulation 100 (confusingly a number also relevant to the 1975 Regulations) of the 1979 Regulations permitted a woman who was married on 6 April 1977 to elect to pay reduced rate contributions but provided that no further elections could be made after 11 May 1977 (although the regulations were made on 23 May 1979, 2 years after that date).

Regulation 101 of the 1979 Regulations provided that an election made under Regulation 100 would cease to have effect at the end of the second consecutive year after 6 April 1978 in which the woman was not earning.

As a result of these successive regulations (assuming that they were all intra vires the powers given to make them), if Mrs Gutteridge made an election under the 1948 Regulations, it was deemed to be an election made under the 1973 Regulations, that election was in turn deemed to be made under the 1975 Regulations, and that election was deemed to be made under the 1979 Regulations. Thus the election was carried forward into new regimes without the need of any further action by Mrs Gutteridge and without any notification to her.

Mrs Gutteridge left employment in April 1973 to bring up her children, returned to her previous employer from October 1978 to December 1978 and was not an earner again until 1981. She was therefore not an earner for two consecutive years after December 1978. As a result when she returned to work in 1981 any election which she may have made or have been deemed to have made would no longer have effect.

Accordingly, whether or not Mrs Gutteridge made an election, after 1981 she was liable respect of any employment to pay full rate contributions.

Was Regulation 100 of the 1975 Regulations made within the powers given to the Minister to make regulations?

At paragraph 52 above I noted concerns as to whether regulation 100 of the 1975 Act was within the power given to the minister to make regulations.

I have set out subsections (1) and (2) of section 130 of the 1975 Act above. Section 130(1) contains a wide power to modify Part I of the Act in its application to married women in such manner as the minister thinks proper. Section 130(2) then states that such regulations "shall provide… for enabling" married women to elect to pay at the reduced rate. The first concern was whether section 130(2) gave the minister power to deem an election previously made to be an election made under the Act when the language of section 130(2) merely spoke of "enabling" an election to be made.

Mr Williams in his written submissions submits that section 130(2) is not a free standing power but rather a constraint upon an exercise of the section 130(1) power in the sense that if the section 130(1) power were exercised the resulting regulations were required to include as a bare minimum the matters referred to in sections 130(2) and (3). Accordingly he says that even if a regulation which "deems" an election to have been made is not a regulation which "enables" an election to be made as required by section 130(2), it is nevertheless a regulation which the minister is given the power to make by section 130(1) and that section 130(2) simply prescribes what additional regulations must also be made.

Regulation 100 falls within a group, "Case D - Married Women and Widows" of the 1975 Regulations, which contains regulations 90 to 106. Each regulation in the group deals in some way with the making of election to pay at a reduced rate. Regulation 106 (to which I was not referred) provides that:

"The provisions of the Act shall have effect as respects married women and widows subject to the modifications contained in the provisions of this Case."

The provisions of Case D relate to women who are or have been married. It contains specific provisions relating to various clauses of such women - for example those who have previously made elections, those who revoke elections, and those who were widowed. Case D does not deal with such women as a single class: it makes different provisions in differing circumstances. However, it seems to me that, when section 130(1) is read with section 130(2), the power given by section 130(1) extends to making such differing provision.

Absent regulation 106 it would not be clear to me that regulation 100 was to be taken as modifying the Act. Regulation 106 makes that clear, and in my view regulation 100 taken together with the other regulations in Case D is therefore properly to be regarded as made under, and within the power granted by, section 130(1) and as modifying the provisions of the Act accordingly.

I noted above that in contrast to section 130 of the Social Security Act 1975, section 3(3)(d) of the Social Security Pensions Act 1975 made express provisions for regulations to deem an election made under regulations under the earlier Act as made under the latter Act. As Mr Williams points out in his written submissions the words adopted by parliament must be considered in their context. The regulation making power in section 3 was narrower than that in section 130: it provides that certain fairly specific regulations shall be made and then permits a smaller number of matters in respect of which elections "may" be made. Section 130(1) is much wider in its ambit. In context therefore and considering the provisions in the round he submits that no inference can be drawn that the section 130(1) power should be regarded as not extending to deeming elections to have been made. I agree.

Accordingly it seems to me that regulation 100 of the 1975 Regulations was made within the powers conferred on the Minister by the Social Security Act 1975.

Regulation 102 of the 1979 Regulations

In seeking written submissions it was suggested to the Respondents that Regulation 102 preserved the effect of a deemed election under Regulation 100 of the 1975 Regulations. In his written submissions Mr Williams adopts that suggestion.

I have set out regulation 102 of the 1979 Regulations above. It provided in broad terms for the continuation of an election made under regulation 91 of the 1975 Regulations.

Insofar as Regulation 102 relates to elections actually made under regulation 91 of the 1975 Regulations it seems to me that it is clearly within the enabling power granted by section 3(3)(d) of the Social Security Pensions Act 1975. That is because that section permitted regulations to treat "an election made in accordance with regulations under section 130(2)" to be treated as made for the purpose of the 1979 Regulations. Regulation 91, so far as it permitted new elections to be made, was a regulation which "enabled" such elections to be made, and an election made under it was therefore within section 3(3)(d) being an "election made in accordance with regulations under section 130(2) of the …Act". Accordingly Regulation 102 was intra vires section 3(3)(d) to the extent it permitted an election actually made under regulation 91 to be treated as continuing for the purpose of the 1979 Regulations.

It is less clear, however, that an election deemed by Regulation 100 the 1975 Regulations have to be made under Regulation 91 of those regulations is to be treated by Regulation 102 as made under the 1979 Regulations. That is because:

(i) regulation 102 speaks of "an election made"; it does not expressly refer to an election to be treated by the regulations as if it had been made. If it had said "an election made for the purposes of the Regulations under regulation 91", or "an election made or treated as made under regulation 91", the position would be clearer; and

(ii) the power to make Regulation 102 appears to be section 3(3)(d). That refers only to elections made in accordance with regulations under section 130(2) and not more generally to regulations made under section 130. I concluded above that the modifications made by Case D of the 1975 Regulations were within the power conferred by section 130; it was less clear that the deeming of an election to have been made was enabling an election to be made within section 130(2); accordingly it may be argued that Regulation 102 should be construed strictly as having effect only to the extent permitted by the enabling power and therefore only having effect in relation to elections actually made under Regulation 91 and not those deemed to have been made. The reference to subsection (2) of section 130 rather than to the wider power in section 130(1) reinforces that argument.

Mr Williams in his written submissions says that given that effect of regulation 100 of the 1975 Regulations is that old elections are deemed to take effect under regulation 91 of the 1975 Regulations, there is no reason why the reference to section 130(2) in section 3(2)(d) should stop the deemed Regulation 91 election from taking effect under Regulation 102 of the 1979 Regulations. This does not appear to me to deal with the issue: the power given by section 3(3)(d) relates only to circumstances where section 130(2) regulation had effect: the question is thus the extent of that power - not whether the reference to section 130(3) should limit it, because the power exists only where section 130(2) applied.

Mr Williams submits that a view that section 130(2) itself (rather than section 130(1)) does not give power to make Regulation 100 relies on a very narrow reading of the legislation. He submits that section 130(2) must be construed in the light of what parliament intended having in mind the legislation of which it forms part. He notes the statement in Bennion on Statutory Interpretation 4^th Edition at page 215 that:

"Underlying the concept of delegated legislation is the basic principle that the legislature delegates because it cannot extend its will in every detail. All it can do in practice is to lay down the outline. This means that the intention of the legislature, as indicated in this outline (that is the enabling Act) must be the prime guide to the meaning of delegated legislation and the extent of the power to make it."

He says that the legislation clearly intended - in the outline set down at section 130(2) - that any married woman or widow should have the opportunity to pay National Insurance contributions at a reduced rate. Regulation 100 he says implements that intention in respect of one subclass of married women or widows namely those who made an election under old legislation.

If it was clear that the legislative purpose was to give such women the opportunity to pay NIC at a reduced rate, then I would agree with Mr Williams that the regulation implements, or is part of the implementation of that intention. But the question is whether the intention behind section 3(3)(d) is to give the opportunity to elect to pay at a reduced rate rather than simply the opportunity so to pay. The language of section 3(2) and (3) suggest to my mind the former purpose:

(i) section 3(2) in its first two branches speaks of "enabling her to elect", and in its last branch of "enabling her to revoke an election". The emphasis is on the electing not the opportunity;

(ii) the provisions of section 3(3) likewise deals with restrictions on and the consequences of an election, not the opportunity.

Accordingly it does not seem to me that the section 3 powers can be construed simply as permitting an opportunity to be conferred by regulation. The regulation must provide for an election.

Mr Williams says that the Secretary of State could have given married women the opportunity to elect merely by implementing regulation 91(1). I agree. But he says that simply doing that without catering for old elections would have resulted in an administrative nightmare for the department and unnecessary aggravation for the women who wished their previous election to continue. Thus the Secretary of State says he gave women the alternative opportunity to continue to pay at a reduced rate by implementing regulation 100.

It may well be the case that those were the reasons which led to the implementation of regulation 100, but that does not answer the question as to whether regulation 100 was made under section 130(2) rather than under section 130(1). And if it was not made under section 130(2) then regulation 102 cannot be construed as extending to elections made otherwise than directly under regulation 91 of the 1975 Regulations.

Mr Williams says that a reading of section 130(2) which results in its being construed as applying only to the making of new elections is unduly narrow and too literal, and that it suggests that section 130 is less of a framework and more of a definitive exposition of the additional rules which could be made. But as Mr Williams points out earlier in his submissions it is section 130(1) which provides wide powers which the Security of State "may" exercise, and section 130(2) which provides more narrowly the particular provisions he "must" make. In that context it is more natural to construe the permissive powers as relating to the framework, and the prescriptive requirements, because of their juxtaposition with the permissive powers, more narrowly but as contributing to the framework under which the wider section 130(1) powers may be exercised.

I conclude that regulation 102 cannot be construed as providing for the continuation of a deemed election.

However, regulation 108 of the 1979 Regulations which was not referred to in the written submissions makes express provision. It provides that where as respects a woman immediately before the appointed day:

"there is a current an election under regulation 2(1)(a) of the [1973 Regulations]… that women shall be deemed to have made an election under the former regulation 91".

Regulation 110 then applies regulation 99 to 107 to that deemed election as if it were an actual election under regulation 100.

Accordingly it becomes clear that the draftsman of the 1979 Regulations also considered that regulation 102 applied only to actual elections made under regulation 91 of the 1975 regulations and decided to fill the gap in relation to deemed elections with regulation 108. As a result so long as regulation 108 is within the power of the Security of State regulation 108 effects the continuance of an election made under previous legislation.

However the preamble to the 1979 Regulations indicates that they are made in exercise of powers conferred on the Secretary of State inter alia by section 130 of the Social Security Act 1975 (it will be recalled that only section 130(2) was repealed) and section 63(1) of the Social Security Pensions Act 1975. That section provides for regulations to be made for any transitional matter connected with the coming into force of the Act and in particular for securing continuity between any provision modified or repealed by the Act and the Act itself. It seems to me that this provision and section 130 provides vires for regulation 108.

The jurisdiction of the Special Commissioners

The Social Security Contributions (Transfer of Functions etc.) Act 1999 transferred to the Inland Revenue the care and management of National Insurance contributions. Section 8 of that Act provided for the making of decisions by an officer of the Board. Section 8(1)(c) specified a decision as to "whether a person is, or was, liable to pay contributions of any particular class and, if so, the amount that he is, or was, liable to pay" as one of those decisions. Section 8(1)(d) contained similar provisions as to entitlement. Section 10 provided for regulations making provision for the variation of any decision under section 8. The Social Security Contributions (Decisions and Appeals) Regulations 1999 contained provisions made under that section 10 permitting an officer to vary a decision if he had reason to believe it was incorrect.

The decision dated on 10 March 2002 (but made I believe on 10 March 2005) and the varied decision made on 21 March 2005 were decisions made pursuant to those provisions.

The 1999 Act provides for appeals against any such decision of the Board to be made to the tax appeal Commissioners and, in section 13, for the regulations to be made in respect of appeals to the tax appeal Commissioners. Regulation 10 of the 1999 Regulations provides that:

"…10. If, on appeal to the tax appeal Commissioners under Part II of the Transfer Act or Part III of the Transfer Order, it appears to the majority of the Commissioners present at the hearing, by examination of the appellant on oath or affirmation or by other evidence, that the decision should be varied in a particular manner, the decision shall be varied in that manner, but otherwise shall stand good…"

Onus of Proof

Mr Williams said that the regulation 10 of the 1999 Regulations placed the onus of proof upon the Appellant because it required evidence to be adduced which would cause the Commissioners to vary the decision. Fairly, he pointed out however that in this case this would put the Appellant in the position of having to prove a negative i.e. that she had not made an election. The Respondents therefore accepted the onus of proof.

Section 50(6) Taxes Management Act 1970 contains language similar to that in regulation 10. It provides:

"If, on an appeal, it appears to… the Commissioners… by evidence - (c) that the Appellant is overcharged by an assessment… the assessment… shall be reduced accordingly, but otherwise the assessment… shall stand good."

This provision was recently considered by the High Court and the Court of Appeal in Wood v Holden 2006 EWCA Civ 26. It was accepted that the effect of this provision was to place a burden on the taxpayer to show that the assessment was wrong, but that "there plainly comes a point where the taxpayer has produced evidence which, as matters stand then, appears to show that the assessment is wrong. At that point the evidential basis must pass to the Revenue." - when the taxpayer could say we have done enough to raise a case, what more can Commissioners expect from us? The burden must pass to the Revenue to produce some material to support their case.

In Wood v Holden the Court of Appeal referred to Lord Brendan's statement in Rhesa Shipping v Edmunds [1985] 1 WLR 948 that a judge is not bound, always, to make a finding one way or the other on the facts asserted by the parties, but has open to him a third alternative of saying that the party on whom the burden of proof lies has failed to discharge it." But that is not a course which should be adopted unless "owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take."

In this case Mrs Gutteridge asserts that she did not make an election. If the only evidence before me was Mrs Gutteridge's oral testimony I would consider what she said and how she said it. If my conclusion was that her evidence was unsatisfactory I would decide that she had not discharged the burden imposed by the Regulations. If however I found her evidence satisfactory and believed that there was a reasonable likelihood that her recollections were accurate I would find for her.

In civil cases the burden of persuading a court or tribunal generally lies on the party who substantively asserts the affirmation of an issue. But as Lord Russell said in Joseph Constructive Steamship Line Ltd v Imperial Smelting Corporation Ltd at p. 177: "the proving of a negative, a task always difficult and often impossible, would be a most exceptional burden to impose on a litigant." What is the affirmation depends on the substance of the issue and requires a measure of common sense to determine.

In this case one party is asserting that a document was signed and the other not. Were this a civil case then it seems to me that the burden would be on the Respondents to show that it had been signed: in other words they could win only if they advanced evidence which in the teeth of the Appellant's denial was persuasive that the form had been signed. They could not sit back and say "show you did not sign it."

It seems to me that in reality the civil law approach and the approach deriving from regulation 10 lead to much the same result. If the Respondents advanced no evidence that the form had been signed the tribunal would, if it found Mrs Gutteridge's evidence cogent, be likely to hold for her. But once the Respondents advance evidence the tribunal's duty is to weigh the evidence of the parties.

The issue of the burden of proof arises if the Appellant advances no evidence or if the Appellant advances evidence but that evidence is so unsatisfactory as to leave the tribunal in real doubt as to whether it has any value. In such circumstances, I believe that despite the authority of Joseph Constantine Steamship Lines, the tribunal would follow the guidance of the Court of Appeal in Wood v Holden and even in the absence of evidence from the Respondents would have to dismiss the appeal. But given the comments of Lord Russell the weight of evidence necessary to raise the issue to a point at which the Appellant would succeed unless the Respondents advanced their own evidence would be light.

In this case however Mrs Gutteridge did give evidence. That evidence was robust and believable. It was also supported, and I shall explain later, by evidence from Mr Gutteridge. If that was all the evidence before me I would hold for the Appellant.

The Evidence

There was an agreed statement of facts:

(i) The Appellant was born on 21 November 1947.

(ii) The Appellant's name was registered at the commencement of her National Insurance history as Daphne Raven.

(iii) The Appellant was married to Derek John Gutteridge on 9 March 1968.

(iv) The Appellant lives at 10 Linda Gardens, Billericay, Essex CM12 OE2.

HMRC produced three bundles of documents. The second was a bundle of authorities and the third a bundle of Appellant's papers bound by HMRC. The first bundle included copies of the decisions which were the subject of this appeal and related correspondence, Mrs Gutteridge's statement of 9 May 2005 that she had not agreed to reduced National Insurance contributions at any time, and photocopies of records said to have been maintained by HMRC. These copies included:

(a) a copy of the leaflet current ("NI1") in November 1967 which explained the effect of an election and contained the form on which it could be made (the CF9 form);

(b) a specimen married woman's national insurance card for a woman who had made an election;

(c) a copy of the forms RF1 for Mr and Mrs Gutteridge. The form RF1 was the centrally maintained National Insurance record;

(d) copies of tax deduction cards said to relate to Mrs Gutteridge in the period 1962 to 2004.

I heard oral evidence from Mr Richard Neil Lange of the National Insurance Contributions unit at Longbenton, Newcastle Upon Tyne. Mr Lange started working for the department dealing with National Insurance in 1965. From 1973 to 1990 he worked on child benefit information. Since 1990 he has been working in the National Insurance record keeping department. Mr Lange explained the procedure for the microfilming of certain national insurance records and brought to the hearing the microfilms which included the films from which the copies of the tax deduction cards in the bundles had been made. He was able to show me the correspondence between one of those films and the copy of the tax deduction card in the bundle. Although he had a large number of films available, I asked only to see one as Mr Gutteridge had said he was content (subject to a point to which I shall return later) for the copies in the bundles to be accepted as representing those on the films.

I also heard oral evidence from Mrs Angela Scott of the Contribution Office, Longbenton, Newcastle upon Tyne. Mrs Scott had also made a witness statement the contents of which she affirmed to be the truth. Mrs Scott joined the department on 31 August 1965 and had worked initially in the records branch at Longbenton and later at local offices in Southend and Newcastle upon Tyne. In the local office she had worked in the Contributions section including time spent as a counter clerk. She had been a National Insurance Inspector visiting employees to check wage records and National Insurance deductions, and had been involved with the training of new officers. Her evidence was relevant to the questions of the reliability or otherwise of the records maintained generally, but since she had had no involvement with Mr or Mrs Gutteridge's affairs she could not, and did not attempt to, give evidence directly related to the compilation of their National Insurance records other than to explain the meanings of abbreviations used on those forms.

I also heard oral evidence from Mrs Gutteridge. During the course of the hearing Mr Gutteridge made a number of factual assertions including one as to his address at a particular time. Although Mr Gutteridge did not give sworn evidence I have taken those statements as part of the evidence before me.

Lastly, but importantly I was given two documents said to be the original forms RF1 for Mr Gutteridge and Mrs Gutteridge taken from the records at Longbenton. Those were made available at the hearing to the Appellants. Until then I understand that they had seen only photocopies - and that not before the middle of 2005.

Following the hearing I was sent by both parties documents relating to Mrs Gutteridge's address at a particular time. I shall indicate at the end of this decision how I dealt with those documents and their contents.

The Record Keeping System

From Mrs Scott's evidence I find that the relevant part of the system for keeping National Insurance records at the relevant time generally operated in the following way.

When a person came within the National Insurance system a record sheet was created. This was known as the RF1. An RF1 would in the first place be completed by a National Insurance office or a Youth Employment Office. It was then sent to Longbenton where it was checked and kept on one of the many ledger sections. (The last two digits of the national insurance number indicated the ledger section to which the card (and therefore the taxpayer) was allocated, and the antepenultimate digit the 'line' or subsection of that ledger section which would work on the card).

The RF1 was the main permanent national insurance contribution record. On it there were entered changes of name, changes of address, changes of marital status and summary details of contributions paid or credited. These details were entered in manuscript in ink which was designed not to fade. Computerisation of the records took place in 1975.

The RF1's were not taken away from Longbenton for updating; instead information was sent to Longbenton and the cards updated by the ledger clerks there. Information to update the cards had to be sent to Longbenton to enable the clerk to update the RF1s.

In the case of the updating of the contribution record, the information to update the cards arrived at Longbenton in the form of National Insurance cards bearing stamps stuck on to them for the period, and in later years tax deduction cards completed by the employer. (From 1979 the employer's returns were combined with PAYE returns). On arrival they were sorted by ledger section and then delivered to the relevant sections for posting to the RF1s.

Information to record a married woman's election reached Longbenton in the following way. I take this account from Mrs Scott's witness statement:

"(a) If [a marriage certificate] was received by [a local office by] post the officer placed any accompanying letter into a pouch and recorded the details of the marriage from the certificate onto the pouch. A second officer then inspected the certificate and verified that the information had been correctly recorded. At this stage a form MF15 correspondence card was completed to notify the details of the marriage to Records Branch [Longbenton], and a leaflet NI1 was issued to the woman by post.

"(b) If the woman called at the local office with her marriage certificate she was attended to at the public counter by a clerk who would inspect the marriage certificate. Details of the marriage were recorded on special forms (often referred to as "caller slips"). These forms were used for recording information obtained at the counter, so that the appropriate section would be advised. The details were then cross-checked against the marriage certificate by another officer. The woman was given leaflet NI1 at this stage and advised to read the information contained therein. The clerk would explain that the married woman had a choice whether to continue paying the full rate or to make an election not to pay contributions, and what effect on her future benefit entitlement a choice not to pay would have. We covered short-term benefit claims such as sickness, unemployment and maternity as well as the long-term retirement pension. We would also explain that a married woman would be able to claim a retirement pension based on her husband's record. The clerk could not, however, advise anyone what choice to make - the choice was a personal one.

"(c) Quite often the women would take a seat in the public waiting area and read the leaflet NI1, and complete the CF9 there and then to make her choice. In this case the CF9 would be handed to the clerk. The woman would be asked to obtain her National Insurance card form her employer and return it to the office without delay.

"(d) At the end of the day, when the counter closed, the clerk would take the caller slips and any CF9s to the Contributions section of the office where they were distributed to the relevant officer. In the Southend office the public counter was situated on the first floor of the office and the Contributions section was on the third floor. In the Newcastle office the public counter and Contributions section were both situated on the first floor. In both offices it was the Contributions section who provided the staff to man the counter on a rota basis. The Contributions section worked on an alphabetical split.

"(e) The relevant officer would put the CF9 and caller slip into a pouch, then complete a form MF15 to notify Records Branch of the verified marriage details, election and the date from which the election was effective. From April 1975 the form used to notify an election was form CF400.

"(f) The pouch was then held to await receipt of the card. If necessary we would ask the employer to return it. On receipt of the card an adhesive label (form CF16) was affixed. The CF16 gave the employer authority to cease deducting Class 1 contributions and commence deducting industrial injuries contributions. The card was then returned to the woman to give to her employer. At this stage the official use box on the reverse of the CF9 was completed by the officer, and the CF9 filed away in the local office for retention for a period of 6 years.

"(g) When all action was complete the pouches were given to the section manager. They were then subject to a random selection for a management check before being put away."

Mrs Scott gave evidence that it was not only women who had recently married who contacted the department, either in person or by post. Married women could change their choice at any time and sometimes they did. The procedures as explained above remained the same except that it was not necessary for the woman to produce her marriage certificate again.

Mrs Scott explained that, on receipt of the MF15 at Longbenton it was forwarded to the appropriate Ledger Section. The ledger clerk would associate it with the appropriate RF1 and record the election in column k of the RF1 together with the date from which it was effective. The entry on the RF1 was abbreviated as, for example, MW1/NP - Married Woman in Class 1 employment who had chosen Not to Pay. Once the RF1 had been noted the MF15 was returned to the originating office to let them know that the action had been taken.

Thus if an election were made it would reach Longbenton in a second hand way: via the form MF15.

From Mrs Scott's evidence I also find that the work on the ledger section was controlled in the following ways.

Clerical officers working at Longbenton underwent a 13 week training course before they were let loose. Classroom based training was followed by practice on the ledger section. This work was closely monitored by an Executive Officer and subject to a 100% check until it was considered that the clerk could be trusted to do his own allocation of work.

At that stage the clerk was issued with an authentication stamp. Each stamp was numbered and the number was registered against the name of the officer to whom it had been issued. The use of the stamp denoted personal responsibility for an entry on a form or for the authentication of the RF1 when first set up. (Not all entries were verified by stamp. It appears that the stamp was used on setting up the RF1 record, and on making entries dealing with military or civil service, but not for the entries of contributions, changes of name, address, marital status, or to record the making of a married woman's election.)

The work on the Ledger section was subject to a system of checking. Some items of work were always checked. These included items in respect of maternity, retirement and widows benefit. I was not told that married women's elections were subject to such 100% checking and have concluded that they were not.

There was also some checking by fellow clerks of postings including those in respect of juvenile contributions. If an entry meant that a National Insurance card would be suppressed because the individual had enlisted in the forces, or became or ceased to be a civil servant, the entry had to be checked by an Executive Officer. The RF1 bearing Mr Gutteridge's name had such an entry and bore the stamp of an Executive Officer who had checked it. Again I was not told that the recording of married women's elections were subject either to customary (non-random) checking by fellow clerks or to compulsory verification by an Executive Officer. I conclude that they were not.

Audits were carried out. If an audit of a section produced an error level above the norm the supervisor was required to produce a report to senior staff. There was some competition between sections for good performance in these audits. Attached to Mr Scott's witness statement was a table listing items checked on audit. It was said not to be a complete list of all the items audited. It did not include the employed married woman's election (although it did include a self employed married women's election). I shall return to this list later.

From Mr Lange's evidence I find the following facts:

(i) From 1961 to the early 1970s documents were sent to Kodak to microfilm. After that period the microfilming took place in-house.

(ii) From 1961 each tax deduction record received was microfilmed.

(iii) After microfilming the originals were kept for one year before being destroyed.

The Issue

As mentioned before the, issue I have to decide is whether it is more likely than not that Mrs Gutteridge made an election under regulation 2(1) of the 1948 Regulations. If she did then from the date that election was effective until 5 April 1975 she was not liable to pay National Insurance Contributions and from 6 April 1975 until 5 April l981 she was liable when employed to pay reduced rate National Insurance contributions only.

I therefore have to decide whether it is more likely that Mrs Gutteridge signed the election, or whether it is more likely that she did not.

Because the forms CF9 on which elections were made were destroyed by the relevant department after six years, the Respondents cannot produce direct evidence that Mrs Gutteridge signed the form to make the election. Nevertheless Mr Williams submitted that it was more likely that she had signed the election than that she had not. The principal evidence that she had signed it was the annotation on the document produced as her RF1:

"MW1/NP - 10/3/69"

Upon those few letters hung the case for the Respondents. They contended that the system for the recording of elections was so accurate that even in the face of Mrs Gutteridge's denial of any recollection that she had made an election it was still more likely than not that she had made it.

Mr Gutteridge submitted that reliance could not be placed on the system: government employees doing repetitive boring jobs would not be too careful: they would say "That'll be OK", or "I won't be here when they find out". He questioned the authenticity of the RF1 shown to me, he pointed out errors in its compilation, he asked whether, given the history of the matter, it could have been made up to cover a mistake. In short he said that it was very unlikely that that entry on the RF1 shown to me truly reflected an election, and that given Mrs Gutteridge's evidence and his own I should find that it was more likely that the election had not been made.

I shall deal with these issues under the following headings:

(i) Mrs Gutteridge's evidence;

(ii) the RF1; and

(iii) the reliability of the system;

I shall then draw some conclusions in relation to the accuracy of the RF1 in a section headed "Discussion".

Following this I discuss the effects of an election and the inferences which I could be asked to draw from them. For example, it was suggested that the fact that when she had her baby in 1973 she was given a single maternity grant rather than 18 weeks of maternity payments (and the latter were available only if full contribution payments had been paid by her) was evidence that an election had been made or that at that time Mrs Gutteridge was aware such an election had been made.

After this, in a section headed The Balancing Exercise, I draw my conclusions from the evidence.

(i) Mrs Gutteridge's evidence

Mrs Gutteridge told me that she had never signed a form CF9 and that she had never signed any other document at a government employment agency. She had thought that throughout the relevant period she had been paying full national insurance contributions. She felt that she had been let down by a government organisation.

Mr Gutteridge asked me to cast my mind back to the late 1960s and to imagine a newly wed couple. They had been such a couple. They had discussed everything together. Any decision to elect, which had long term effects, they would have discussed together. He had no recollection of such a discussion. There had not been one.

Mrs Gutteridge was 20 years old when she married Mr Gutteridge. She does not recall taking her marriage certificate to an employment exchange. She believes her marriage would have been notified to the department by her employer. She recalled receiving her marriage certificate back.

(ii) The RF1

I am convinced that the RF1 produced to me was the document created in 1962 to record Mrs Gutteridge's (or Miss Raven's, as she then was) entry into the national insurance system. The document had the feel of 1950s and 60s bureaucracy: the nature and state of the paper, the style of the entries, the manuscript entries, the colour of the stamp ink all indicated an official document from that period.

Mr Gutteridge suggested that the document could have been made up. He showed how easy it would be to produce the form of the document on a modern day word processor. His format was a very good replica of that of the document shown to me, but the paper, the printing, the writing and the wear of the document before me convinced me that it was an authentic document from the 1960s.

But even if the piece of paper was authentic that does not mean that the entries made on it were correct.

(iii) The reliability of the system

Mrs Scott told me that in her experience the error rate both at local offices and at Longbenton was small. She said that mistakes were made but the proportion of wrong entries at any stage of the system was small. She referred to the system of random internal audit, the checks which were made at the local office before forwarding the MF15 to Longbenton, the training and supervision of the officers. She did not specify a figure for the proportion of wrong entries but gave me the impression that in her experience and her recollection of the reported experiences of others that the rate was substantially below 5%.

Mr Gutteridge made a number of attacks upon the accuracy and reliability of the system.

First, he pointed to the addresses given on the forms RF1 for both Mrs Gutteridge and himself. Mrs Gutteridge's address is first recorded on her form RF1 as Ivydene, Norsey View Drive, Billericay. This has been crossed out and the address "Flat 19, Lucy Lane Estate, Stanway Colchester, Essex" entered with a date which appears to be 20/6/68. This is also crossed out and a new address 2, Provence Close, Stanway, Colchester" entered with the date 20/4/74. Mrs Gutteridge told in evidence that after she married she had lived at 62, Elizabeth Road, then at 2, Provence Close, and then at 10 Linda Gardens but that she had never lived at Flat 19 Lucy Lane Estate.

Mr Gutteridge's form RF1 records his addresses successively after 1988 as 62 Elizabeth Road (entry dated 28/3/67), Plot 19, Lucy Lane Estate (entry dated 31/3/68), 62 Elizabeth Road (entry dated 22/9/70), and 2 Provence Close (entry dated 19/1/92). Mr Gutteridge told me that he had never lived at Flat 19 Lucy Lane Estate.

Thus the RF1s bore Mrs Gutteridge's address as Flat 19, Lucy Lane Estate between 20 June 1968 and 20 April 1974, and Mr Gutteridge's address as Plot 19 Lucy Lane Estate between 31 March 1968 and 22 September 1970 and both of them told me they had not lived at Flat 19 Lucy Lane Estate.

It appears that Mrs Gutteridge's change of address to Flat 19 Lucy Lane Estate was entered on the same date as the notification of her marriage because both changes bear the date 20 June 1968.

Secondly, Mr Gutteridge said that in his experience clerks particularly those in their teens or twenties, working on a low wage in civil service departments were not overly concerned with accuracy. He had heard such people saying "That'll do", and "I won't be here when this is found out". Mrs Scott responded by saying that this had not been her experience of the staff working for the relevant department. Thirdly, Mr Gutteridge noted that mistakes were made by government departments. He recalled a time in 1964 when the Inland Revenue had recorded him as having three company cars when he had none. When mistakes were discovered, he suggested, there would be a temptation to cover them up. The records I was shown should be looked at with an eye to that possibility.

Thirdly, Mr Gutteridge noted that the tax deduction cards and forms sent to the relevant department and recorded on microfilm bore no authorising signature. What was received was accepted as true and accurate. False, inaccurate or misleading documents could be processed and microfilmed and no check or signature was required. Mr Lange replied that he had never heard of a record which had been microfilmed being one which had been falsified but did not deny that the system did not require the tax deduction cards and forms to be signed, or that it was possible for erroneously or falsely completed forms to be recorded.

Mr Gutteridge also noted that the RFI for Mrs Gutteridge omitted her middle name while his RFI included his. That, he suggested, I should infer cast some doubt upon the general accuracy of the record keeping system or the authenticity of the records, and might suggest that there had been some confusion between two Daphne Gutteridges because of the failure to distinguish them by their middle names. Mr Gutteridge asks how can the RFI "be taken as a true and accurate record when the primary elements like the name and addresses are wrong?"

Mr Gutteridge also drew my attention to the copy of the microfilmed year end deductions form bearing the stamp of LS & J Sussman Ltd for the year 1978 - 79 which indicated that Mrs Gutteridge had left employment there on 22 December 1978. Mr Gutteridge told me that Mrs Gutteridge had left this employment in October of that year. Although when Mr Gutteridge had written to Mrs Nossiter of HMRC on 29 March 2005 he had said that Mrs Gutteridge had left Sussman's employment "just before Christmas 1978" that, he said, had been a reference to her leaving in October 1978.

Discussion

(a) The CF9s

I accept the Respondent's evidence that the CF9s were routinely destroyed after 6 years in accordance with the government policy on document retention, and that as a result in relation to any taxpayer alleged to have made an election, the form on which she may be alleged to have made it is no longer available. I do not find that these documents were destroyed with any improper motive.

Clearly had the form existed and been available it would have been the best evidence of an election having been made. Contrariwise if the forms had not all been destroyed an inability on the part of the Respondents to produce the signed form would have been strong evidence that the election had not been made.

Although the destruction of the CF9s makes it necessary for the Respondents to produce other evidence of sufficient weight if they are to succeed in showing that on a balance of probabilities (and contrary to Mrs Gutteridge's evidence) that the form was signed, I do not conclude that the absence of the CF9 is evidence that it was not signed by Mrs Gutteridge.

(b) the RF1

No record keeping system is likely to be immune from error and carelessness and it is clear that the National Insurance Record keeping system was no exception. Mrs Scott agreed that mistakes were made, in her witness statement it was noted that there was competition between sections for the lowest error rate on audit, and that errors disclosed on audit at a level "above the norm" required an explanatory report. The RF1 records for Mr and Mrs Gutteridge discloses what must be an error: even if Mr and Mrs Gutteridge lived at Lucy Lane Estate, one is given the address "Flat 19" and the other "Plot 19". That must reflect some form of error at some stage.

However, I accept Mrs Scott's evidence that there were strict controls and checks applied and a continuing system of audit. I also accept her evidence that the rate of error was small and take that to mean that overall less than 5% of recorded entries were wrong.

My concern however is not with the accuracy of the recorded entries as a whole but the accuracy of the recording of a married woman's election. It is thus with the question of what the error rate would be in the recording of entries such as the entry:

"MW1/NP 10/3/69"

On Mrs Gutteridge's form RF1: Mrs Scott told me that if that entry had been made in error and had not been picked up on one of the checks or audits - or had not itself been subject to check or audit, then, unless the married woman objected, the error would be perpetuated throughout the woman's contribution history. Stamps and deductions paid in conformity with it would not be queried. Thus the level of error in these particular original entries in the RF1 was of special importance.

Mrs Scott's witness statement disclosed that some entries were subject to 100% checks i.e. a person other than the clerk making the entry had to check those entries were correct. Generally these seem to have been entries which gave rise to credits for contributions for persons in the services or the civil service and in respect of prisoners, and authorities and entries relating to the payment of benefits. The checking of married women's elections appears to have received no such special scrutiny. That may have been because it did not involve the payment out of money or the crediting of contributions; instead it was simply a reduction in contributions - albeit one with significant long term effects.

Thus it seems to me that I cannot conclude that the error rate which applied on average across on all entries was that for the recording of married women's elections. The error rate for the recording of such elections could have been greater or less than the average, and because it appears that they were subject to a lower level of scrutiny it is more likely that the error rate was greater than the average.

Nevertheless I cannot accept that the error rate for such entries was more than 1 in 10. The tight regulation of the system and the concern which that would generally (but not always) engender in those working in it for accuracy would in my view extend across all entries made, and although it might be the case that the system did not focus specially on these entries it is very unlikely that the rate of error would have been a significant multiple of the norm.

I do not find that the evidence relating to the authorisation or recording of the tax deduction cards and forms is directly relevant to this issue. The accuracy or otherwise of those forms does not cast any light on the accuracy of the entries for married women's elections generally on the RF1. If the national insurance cards sent to Longbenton, or the deduction slips evidenced contributions at a rate indicative of an election, then when they were entered on the RF1 no contradiction would be apparent. If the entry on the RF1 was wrong then no alarm bells would have been rung by exempt or reduced rate contributions. Thus cards or deduction slips evidencing such contributions are not evidence supporting the accuracy of the RF1 entries. Indeed as Ms Scott told me if the entry had been made in error it would have been perpetuated indirectly by instructions to employers to abide by it. Thus I find no support for the accuracy of the RF1 entry and thus no support for the proposition that the election had been made in the cards and deduction slips unless those cards or slips evidence acceptance by Mrs Gutteridge that she had made an election. For the reasons set out in the next section below I do not find the cards or slips evidence of Mrs Gutteridge's acceptance that she had made an election.

The effects of an election

Mrs Scott's evidence was that, at the time when Mrs Gutteridge is alleged to have made such an election it was the practice that, following the making by a married woman of an election on a form CF9, the woman's National Insurance card would be called for and an adhesive label affixed it to giving the employer authority to cease deducting National Insurance Contributions and to commence deducting industrial injury contributions only. The card would then be returned.

For those subsequent years in which National Insurance cards were used to record contributions and to which the employer would affix National Insurance stamps, the NI card for a person who was recorded as having made an election would be in the form of a "Special National Insurance Card". This card for the year ending 31 May 1970 contained instructions to the employer:

"where the employee is a married woman or widow this card may be accepted as a certificate that she has elected not to pay flat rate contributions",

and a note under the heading "What the Contributions Cover":

"stamps at the special rate include Industrial Injury contributions, the employer's contribution to the National Health service, and the employer's payment of Selective Employment Tax." [my emphasis],

and a note to the insured person on how to revise a decision not to pay flat rate contributions. On the front page of the card was a box for the signature of the employee and the noting of any change in address from that given on the card at issue.

Mrs Scott told me that there was no departmental procedure requiring that the card, when submitted for the updating of records at the end of that period to which it related, should be rejected if not signed by the employers.

In later years, when the system of affixing adhesive stamps to NI cards was replaced by deductions regulated on the same type of system as PAYE, the rate and type of national insurance contributions to be deducted would, as I understand it, be determined by notice given to the employer.

I was shown copies from the micro-filed records of the annual tax deduction cards, and in later years forms P14 collected by HMRC or its predecessors from Mrs Gutteridge's employers. These records, Mr Gutteridge asked me to observe, were not signed and there was no obligation for the employer to sign them.

As I noted at paragraph 36 above, the 1948 regulations imposed an obligation on the Minister to issue a certificate of election to the married woman making the election, and an obligation on the married woman to produce that certificate to her employer.

It appears that the Minister treated the sticking of the adhesive label onto the NI card current at the time of the making of an election, and the issue of a Special National Insurance Card in future years as satisfaction of this obligation; and that the married woman's obligation to produce the certificate to her employer was treated as satisfied by the delivery to the employer of the labelled or Special NI card.

Mr Scott's evidence was that if an election was made by an employed woman then "if necessary [they] would ask the employer to return" the NI card so that the label (the certificate) could be attached. She says that the card was then returned to the woman to give to the employer, although I suspect that the natural course of action would have been for the relevant officer to send it back to the employer if it had been received from the employer.

Mrs Scott told me that one effect of a married woman's election was that it affected the payment of maternity benefits. A maternity grant (of £22 in 1967) was available either by reason of her own or her husband's insurance record; a maternity allowance (which in 1967 seems to have been £4 10s 0d per week for 18 weeks) was payable only if the woman had not made an election.

Mr Gutteridge's RF1 indicated that maternity benefit had been paid or authorised on 19 June 1973. This would have been paid to Mrs Gutteridge. Mrs Scott told me that since it was paid by reference to Mr Gutteridge's contribution record, it would have been the maternity grant. No record of maternity benefits appears on Mrs Gutteridge's form RF1, thus it appeared that the 18 week payment had not been made to Mrs Gutteridge.

The note to the 1967 Married Woman booklet issued by the Ministry of Social Security indicates that a married woman would be entitled to the 18 week benefit only if two conditions were satisfied: first that she had made no election, and second that she was working for an employer or was self-employed.

There are a number of inferences I could be asked to draw in relation to Mrs Gutteridge's evidence from the evidence as to the operation of the contribution and deductions system after a married woman's election was made.

First that because the system required the sticking of a special label on to the NI card once an election was made, Mrs Gutteridge would have been aware of or reminded of her election when she received the card with the label affixed, and as a result her evidence that she did not make the election is less credible. I decline to draw this inference. I was not shown the form of the label. Mrs Gutteridge told me that her marriage would have been notified to the department by her works and that she recalled her married certificate being sent in. It seems to me quite likely that the department dealt with her employer and would have sent the card with the label affixed directly to her employer and that she would not have seen it.

Secondly I could be asked to infer that the Special National Insurance cards which I assume were issued in respect of Mrs Gutteridge's employment in the years after her alleged election would have been seen or signed by Mrs Gutteridge each year, and that thus she would have been reminded of her election and, by her signing effectively have been confirmed by her. For the following reasons I also decline to draw this inference.

Paragraph 77 of the 1968 edition of the Employer's Guide to Flat Rate National Insurance Contributions issued by the Ministry of Social Security states:

"Within the last four weeks before a card is due to be exchanged the employer must arrange for the employee to sign his card and insert his latest address. It is particularly important that the employee's address on the card should be correct.

"When the period of currency of a card expires the employer must surrender it to a local office of the Ministry of Social Security within 6 days. A fresh card will then be issued to him."

It appears from this extract that the new cards were sent directly to the employer rather than to the employee. Mrs Gutteridge did not change employer for many years. Thus she may not have seen the Special National Insurance cards in the early years after her marriage.

Mrs Scott told me that even when a person changed employment it was possible for NI cards to be passed from the earlier to the subsequent employer without going through the hands of the employee although there was no provision for that to happen generally.

Neither was there any evidence that employees usually signed the cards before they were exchanged. Thus the existence and the system for the issue of Special National Insurance Cards cast no doubt in my mind on Mrs Gutteridge's evidence.

Thirdly I could be asked to infer that Mrs Gutteridge would have noticed from her payslips or her year end deduction records that she was paying no national insurance (and just industrial injury insurance contributions) or national insurance at a reduced rate; and that her acquiescence on noticing that was evidence that she was content that she had made an election. I regard this last possibility as fanciful. I would not expect anyone other than a national insurance specialist to notice from their payslips or year-end certificate whether they were paying the correct amount of national insurance, or whether they were paying at a reduced rate or paying only industrial injury contributions. Mrs Gutteridge told me that she looked at her payslips but only to see the net amount. That is what almost everyone else does - they ask whether it looks about right. Mrs Gutteridge cannot in my judgment be expected to have drawn any inference relevant to this appeal from her payslips or other year-end documentation.

Lastly, I could be asked to draw the conclusion that because, in 1973, Mrs Gutteridge received only the maternity grant and not the 18 weeks maternity payments, she would have realised at that time or been reminded that she had made an election, and thus that her denial that she had made an election should be treated with some caution. Mrs Gutteridge could not recall what she had received: she said in evidence "I don't think I received anything - it was on [Mr Gutteridge's] tax."

Mrs Scott however very fairly explained that the 18 week maternity allowance would have been paid only if a claim had been made, and that if a claim had been made the RF1 would in the circumstances have recorded that the claim was disallowed. Since there was no annotation to that effect on the RF1 she could not infer that Mrs Gutteridge had made a claim for the allowance. Accordingly the only inference I could draw is that it is possible that Mrs Gutteridge knew that she was not eligible for the 18 weeks allowance and so did not claim it. I am not prepared to draw that inference on the evidence before me: in particular there was no evidence that Mrs Gutteridge understood or was aware of the range of benefits available under the national insurance system or the conditions attaching to them.

Finally it does not seem to me that the fact that Mrs Gutteridge's employers in the period after March 1969 deducted only industrial injury contributions or contributions at a reduced rate is evidence that Mrs Gutteridge made an election. That is because:

(i) once the RF1 had been annotated to indicate that an election had been made, the deduction of amounts consistent with that election would not have been investigated - contributions of lesser amounts would have been consistent with the RF1; and

(ii) cards issued to employers after the making of the entry on the RF1 would have authorised the lower deductions. Those cards I believe would have been issued on the basis either of the RF1 entry or on the basis that the card surrendered was a special card or had the appropriate label affixed to it.

The balancing exercise

I am not required to decide whether or not Mrs Gutteridge actually made an election, I have to decide on the evidence before me whether it is more likely that she made an election than that she did not. I have to make that decision on the balance of probabilities: I do not have to be satisfied beyond all reasonable doubt that she did or did not make the election; I merely have to be convinced that it is more likely than not that she did or did not make it. This has a number of consequences. In particular I note two. First that if I decide that one set of facts is more likely on the evidence before me it does not mean that in reality the other did not actually occur. And second that the evidence before me might not be all that in a perfect world would be available, and had other evidence been capable of having been found or advanced my decision could have been different.

Mrs Gutteridge said that she had not signed an election. The form RF1 2indicates that she did. How do I weigh these contradictory propositions? In his later submissions (see below) Mr Gutteridge describes Mrs Gutteridge as the most reliable trustworthy and honest person he has ever known. I am willing to accept that that is true but I do not accept that her memory is perfect. It is in my view more likely that a person would forget they had done something than believe that they had done something which they had not. When a person says she did not do something that, in my view, can only mean that she does not recall doing it. I take Mrs Gutteridge as truthfully saying precisely that.

I therefore have to weigh the likelihood that Mrs Gutteridge made, but has forgotten that she made, an election against the possibility that she did not make an election and that the RF1 is wrong.

The entry on the form RF1 is clearly not conclusive evidence that an election was made. There are various situations in which it could be wrong:

(i) Mrs Gutteridge could have made an express election to pay full contributions (the form CF9 had a box next to the election box for this purpose) but since most elections were not to pay full contributions, the officer transcribing the election on to the card to go to Longbenton may have erroneously made the usual entry – an election not to pay, and either that error had been overlooked when the MF15 had been checked, or for some reason it had not been checked.;

(ii) Mrs Gutteridge made no election and no card was sent to Longbenton, but someone else with a National Insurance number close or confusingly similar to that of Mrs Gutteridge made an election, and when the card reached Longbenton the clerk posted the election to Mrs Gutteridge's form RF1 rather than that of the correct person;

(iii) this could have been one of those cases where other errors were made at Longbenton;

(iv) Mrs Gutteridge's election could have been made on her behalf by some misguided person in the wages department of her employer;

(v) that the entry on the RF1 or the form itself was made in recent times.

These are possibilities which could apply to any married woman's election entry on an RF1. I therefore asked myself two questions. First what was the probability that such an entry might be wrong – or in other words what proportion of such entries were wrong, and second was there anything in the evidence before me (other than Mrs Gutteridge's evidence that she did not make the election and one other matter which I shall explain shortly) which made it more or less likely that that probability was higher or lower in her case.

In relation to the first question I concluded above on the basis of Mrs Scott's evidence that the error rate in entries of this type on RF1s was highly unlikely to be more than 1 in 10. This would include errors caused by any of the possibilities in (i) to (iii) above. I do not believe that the possibility referred to in (iv) above is at all high and, in relation to (v), I found the RF1 presented to me and the entry on it to be authentic. I therefore do not believe that the probability of an RF1 entry for a married women's election being wrong for any of the above reasons is significantly higher than 1 in 10, and believe it to be likely that it is well below that level.

In relation to the second question, elements in the evidence before me might affect that conclusion in Mrs Gutteridge's case. The first of these is the fact that Mrs Gutteridge's marriage was noted as having been recorded in June 1968 but her election recorded as having been made with effect from 10 March 1969 – just over a year since her marriage. Mrs Scott's evidence was that the booklet explaining the election was given out if and when the marriage certificate was presented at the local office, and that the form CF9 would often be completed there and then. Clearly this cannot have been the case here. The delay between the two events is unexplained but it seems to me to reduce the likelihood that the form or the entries on it are a fabrication, but to increase the likelihood that someone else may have signed the election form for her (having noticed on her wages record that she was paying a higher level of contributions than normal for a married woman) or of some mix up. Overall it does not however seem to me significantly to affect the conclusion I drew earlier as to the likelihood that the entry on the form RF1 was wrong.

The second was the discrepancy between Mr and Mrs Gutteridge's addresses and the omission of Mrs Gutteridge's middle name that I noted under the heading "(iii) the reliability of the system" above. I asked myself whether this made it any more likely that the "MW1/NP" notation was wrong. I concluded that it did not. That was because, although it went to the question of the general accuracy of the RF1s, they were not entries recorded as made at the same time as the "MW1/NP" entry and thus very unlikely to bear on the correctness or otherwise of that entry.

If, as I have concluded, it is the case that less than 1 in 10 of the "MW1/NP" entries are incorrect, what evidence do I need to be able to conclude that it is more likely than not that Mrs Gutteridge's "MW1/NP" falls into the class of those that are wrong? Absent such evidence it will be more likely than not that the entry falls into the larger class of correct entries.

Mrs Gutteridge says that she did not make an election, but 1969 was over 35 years ago and it seems to me that one's recollections of what one did or did not do that long ago are not generally as good as those of 35 days ago. On balance it seems to me that even to show on the balance of probabilities that one falls into a one in ten possibility of something not having taken place that was recorded as having taken place more evidence is needed than a recollection even of the most truthful witness of something not done that long ago.

There may be occasions when the balance can be tipped: if the taxpayer could show that she was in a coma at the date of the purported election, or out of the country for a long period including the relevant date by reference to her passport, letters, or the evidence of those she was with, or that she kept an accurate meticulous record of all official documents she signed and that this was not in or referred to in that record. In such cases it could be found that it was likely that the entry was one of those in the category of wrong entries. But in each case something other than the taxpayer's recollection is, in my judgment, necessary to tip the balance.

In this case there was however one piece of evidence in addition to Mrs Gutteridge's evidence which supported that evidence and, in my view, increased the likelihood that her recollection was correct. Mr Gutteridge reminded me that at that time they were a newly married couple. He asked me to think of the early days of married life when a couple would have discussed everything together. He and Mrs Gutteridge were like that. They discussed everything important. Signing something like a CR9 and looking at the booklet explaining the elections would have been something which Mrs Gutteridge would have discussed with him at the time. He would have remembered such a discussion but he did not. Those kind of discussions in the early days of a marriage when you discuss everything together stick in the mind he said. He had no recollection of such a discussion.

This evidence does in my view add considerable weight to Mrs Gutteridge's case. I found Mr Gutteridge quite believable. It affected my view of the likelihood that Mrs Gutteridge's "MW1/NP" was one of the relatively few that could be wrong.

On balance, however, even this did not convince that it was more likely than not that the RF1 entry was wrong. It is a steep hill that a taxpayer needs to climb to show that her recollection of events 35 years ago is more likely to be correct than a written record where, even though it is found that that written record might be liable to error, it is also found that the likely rate of error is very small. Mr and Mrs Gutteridge went a long way up that hill but in my judgment did not reach the top.

In reaching this conclusion I must be clear that I did not believe that Mrs Gutteridge or Mr Gutteridge were not telling the truth as they recalled it in their evidence before me but merely saying that it seems to me that their truthful account of their recollection is more likely to be an account of a faulty recollection than of a correct one.

DECISION

As a result I find that it was more likely than not that Mrs Gutteridge had made an election in 1969, and accordingly that the decision under appeal should not be varied but shall stand good.

Other Matters

(1) Submissions made after the hearing

At the hearing I asked Mr Williams for a further submission on the interlinking of the Acts and regulations since 1946 applying to married women's elections. My conclusions on those submissions are contained in the section of this decision dealing with the legislative background.

When Mr Williams sent these submissions he also sent a note relating to the question of whether at any time Mrs Gutteridge had lived at Flat 19 Lucy Lane Estate as was recorded on her RF1 (see the section headed "(iii) the reliability of the system"). This note recorded a telephone conversation between Diane Gentile of the Finance Department of Colchester Borough Council and Jeff Rodin of HMRC in which Jeff Rodin had been told that Plot 19 Lucy Lane Estate had become No. 2 Provence Close on completion of the building on the estate. This note was also sent to Mr and Mrs Gutteridge.

In response Mr Gutteridge wrote to the Clerk to the Commissioners objecting to the admission of this additional material, and asking that if this evidence were admitted I should also take into account a letter from Mr and Mrs Hall of 64 Elizabeth Road in which Mr and Mrs Hall say that they have lived at 64 Elizabeth Road for 40 years and that they confirm that after Mr and Mrs Gutteridge were married "in March 1968 they both lived next door to us at 62 Elizabeth Road for a few months before moving to 2, Provence Close, Stanway, Colchester, Essex at the end of July early August 1968."

As it happens I had written the parts of this decision dealing with this issue before I received either Mr Williams' or Mr Gutteridge's missives. Thus the decision made above is one made as if this information had been excluded. Had I had this information it would have affected my approach in the following way.

Firstly, it seems to me very likely that 2 Provence Close was at some time known as Plot 19 Lucy Lane Estate. Secondly, it seems highly unlikely that there was ever a Flat 19 Lucy Lane Estate or that Mr or Mrs Gutteridge ever lived at a Flat 19. Thirdly, it seems clear that Mr and Mrs Gutteridge did live at a location which was at some time called Plot 19 Lucy Lane Estate and later 2 Provence Close. Fourthly, that it was reprehensible and unfair for Mr Gutteridge strongly to make the point that they had never lived at Flat 19 Lucy Lane Estate without admitting that the "Lucy Lane Estate" part of the address was correct. Fifthly, that such conduct on his part puts into question his frankness (but not his honesty) on other issues. And, lastly, that the entry "Flat 19" on Mrs Gutteridge's RF1 is clearly an error and probably a mis-transcription of Plot 19. As I said earlier no system is free from error: this is one; but the issues relevant to my decision are the general level of accuracy and any particular factors which affect the chance that this particular type of entry, or this particular taxpayer's form, are more or less correct than the norm. In that respect none of this evidence affects the strength of my earlier conclusions.

(2) Other Cases

Mr Gutteridge asked that this case be heard on its merits and not by reference to other cases. In particular he noted the references made in the Respondents' materials to Joseph Constantine Steamship Line Ltd v Imperial Smelting Corporation Ltd, and Lime IT v Michael Justin.

I have not decided this case by reference to the facts of any other case. I have considered the evidence presented to me on its own merits only. I have applied the terms of the statutory provisions to the facts as I have found them. I have used the legal principle in the Joseph Constantine Steamship case to help me decide an issue about the burden I should place on the Respondents. I referred to Wood v Holden in the same context. My decision on that issue was in a manner not adverse to the Appellant.

(3) The use of this case as a precedent for other taxpayers

Mr Gutteridge was concerned that HMRC would use this case as a precedent to bind other taxpayers in the same situation.

I have decided the issue in this case on the evidence before me. In the case of another taxpayer the evidence available from the Respondents or the taxpayer may be different. None of my findings of fact would bind another tribunal.

(4) The destruction of CF9s

Mr Gutteridge makes a number of points about the destruction of the forms CF9:-

(i) that as a matter of responsible proper administration they should not have been destroyed;

(ii) that if they had to be destroyed they should as a matter of responsible and proper administration been microfilmed first;

(iii) that destruction and failure to microfilm casts doubt on the veracity of the manuscript and computer records maintained.

Only the last of these issues falls within my jurisdiction and I have indicated my conclusion in relation to it above.

The remaining issues are not for me but might be relevant to any issue presented to the Parliamentary Commissioner for Administration were an MP to refer any complaint by Mrs Gutteridge to him or her.

(5) Authorisation

Mr Gutteridge was requested to produce a form 64-8 signed by his wife before the National Insurance Contributions office would treat him as representing his wife. The department (or its predecessor) was not so nice about its own need to possess signed copies of the forms CF9.

I do not see this issue as being of relevance to the issue before me. Nor do I suspect that there is in it any pointer to current maladministration. It seems to me that what the department now responsible requires is quite reasonable; its standards now have no bearing on the evaluation of the evidence in relation to the issues before me.

(6) Conduct

Mr Gutteridge asserts that this appeal came before the tribunal as a result of the "sheer dogmatic way HM Revenue and Customs have conducted themselves, as [Mrs Gutteridge and he] tried for four years to resolve this matter and in that time…asked for [their] evidence to support [the] claim" that Mrs Gutteridge had elected. I have set out some of the history of the correspondence at the beginning of this decision.

This issue is not relevant to the determination of the substantive issue before me save insofar as it may give rise to a possibility that the evidence before me was fabricated. I have set out my views on that issue above.

The issue may also be relevant to my jurisdiction in relation to costs which I deal with later in this decision.

Other than in these respects the issue is not of relevance to my jurisdiction. It may however be of relevance to any complaint Mrs Gutteridge might ask to be referred to the Adjudicator (who considers complaints about the way a taxpayer's affairs have been dealt with rather than the determination of the taxpayer's legal position).

Costs

Regulation 21 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 provides that a Tribunal may make an order "awarding the costs of, or incidental to, the hearing" against a party if it is of the opinion that that party has acted "wholly unreasonably in connection with the hearing in question."

In this context I read the normally very broad words "in connection with" as constricted by association with the limitation of the awardable costs to those which are of and incidental to the hearing. As a result, it seems to me that I cannot have regard to conduct before the notice of appeal was given. And in relation to the period after the notice of appeal was given this regulation appears to me to be primarily aimed at conduct which caused avoidable costs to be greater than they should have been and which was "wholly unreasonable".

In relation to the conduct of the appeal after the notice of appeal had been given by Mrs Gutteridge, it does not seem to me that either the Appellants or the Respondents acted unreasonably. Mr and Mrs Gutteridge were suspicious of documentation produced late in the history of the matter, they were uncertain about whether they had elected to bring this case before the right type of tribunal, and were taken aback by the more formal procedure before the Special Commissioners. All these factors seem to me to suggest that their approach was quite understandable, and not in the circumstances unreasonable.

Neither do I find that, after the notice of appeal had been given, the Respondents acted wholly unreasonably. In the course of the hearing they acted fairly and reasonably. Before the hearing Mr Williams took pains to explain the Respondents' case and the related procedure to the Appellant and Mr Gutteridge, and he accepted that practically the onus of the proof was on the Respondents and that it was "nonsense to expect Mrs Gutteridge to prove a negative". I heard no real criticism of his conduct from Mr Gutteridge apart from a concern that Mr Williams' explanation had led the Appellant to elect for a hearing before the Special rather than the General Commissioner; and I saw no criticism in the papers before me other than in relation to the surprise presence of two additional officers from HMRC at Mr Gutteridge's first meeting with Mr Williams on 5 August 2005. I do not believe that these actions were wholly unreasonable.

It does seem to me that the Appellant has some cause for complaint in relation to the late provision to her of the relevant documentation. Her appeal was made on 29 March 2005. It was not until 22 July that a copy of her form RF1 and copies of her tax deduction costs were sent to her. Mr Williams provided those documents promptly after he received them but that was almost four months after the notice of appeal had been given. (It was also almost 2 years after Mrs Gutteridge made, in her letter of 27 October 2003, the first statement in the written evidence before me denying that an election had been made). That delay in the context of a dispute which had already lasted 2 years, and where the documents concerned were central to the Respondents' case does seem to me to be unreasonable when viewed from the Appellant's perspective - and it seems to me that delay which is not explained or excused as or soon after it occurs must, for these purposes, be so viewed.

However, as I have said, regulation 21 applies only where the party has acted "wholly unreasonably in connection with the appeal". It is not enough that from time to time there has been unreasonableness and in my view this condition is not satisfied where there is one part of a person's conduct which is unreasonable and one part where it is not, unless that part in relation to which it was unreasonable dominates the conduct of the appeal. The delay in this case did not.

In relation to the period from 2002 to the giving of the notice of appeal the position is, as I have indicated above, quite different. That conduct does not qualify as being in connection with the hearing and I cannot therefore make any order for costs.

Postscript

I am grateful to Mr Williams for his courtesy and flexibility in a hearing which I did not conduct in the standard way, and must pay tribute to Mr Gutteridge who put his arguments clearly and his complaints fearlessly in circumstances which may have cowed others, and who accepted without complaint directions I made during the hearing.

I also owe an apology to Mr Lange and Mrs Scott. I permitted them to suffer more ardent questioning than I should have done. The points put to them by Mr Gutteridge were generally fair but occasionally he conveyed those questions in terms which could have been disconcertingly upsetting; I should have taken steps to present Mr Gutteridge's points to them in a more conventional way.

CHARLES HELLIER

SPECIAL COMMISSIONER

RELEASED: 11 April 2006

SC 3111/05

Appendix

I indicated at paragraph 15 of this decision that I would set out what my decision would have been had I not refused Mr Gutteridge's application (referred to in paragraph 12 above) to exclude certain documents The documents which Mr Gutteridge asked me to exclude included copies of the deduction cards for Mrs Gutteridge and the forms RF1, all of which were first disclosed to the Appellant in July 2005.

Having undertaken to provide this analysis I have done so. However I believe that I was unwise to have offered to do so because the balancing act is a hypothetical one. I did not actually hear Mrs Scott give evidence in circumstances in which the RF1 was not available. I fear that all I can do is to give an indication to Mr and Mrs Gutteridge as to how I believe the evidence would have appeared, and of what I would have decided had I excluded those documents. That is I fear not the same as saying with certainty "this is what it would have been on that basis". I hope it is of some help to Mr and Mrs Gutteridge however in considering whether they wish to appeal my decision.

Central to my decision in this appeal has been the form RF1 and the annotation "MW1/NP" on it. Had neither that form nor any copy of it been before me then there would have been no documentary evidence purporting to record the making of an election. Absent this form, Mr Gutteridge's RF1 and the deduction cards, the Respondents' evidence would have consisted of an assertion that they possessed records (which they would assert had been reliably maintained) which showed that on election had been made. In those circumstances I would have had to weigh the likelihood that the Respondents' witnesses were mistaken in their recollections and the likelihood that the systems they described produced erroneous entries in Mrs Gutteridge's case against the likelihood that Mrs Gutteridge (and Mr Gutteridge) were mistaken in their recollections.

Had the Respondents' position been they possessed the records but refused to provide them without any good reason I believe that would have regarded their evidence as of little weight and would have found on balance that no election had been made. But I could not have treated what would have been my refusal to allow the Respondents to produce the documents as the Respondents' refusal to produce them. I would therefore have had to treat the absence of the documentary evidence as not being withheld unreasonably or suspiciously. In those circumstances I would have weighed the evidence of the Respondents against that of the Appellant and Mr Gutteridge. Mrs Scott's evidence as to the recording system would have remained unchanged and she would no doubt have given evidence as to what had been written on Mrs Gutteridge's RF1. On balance I believe that my conclusion would have been the same but I would have reached it with greater hesitation.

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You are here: BAILII >> Databases >> United Kingdom Special Commissioners of Income Tax Decisions >> Gutteridge v Revenue & Customs [2005] UKSPC SPC00534 (11 April 2006) URL: http://www.bailii.org/uk/cases/UKSPC/2006/SPC00534.html Cite as: [2005] UKSPC SPC00534, [2005] UKSPC SPC534