Humphreys CTC 2608 2008

JurisdictionUK Non-devolved
JudgeJudge E. Jacobs
Judgment Date16 May 2012
Neutral Citation2009 24
Subject MatterHuman rights law
RespondentHMRC
CourtUpper Tribunal (Administrative Appeals Chamber)
Docket NumberCTC 2608 2008
AppellantHumphreys
JUDGMENT

[2012] AACR 46

(Humphreys v The Commissioners for Her Majesty’s Revenue and Customs

[2012] UKSC 18)

SC Lady Hale CTC/2608/2008

Lord Walker

Lord Clarke

Lord Wilson

Lord Reed

16 May 2012

Tax credits – indirect discrimination against fathers by payment of child tax credit solely to principal carer – whether objectively justified

Two children lived with their mother but had extensive contact with their father who looked after them for at least three days a week. He was in receipt of means tested benefits and disability living allowance. Where parents are separated and so cannot make a joint claim, child tax credit is payable to one person only in respect of each child. Entitlement depends upon a claimant being “responsible” for one or more children. Where there are competing claims, regulation 3(1) of the Child Tax Credit Regulations 2002 provides for a child to be treated as the responsibility of whichever of the parents has “main responsibility” for that child. There were no provisions allowing child tax credits to be shared between separated parents. The father’s claim for child tax credits was refused on the ground that the mother had main responsibility for the children. The father challenged the decision on the ground that the rule restricting entitlement to one household discriminated in favour of women. The Upper Tribunal and the Court of Appeal both decided against him. On further appeal to the Supreme Court it was accepted by HM Revenue & Customs (HMRC) that child tax credit falls within the ambit of Article 1 of the First Protocol to the European Convention on Human Rights and that the rule that child tax credit is payable to one person only in respect of each child discriminates indirectly against fathers because they are far more likely than mothers to look after a child for a smaller number of days a week.

Held, dismissing the further appeal, that:

  1. the proper approach to justification in cases involving discrimination in state benefits is set out in the decision of the Grand Chamber of the European Court of Human Rights (ECtHR) in Stec v United Kingdom (2006) 43 EHRR 47. Difference in treatment is discriminatory if it has no objective and reasonable justification; it must pursue a legitimate aim and there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised (paragraph 15)

  1. in deciding whether discrimination was justified a contracting State was entitled to a margin of appreciation which varied according to circumstances. In relation to general measures of economic or social strategy a wide margin is usually allowed to a State because national authorities are better placed than international judges to appreciate what is in the public interest on social or economic grounds. Accordingly the ECtHR will generally respect the national legislature’s policy choice unless it was “manifestly without reasonable foundation” (paragraph 16)

  1. the normal strict test for justification of sex discrimination in the enjoyment of Convention rights gives way to the “manifestly without reasonable foundation” test in the context of state benefits, both in relation to direct sex discrimination (Runkee v United Kingdom [2007] 2 FCR 178) and indirect discrimination, as in this case; Stec v United Kingdom (2006) 43 EHRR 47 (paragraphs 17 to 21)

  1. in all the circumstances the “no-splitting” of child tax credit rule was a reasonable rule for the United Kingdom authorities to adopt and the indirect discrimination was justified (paragraphs 28 to 33).

DECISION OF THE SUPREME COURT

Richard Drabble QC and Sasha Blackmore, instructed by Ford Simey LLP, appeared for the appellant.

Jason Coppel and Katherine Eddy, instructed by the Solicitor, Her Majesty’s Revenue and Customs, appeared for the respondent.

Judgment

LADY HALE (with whom Lord Walker, Lord Clarke, Lord Wilson and Lord Reed agree):

1. The issue is simply stated. Child tax credit (CTC) is payable to one person only in respect of each child, even where the care of the child is shared between separated parents. It is (now) accepted that entitlement to CTC falls within the ambit of Article 1 of the First Protocol to the European Convention on Human Rights (Protection of property): see R (RJM) v Secretary of State for Work and Pensions [2008] UKHL 63; [2009] 1 AC 311. It is (now) accepted that the rule discriminates indirectly against fathers, because experience shows that they are far more likely than mothers to be looking after the child for the smaller number of days in the week. The question, therefore, is whether this discrimination is justified or whether the refusal of CTC to a father who looks after his children for three days a week is incompatible with his Convention rights. If it is incompatible there is a further question as to how this incompatibility can be remedied.

The facts

2. The appellant father has two children, a son born on 7 June 1998, and a daughter born on 6 May 1999. We are concerned with the period from 12 January 2004 until December 2005. During that time, they lived with their mother but had very extensive contact with their father, who looked after them for at least three days a week. A court order dated 8 November 2004 sets out the precise arrangements determined after a contested hearing between the parents. In effect, this provided for the father to have the children for three full weekends in every four and on Thursdays in the fourth week and for half of all school holidays. In other cases, such a level of shared care might well be reflected in a shared residence order rather than in an order for residence and contact. But the labels attached to the arrangements are immaterial for the purpose of the present issue.

3. Throughout the relevant period, the father was in receipt of income support, contributory incapacity benefit and non-contributory disability living allowance. Income support was, of course, a means-tested benefit equivalent to income-based jobseekers’ allowance and set at the officially prescribed subsistence level. Following the introduction of CTC, the children’s needs were not taken into account in assessing the father’s entitlement to income support. He claimed CTC in respect of both children but his claim was refused on the ground that the mother had the main responsibility for them. He challenged this decision on the ground that the rule restricting entitlement to one household discriminated in favour of women. He succeeded in the appeal tribunal (reference: 201/07/453 and 08/337, 16 June 2008) but failed before Upper Tribunal Judge Jacobs in the Upper Tribunal (HMRC v DH [2009] UKUT 24 (AAC), 4 February 2009) and before the Court of Appeal where the judgment of the court was delivered by Richards LJ: [2010] EWCA Civ 56; [2010] 1 FCR 630.

Child tax credit

4. CTC and working tax credit were introduced by the Tax Credits Act 2002 (TCA). CTC replaced the separate systems for taking account of children’s needs in the tax and benefits systems. Previously, people in work (or otherwise liable to pay income tax) might claim the children’s tax credit to set off against their income. This was administered by the tax authorities. People out of work (or otherwise claiming means-tested benefits) might claim additions to their income support or income-based jobseeker’s allowance to meet their children’s needs. This was administered by the benefits authorities. Under the new system, a single tax credit is payable in respect of each child, irrespective of whether the claimant is in or out of work, and is administered by Her Majesty’s Revenue and Customs (HMRC). CTC is like income support and jobseeker’s allowance, in that it is a benefit rather than a disregard and it is means-tested, so that the higher one’s income the less the benefit, until eventually it tapers out altogether. But in several other respects, including the “light touch and non-stigmatising” way of measuring income, calculated for the year ahead based on the previous year’s income, with a balancing exercise at the end of the year, it is like a tax allowance. As the Government explained, in The Child and Working Tax Credits: The Modernisation of Britain’s Tax and Benefits System, April 2002, paragraph 2.3:

“The Child Tax Credit will create a single, seamless system of support for families with children, payable irrespective of the work status of the adults in the household. This means that the Child Tax Credit will form a stable and secure income bridge as families move off welfare and into work. It will also provide a common framework of assessment, so that all families are part of the same inclusive system and poorer families do not feel stigmatised.”

5. CTC is, of course,...

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