HM Revenue and Customs v Fenton
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE RICHARDS |
| Judgment Date | 17 June 2010 |
| Neutral Citation | [2010] EWHC 2000 (Ch) |
| Court | Chancery Division |
| Date | 17 June 2010 |
| Docket Number | Case No: CH/2010/APP/0089 |
[2010] EWHC 2000 (Ch).
Chancery Division.
Richards J.
David Forsdick (instructed by the Solicitor to HM Revenue and Customs) appeared for the Crown.
The taxpayer did not appear and was not represented.
National Insurance contributions (NICs) - Voluntary additional Class 3 contributions - Qualifying periods - Change to maximum number of qualifying years for basic state pension - Contributions made by individuals with full contribution record under new rules - Whether contributions refundable as "paid in error" - HMRC's Appeal allowed - Social Security (Contributions) Regulations 2001 (SI 2001/1004), reg. 52.
This was an appeal by HMRC by way of case stated against a decision of the general commissioners upholding the taxpayer's claim for repayment of voluntary additional Class 3 National Insurance contributions (NICs).
The respondent was made redundant in 2002 and had received a retirement pension forecast showing that, under the regulations then in force, he did not have the necessary 44 qualifying years to be entitled to a full basic state pension. He therefore decided to improve his entitlement to the state pension by paying voluntary Class 3 NICs. After he had been making such payments for about three years, the Pensions Act 2007 reduced the maximum number of qualifying years to 30. He therefore asked for a refund of the contributions since he had had enough qualifying years under the new rules and therefore there had been no need for him to make the additional contributions. Under the relevant legislation, refunds could only be made of contributions that were incapable of counting towards a full year or if they had been paid in error (see reg. 52 of the Social Security (Contributions) Regulations 2001, SI 2001/1004). In that context "error" meant an error made at the time of the payment and which related to some past or present matter (see reg. 52(9)).
HMRC refunded £166.10 in respect of the period 6 April 2006 to 9 September 2006 because the respondent had cancelled his direct debit part-way through the year 2006-07 and he would not therefore have derived any benefit from his payment of NI contributions for that year. However, HMRC decided that the contributions paid in the years 2003-04, 2004-05 and 2005-06 were not paid in error. Those payments enabled the respondent to satisfy the conditions for both basic state pension and bereavement benefits. The fact that the legislation changed did not alter the respondent's intention to pay the contributions.
On appeal the general commissioners decided that the respondent had not made the voluntary payments in error. However, HMRC had not produced any evidence at the hearing as to the amount by which the voluntary payments had increased the respondent's entitlement to bereavement benefit. Since no evidence of such benefit had been produced the appeal was allowed. HMRC appealed by way of case stated.
Held, allowing HMRC's appeal:
1. The only circumstances set out in the legislation in which refunds of Class 3 NICs could be made were either where contributions had been made in error, under the Social Security (Contributions) Regulations 2001, reg. 52, or where precluded Class 3 NICs had been made, as defined by the Social Security Contributions and Benefits Act 1992, s. 14 and reg. 49 of the 2001 Regulations. The contributions did not fall within s. 14 or reg. 49 and had not been made in error since reg. 52(9) was expressly limited to an error made at the time of payment and relating to some past or present matter.
2. The taxpayer had made no error because, for the three years in question and under the legislation then in force, he had needed 44 qualifying years to secure his full entitlement to the basic state pension and his contributions had been made for that purpose. The legislation provided a comprehensive scheme for dealing with contributions and benefits and there was no other basis on which he might be entitled to a refund.
[1] At a meeting of the General Commissioners of Income Tax for the Division of Stockport held on 24 March 2009 at Stockport Town Hall, Edward Street, Stockport, SK1 3XE Mr Michael Fenton ("the Respondent") appealed against a decision by the appellants that he was not entitled to a refund of Class 3 voluntary National Insurance contributions for the years 2003-04, 2004-05, and 2005-06 amounting in total to £1,115.40.
[2] Shortly stated, the question for our determination was whether the Respondent was entitled to a refund of his Class 3 voluntary National Insurance contributions for the years 2003-04, 2004-05, and 2005-06 on the basis that he had paid the same in error.
[3] The Respondent appeared in person and the appellants were represented by Ms SA Ellwood of the Appeals & Review Team, 3rd Floor Albert Bridge House, 1 Bridge Street, Manchester M60 9AF.
[4] [Paragraph 4 listed the documents produced and admitted before the commissioners.]
[5] From the evidence deduced we found the following facts admitted or proved, in numbered sub-paragraphs for ease of reference:
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(a) The Respondent was made...
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Bonner and Others v HM Revenue and Customs
...(instructed by the Solicitor to HMRC) for the commissioners. The following case was referred to in the judgment: Fenton v R & C CommrsTAX [2011] BTC 29 National Insurance contributions - Refunds - Contributions record - Voluntarily additional Class 3 contributions - Contributors made volunt......
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Howell
...The judges of the Upper Tribunal stated: We fully agree with the decisions of both Richards J [in Fenton v R & C Commrs UNK[2010] EWHC 2000 (Ch); [2011] BTC 29 in which a similar point arose for decision] and Judge Berner about the application of regulation 52 in this group of cases. The de......