Gutteridge v HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judgment Date | 11 April 2006 |
| Date | 11 April 2006 |
| Court | Special Commissioners (UK) |
special commissioners decision
Charles Hellier
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
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
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9 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.
10. 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.
11. 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.
12. 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.
13. I rejected Mr Gutteridge's application. I did so for these reasons:
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(i) (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.
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(ii) (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;
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(iii) (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.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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....
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