Humphreys v Revenue and Customs Commissioners

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Richards
Judgment Date11 February 2010
Neutral Citation[2010] EWCA Civ 56
Date11 February 2010
Docket NumberCase No: C3/2009/0891

[2010] EWCA Civ 56

IN THE HIGH COURT OF JUSTICE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

Upper Tribunal Judge Edward Jacobs

Before : The President Of The Queen's Bench Division

Lord Justice Richards

and

Lord Justice Goldring

Case No: C3/2009/0891

Between
Humphreys
Appellant
and
The Commissioners For Her Majesty's Revenue And Customs
Respondents

Richard Drabble QC (instructed by Ford Simey LLP) for the Appellant

Jason Coppel (instructed by The Commissioners for HMRC) for the Respondents

Hearing date : 2 December 2009

Lord Justice Richards

Lord Justice Richards : This is the judgment of the court.

1

This appeal concerns entitlement to child tax credit (“CTC”) where parents are separated but share the care of the children. The appellant, Mr Humphreys, was in receipt of income support, a subsistence benefit equivalent to income-based jobseeker's allowance (“ JSA”) and subject to materially similar rules. He had the care of his children for approximately three days a week in the period January 2004 to December 2005. He claimed CTC in respect of the children. The Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) refused the claim because, as a minority carer, he was not “responsible” for the children within the terms of the legislation. He appealed successfully to an appeal tribunal, which held that the relevant provisions gave rise to unjustified indirect discrimination against men, contrary to article 14 ECHR. There was then an appeal by the Commissioners, originally to the Social Security Commissioners but subsequently transferred to the Administrative Appeals Chamber of the Upper Tribunal. That appeal was determined in the Commissioners' favour by Upper Tribunal Judge Edward Jacobs on 4 February 2009. In view of the importance of the case, the judge granted Mr Humphreys permission to appeal to this court.

2

In Hockenjos v Secretary of State for Social Security [2004] EWCA Civ 1749, [2005] EuLR 385, the Court of Appeal held that certain provisions of the then existing scheme relating to JSA constituted unlawful discrimination, contrary to the equal treatment provisions of Council Directive 79/7/EEC, in that entitlement to an additional amount in respect of a child (“child premium”) was dependent on whether the applicant was “responsible” for the child, and the rules for determining responsibility discriminated unjustifiably against minority carers. The legislation in issue in the present appeal supersedes in all material respects that which was considered in Hockenjos, but much of the argument has revolved around the judgments in Hockenjos and the extent to which the reasoning in them applies to the present case notwithstanding the differences between the schemes themselves and the legal context (it being common ground that the CTC provisions are not governed by EU law but fall to be considered by reference to the ECHR).

The legislation

3

CTC, along with working tax credit, was introduced by the Tax Credits Act 2002 (“the 2002 Act”). Tax credits are state benefits paid by the Commissioners directly to claimants. We are told that they represent a new approach to benefits, modelled on state support for children as delivered in Canada and Australia. According to a government document, The Child and Working Tax Credits, published in April 2002 to explain the proposals in the then Bill, the new credits “will separate support for adults in a family from support for the children, and for the first time integrate all income-related support for children”, to provide a clearer focus, in the case of CTC, on the aim of supporting families and tackling poverty (para 2.2); and CTC “will create a single, seamless system of support for families with children, payable irrespective of the work status of the adults in the household” (para 2.3). The document describes the tax credits as central to the government's strategy for achieving its long-term goal of halving child poverty by 2010 and abolishing it within a generation (para 3.7). It states that the CTC will create a single credit payable to those in and out of work at the same rate (para 3.8). The amount of CTC actually payable depends on the claimant's income: in the 2004/2005 tax year some CTC was payable to those with an annual income of up to £50,000.

4

Section 1 of the 2002 Act makes provision for CTC and abolishes the former child premium elements of income-based JSA (and income support). Section 7 makes provision for an income test. Section 8 governs entitlement to CTC and provides in material part:

“8.(1) Entitlement of the person or persons by whom a claim for child tax credit has been made is dependent on him, or either or both of them, being responsible for one or more children or qualifying young persons.

(2) Regulations may make provision for the purposes of child tax credit as to the circumstances in which a person is or is not responsible for a child or qualifying young person.”

Section 9 makes provision for determining the maximum rate at which a person or persons may be entitled to CTC. It makes specific provision in subsection (7) for a possible apportionment of CTC:

“9.(7) If, in accordance with regulations under section 8(2), more than one claimant may be entitled to child tax credit in respect of the same child or qualifying young person, the prescribed manner of determination may include provision for the amount of any element of child tax credit included in the case of any one or more of them to be less than it would be if only one claimant were so entitled.”

5

The relevant regulations are the Child Tax Credit Regulations 2002 (“the 2002 Regulations”). The key provisions are contained in regulation 3, which sets out the rules for determining whether a person is “responsible” for a child or qualifying young person. It reads, so far as material:

“3.(1) For the purposes of child tax credit the circumstances in which a person is or is not responsible for a child or qualifying young person shall be determined in accordance with the following Rules.

Rule 1

1.1 A person shall be treated as responsible for a child or qualifying young person who is normally living with him (the 'the normally living with test').

1.2 This Rule is subject to Rules 2 to 4.

Rule 2 (Competing claims)

2.1 This Rule applies where –

(a) a child or qualifying young person normally lives with two or more persons in –

(i) different households …; and

(b) two or more of those persons make separate claims (that is, not a single joint claim made by a married couple or unmarried couple) for child tax credit in respect of the child or qualifying young person.

2.2 The child or qualifying young person shall be treated as the responsibility of –

(a) only one of those persons making such claims, and

(b) whichever of them has (comparing between them) the main responsibility for him (the 'main responsibility test'),

subject to Rules 3 and 4.

Rule 3

3.1 The persons mentioned in Rule 2.2 (other than the child or qualifying young person) may jointly elect as to which of them satisfies the main responsibility test for the child or qualifying young person, and in default of agreement the Board may determine that question on the information available to them at the time of their determination.”

6

When the Tax Credits Bill was before Parliament, the government had made clear in a draft of the 2002 Regulations that CTC would be payable to the family (or person) having main responsibility for the child in question. The Financial Secretary to the Treasury, Mrs Dawn Primarolo, explained the thinking as follows (Hansard, 26 June 2002):

“Clauses 8 and 9 provide the framework for entitlement to the child tax credit. The draft Child Tax Credit Regulations … provide the detailed provision that will sit within that framework. Together, those measures create a system that ensures that the family with main responsibility for a child will be provided with a suitable level of support, depending on their needs. That is similar to many current systems of support for children, and we believe that – currently – it provides the most suitable means to ensure that we can focus support on raising children out of poverty.

Our present aim is to enable one family to claim support for any particular child at any one time. That is the principle on which the Bill, the draft regulations and the business systems being developed are based. There are several sound reasons for that approach. Usually, the person or couple who have the main responsibility for care of a child bear more of the everyday responsibilities for the child, and meet the everyday expenditure for him or her. It is vital, especially for families on lower incomes, that enough support is directed to that family to lift the child from poverty, or to keep him or her out of poverty.”

7

She also explained that it was possible that, in the light of changing patterns of care, the government might want to revisit the single payment rule in the future. Specific amendments were proposed to the Bill to enable that to occur:

“However, we recognise that patterns of care may be changing. That is the reason for the amendments. Many more families share responsibility for children than was previously the case, especially where a family has split up – resulting in both parents sharing responsibility for the children from the former relationship. The increase in shared responsibilities between families raises the question of whether, in future, directing support to one family will continue to be the right approach. We are determined to...

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