GL v Revenue and Customs Commissioners

13 April 2023. DEPUTY UPPER TRIBUNAL JUDGE BULEY KC gave the following judgment.

1 The appellant’s appeal to the Upper Tribunal (“the UT”) is dismissed. The decision of the First-tier Tribunal (“FTT”) dated 16 August 2021 did involve the making of an error of law in relation to its consideration of the child tax credits (“CTC”) element of her appeal, for the reasons acknowledged by the respondent (“HMRC”), but that error is not material to the appellant’s ongoing entitlement to CTC for the reason given in the next paragraph. The FTT made no error of law in relation to working tax credits (“WTC”).

2 No error of law in the FTT’s decision, including that in relation to CTC, could be material to the outcome of the appellant’s benefits entitlement, in circumstances where HMRC made a final decision under section 18 of the Tax Credits Act 2002 (“the TCA”) on 24 August 2021, shortly after the decision of the FTT that is under appeal. HMRC has acknowledged its error in relation to CTC and indicated that it will give effect to that error. It will also undertake a mandatory reconsideration of the decision of 24 August 2021, thus ensuring that the appellant has the ability to pursue a further appeal if she is minded to do so. In those circumstances, in line with the approach in LS v Revenue and Customs Comrs [2018] AACR 2, I conclude that it is not appropriate to set aside the decision of the FTT under section 12(2)(a) of the Tribunals Courts and Enforcement Act 2007 (“the TCEA”).

3 Permission to appeal was granted in this case on the basis that it might be desirable for the UT to give guidance as to cases where travel restrictions arising from the Covid-19 pandemic mean that, for reasons beyond their control, a tax credit claimant has found themselves unable to comply with the “eight-week rule”, that any temporary absences from the UK should not exceed eight weeks at a time. The eight-week rule is found in regulation 4 of the Tax Credits (Residence) Regulations 2003 (“the Residence Regs”). With that in mind, I will summarise my key conclusions on that issue:

(i) HMRC did not put in place any legislative “easement” or amendment of the eight-week rule for any period of the pandemic, with the result that, at least for cases involving WTC, the eight-week rule remains a condition of entitlement which must be applied in accordance with its terms. The eight-week rule does not admit of any possibility of extension. A person who is absent from the UK for a period exceeding eight weeks will (other than in certain cases of medical treatment abroad, where a longer 12-week period is permitted) cease to be “in” the UK for the purposes of section 3 of the TCA, and therefore cease to be entitled to WTC.

(ii) The same applies to CTC, other than in cases where the claimant’s absence from the UK is occasioned by their presence in an EU member state. In such cases, for so long as it continued to apply, HMRC concedes that the effect of Parliament and Council Regulation (EC) No 883/2004, “on the co-ordination of social security systems”, is that the eight-week rule could not apply to a person whose absence from the UK was occasioned by their presence in an EU member state. This rule under Regulation No 883/2004 was not in any direct way linked to the Covid-19 pandemic, and will apply regardless of the reason for absence from the UK in excess of eight weeks, but it would continue to apply at least for much of the period of the pandemic (at least until the end of the “implementation period” of the UK’s exit from the EU, on 31 December 2020).

(iii) HMRC appears to consider that it has a discretion, in exceptional cases, to waive the requirements of the eight-week rule in “cases … where the customer was unable to return to the UK from overseas as a result of Covid-related travel restrictions”. The extent of this discretion, and the extent to which HMRC has exercised this discretion in practice, is unclear. I strongly doubt whether HMRC is...