Upper Tribunal (Administrative Appeals Chamber)

THE UPPER TRIBUNAL Appeal No. CP 1674 2006

ADMINISTRATIVE APPEALS CHAMBER

 

SSWP v Thomas Beamish and HMRC (RP)

 

Heard in Manchester on 2 September 2009

 

Mr Stephen Cooper, solicitor, instructed by the Solicitor to the Department for Work and Pensions for the Appellant

The first respondent in person

Miss Angela Main-Thompson, solicitor to the Office of the Counsel General to Her Majesty's Revenue and Customs for the second respondent

 

DECISION

 

The appeal is allowed. For the reasons below, the decision of the tribunal is set aside. I replace the decision of the tribunal with the decision the tribunal should have taken. This is:

 

Appeal allowed. The decision of the Secretary of State for Work and Pensions of 4 October 2004 is set aside. The appeal is referred to the Secretary of State for Work and Pensions to recalculate the appellant’s entitlement to state retirement pension in the light of the decision of the Tax Chamber of the First- tier Tribunal on 2 September 2009 confirming the decision of Her Majesty's Revenue and Customs on 21 August 2006 about the appellant’s National Insurance contribution record.

 

REASONS FOR DECISION

 

1 This is an appeal by the Secretary of State for Work and Pensions against a decision of a tribunal in what is now the First-tier Tribunal Social Entitlement Chamber. That tribunal took a decision about the National Insurance (“NI”) contributions record of Mr Beamish in connection with his claim for a state retirement pension. It did so as part of an appeal by him against a decision of the Secretary of State for Work and Pensions about the weekly amount of his state retirement pension.

 

2 Permission to appeal was granted by Regional Tribunal Judge Warren. He granted permission because:

 

“what has happened here is typical of the impasse many appellants reach when the tribunal or [tribunal judge] makes a direction concerning contribution questions. It is in the public interest that the Secretary of State and or HMRC should explain what is going on to the higher judiciary.”

 

3 Following that grant of permission, I issued directions both about the appeal by Mr Beamish and about the general questions raised by Judge Warren. As a result, I held hearings together of the NI contributions appeal and the social security appeal made by Mr Beamish. Details are below. The Secretary of State for Work and Pensions was represented at the joint hearings by Mr Stephen Cooper and HMRC by Miss Angela Main-Thompson. Both are experts in this area and I am grateful to them for their contributions to the discussion of the general issues. Following that hearing, and with agreement of all parties, I issued a draft of this decision. I now have responses from the parties to that draft, and have agreement of both government departments to what is set out below as a suggested approach by tribunals for dealing in future with the issues raised by Judge Warren.

 

The government departments and tribunals involved

4 Mr Beamish’s dispute involves decisions of officers of two government departments and separate appeals from those decisions to two separate parts of the tribunal system. The officers are at the NI Contributions Office (“NICO”) of Her Majesty's Revenue and Customs (“HMRC”) and at the Pension Service of the Department for Work and Pensions (“DWP”). This dispute is complicated by being overtaken on its way through the tribunal system by fundamental reforms applying both to social security appeals and to NI contributions appeals. Until 2008 appeals against decisions by the Pension Service (or its predecessors) went to the social security tribunals and on further appeal to the Social Security Commissioners. This is how Mr Beamish’s social security appeal first arrived before me. Until 2009 appeals about NI contributions questions went to the General or Special Commissioners of Income Tax and on appeal to the Chancery Division of the High Court. That is how Mr Beamish’s NI contributions appeal first arrived before me.

 

5 The position has now changed. Appeals against decisions taken for the Secretary of State for Work and Pensions by officers of the Pension Service now go to the judges of the First-tier Tribunal (“FTT”) Social Entitlement Chamber and on further appeal to the judges of the Upper Tribunal (“UT”) Administrative Appeals Chamber. Appeals about NI contributions questions now go to the judges of the FTT Tax Chamber and on appeal to the UT Tax and Chancery Chamber. For simplicity in this decision I refer only to the new chambers of FTT and UT and not to the previous tribunals.

 

Mr Beamish’s appeals

6 There are two linked appeals about Mr Beamish’s pension claim: this appeal and the NI contributions appeal. I am authorised to decide both, and have done so. As noted above, I did so following a single joint hearing of both appeals held in Manchester with Mr Beamish present and both government departments represented by their own experts. I am grateful to Mr Beamish for agreeing to the two appeals being heard together so that all involved were in a position to comment and ask questions about all relevant aspects of the appeals together.

 

7 The decision about Mr Beamish’s NI contributions appeal is attached to this decision. I delayed making this decision both so that Mr Beamish could exercise his right, if he wished, to appeal against the NI contributions decision and so that a draft of this decision could be issued for comment by the parties. Mr Beamish did not appeal. That decision is now final. I adopt it here and do not repeat its contents. I add that it is the standard practice of tax tribunals not to anonymise appeals such as that by Mr Beamish. That being so, I saw no point in following the standard practice in this jurisdiction of issuing this decision in anonymous form. All parties agreed with this.

 

8 I now turn to the pension appeal. This is by the Secretary of State for Work and Pensions against a tribunal decision in Mr Beamish’s favour. I must allow that appeal. Put simply, the social security tribunal took a decision it had no jurisdiction to take. While I can see why the tribunal took the decision, it nonetheless remains the position that at the time it took that decision there was no decision by HMRC against which an appeal could have been made, even if that tribunal had jurisdiction to hear the appeal (which it did not). The contributions decision has now been made and the appeal from the decision heard by the correct tribunal. The proper course of action is therefore to set aside the decision of the social security tribunal and replace it with the decision that is now appropriate. This is that Mr Beamish’s entitlement to pension should be recalculated on the basis of the confirmed decision about his NI contribution record. My decision to that effect is set out above.

 

 

The points raised by Judge Warren

9 The level of state retirement pension payable weekly to someone reaching pensionable age depends on his or her NI contribution record over his or her working life. It is the task of NICO to keep the contributions records for the full working life of everyone in Britain. It is the task of the Pension Service, on behalf of the Secretary of State for Work and Pensions, to deal with claims for, entitlement to, awards of, and payment of state retirement pensions. This includes calculation of the weekly amount to which someone is entitled. In the usual case the Pension Service relies on the NI contributions records held by NICO when calculating weekly entitlements. Officers of the Pension Service obtain the NICO records and make calculations assuming that the records are correct. In my experience, this is usually presented to pension claimants as if the entire operation were that of the Pension Service alone. It is therefore understandable that someone dissatisfied with an award of weekly pension objects only to the decision made for the Secretary of State for Work and Pensions.

 

10 There is a formal procedure for dealing with an objection by an individual to his or her NI contribution record as used to calculate weekly entitlement in this way. When it becomes clear that an issue requires formal decision by NICO, DWP officers are required to refer the matter to NICO for a decision. This is laid down in regulation 11A of the Social Security and Child Support (Decisions and Appeals) Regulations 1999. It applies both before and after any official decision by the Secretary of State for Work and Pensions.

 

11 In practice it is often not clear to the claimant or to officers making decisions that a dispute is about the NI contributions record. In that case, if there is a valid appeal, it should go to a tribunal in the FTT Social Entitlement Chamber. That is what happened here. It is then the task of the tribunal to deal with the dispute. There is also a formal procedure for cases where the tribunal recognises that a formal decision is needed from NICO. That procedure is in Regulation 38A of the Social Security and Child Support (Decisions and Appeals) Regulations 1999. This requires the tribunal to adjourn the appeal and refer the matter to the Secretary of State for onward reference to NICO.

 

12 These procedures were put in place when the Secretary of State for Work and Pensions was responsible both for administering pensions decisions and for running the tribunals that were the predecessors to the FTT Social Entitlement Chamber tribunals.

They were authorised by sections 10A and 24A of the Social Security Act 1998 as amended by Schedule 7 to the Social Security Contributions (Transfer of Functions) Act 1999.

 

13 Since then the new tribunals have been created and given wide procedural powers. In addition, administration of tribunals has been transferred from the Secretary of State to the Tribunals Service of the Ministry of Justice. As a result, this procedure currently requires (a) a tribunal of the Social Entitlement Chamber to adjourn an appeal and request its officials to refer the matter to the Secretary of State; (b) Tribunals Service officials to refer the matter to officials working for the Secretary of State; (c) officials of the Secretary of State to refer the matter to Her Majesty’s Revenue and Customs for decision by NICO. When NICO has taken the decision, it should then be referred back via the Secretary of State and the Tribunals Service to the tribunal that made the initial reference (or an appropriate alternative). This case shows that there is now much scope for this series of references to go wrong – because it is not made at all, or it is sent to the wrong part of the DWP, or by DWP to the wrong part of HMRC, or at some intermediate stage no action is taken. All those outcomes have occurred in cases I have seen.

 

References for a decision by NICO

14 Miss Main-Thompson helpfully made enquiries about these problems before the hearing. I have also been assisted by enquiries to officials made for me following the hearing by one of our Registrars, and by the submissions made for both the Secretary of State and HMRC on the draft of this decision. I am informed that HMRC has reviewed its own procedures, and that the submissions made to me in this appeal reflect changes made in those procedures. Taking all the above into account, I suggest the following as the best course of action to be taken by either a FTT tribunal or a tribunal of the UT Administrative Appeals Chamber where a decision is needed on a contributions question or some other issue for which NICO is the first tier decision-making authority.

 

15 Regulations 11A and 38A of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 are in mandatory terms and must remain the default procedure. However, all relevant tribunals are now governed by the new Tribunal Procedure Rules made under section 22 of the Tribunals, Courts and Enforcement Act 2007. In particular, section 22(4)(c) of that Act mandates rules that ensure that proceedings before tribunals “are handled quickly and efficiently”. Rules 2 and 5 of the Rules that apply to all relevant tribunals reflect that duty. They authorise tribunals to take steps that could not be taken by the former tribunals. For example, a tribunal of the Social Entitlement Chamber can now direct that something be referred directly to NICO, can direct that NICO reply directly to the tribunal and can, if necessary, add NICO (more correctly, HMRC) as a party to an appeal. In a few cases those powers may require consideration.

 

16 In most cases a tribunal will deal with the matter most quickly and efficiently if it directs its own officials to send a copy of its decision and directions to the officer identified below at NICO with a full copy of the papers before the tribunal:

 

Mr Peter Rooney

HMRC

National Insurance Contributions Office

Room BP2301

Benton Park View

Longbenton

Newcastle upon Tyne NE98 1ZZ

(Telephone 0191 225 9119).

 

The appropriate reference is the individual’s National Insurance number (or numbers). The tribunal should ensure that the Secretary of State for Work and Pensions is informed of this and is invited to contact NICO direct about the reference if he so wishes. The tribunal should also consider if the case is one that should be sent to the Secretary of State rather than direct to NICO, for instance if further matters need clarifying before a reference is made. If so, then the tribunal should direct the Secretary of State to refer the matter, when it is ready for reference, to the officer identified above together with a full set of papers.

 

17 The tribunal should identify in its decision and direction why it is referring the matter and what decision it is asking NICO to make. For example, the tribunal may need a decision about the contribution record for a specific year or years so that it can decide an appeal about a claim for retirement pension currently before it. The tribunal should also consider whether it should direct or encourage the appellant to send any further information to the above address, using the appellant’s National Insurance number as the reference. The tribunal should, by its decision, notify both parties that this is what it is doing, particularly if a party is not present when the tribunal makes the decision. Having done that, it remains required to adjourn the case under regulation 38A unless it can be resolved in some other way. And it is required to leave the appeals adjourned while a decision is taken by NICO and, if necessary, by a tribunal on appeal.

 

18 The advantage of this procedure is that it ensures that references do not get lost or delayed and that NICO will both receive a full set of the papers assembled about the dispute and clear guidance as to the decision needed and the context of that decision. I am assured that if this procedure is followed then NICO will use its best endeavours to expedite the necessary decision.

 

Conclusion

19 I described the reaction of Mr Beamish to the long drawn out process of his appeal in my decision on his NI contribution record. I set out the comments of Judge Warren on this appeal. I trust that if this procedure is followed then the steps taken by both government departments during the consideration of these linked appeals, and reflected in the suggested procedure, will ensure that such delays and impasses do not recur.

 

David Williams

Upper Tribunal Judge

24 03 2010

 

[Signed on the original on the date stated]