SG CTC 1023 2010
| Jurisdiction | UK Non-devolved |
| Judge | Judge C. Turnbull |
| Judgment Date | 16 May 2011 |
| Neutral Citation | 2011 UKUT 199 AAC |
| Subject Matter | Tax credits and family credit |
| Respondent | HMRC |
| Court | Upper Tribunal (Administrative Appeals Chamber) |
| Docket Number | CTC 1023 2010 |
| Appellant | SG |
IN THE UPPER TRIBUNAL Case No. CTC/1023/2010
ADMINISTRATIVE APPEALS CHAMBER
1. This is an appeal by the Claimant, brought with my permission, against a decision of a First-tier Tribunal sitting at Middlesbrough on 12 January 2010. For the reasons set out below I dismiss the appeal.
2. I held an oral hearing of the appeal at which Mr Graham Tegg, a solicitor employed by the Child Poverty Action Group, appeared on behalf of the Claimant, and Mr Ben Hooper, of counsel, appeared on behalf of HMRC.
The legislative framework
3. The following account of the legislative framework is substantially taken (with gratitude) from Mr Hooper’s helpful Skeleton Argument.
Claims for tax credit, and awards of tax credit
4. The Tax Credits Act 2002 (“the TCA”) distinguishes between a decision to award tax credits and a decision as to a person’s entitlement to tax credits so awarded.
5. As regards the former, s. 14(1) of the TCA provides:
“On a claim for a tax credit the Board must decide—
(a) whether to make an award of the tax credit, and
(b) if so, the rate at which to award it.”
(Emphasis added)
6. By s. 5 of the TCA, an award of tax credit can, at most, be for the whole of a given tax year. In other words, the TCA contemplates that if a person is to receive a tax credit on an ongoing basis he will need to make (or be taken to have made) a claim for the tax credit for each tax year, so as to receive successive yearly awards under s. 14(1) of the TCA.
7. Regulation 5(1) of the Tax Credits (Claims and Notifications) Regulations 2002, SI 2002/2014 (“the 2002 Regulations”), prescribes the manner in which a claim for a tax credit is to be made. Regulation 5(2)-(3) provide:
“(2) A claim must be made to a relevant authority at an appropriate office—
(a) in writing on a form approved or authorised by the Board for the purpose of the claim, or
(b) in such other manner as the Board may decide having regard to all the circumstances.
(3) A claim must contain the information requested on the form (or such of that information as the Board may accept as sufficient in the circumstances of the particular case).”
8. Once HMRC has awarded a tax credit for a given tax year under s. 14(1) of TCA, a person’s entitlement to that tax credit is determined by HMRC on a retrospective basis following the end of the tax year in question under ss. 17-18 of the TCA.
9. As regards the entitlement to tax credits, s. 3(1) of the TCA provides:
“Entitlement to a tax credit for the whole or part of a tax year is dependent on the making of a claim for it.” (Emphasis added)
10. Thus, a claim for a tax credit in a given tax year is both a pre-condition for an award of that tax credit in that year and a pre-condition for any subsequent decision that the recipient of the award was entitled to that tax credit for that year.
S. 17 notices, and their consequences
11. S.17(1) of the TCA provides in relevant part:
“Where a tax credit has been awarded for the whole or part of a tax year—
(a) … the Board must give a notice relating to the tax year to the person to whom the tax credit was awarded,
…”
12. Such a notice has two purposes. The first (as already noted) is to enable HMRC to determine whether the person was in fact entitled to the tax credit that he was awarded in the tax year that has just passed. This function of the s. 17(1) notice follows from s. 17(2)-(8) and s. 18 of the TCA.
13. S. 17(2)-(7) provide in relevant part:
“(2) The notice must either—
(a) require that the person … must, by the date specified for the purposes of this subsection, declare that the relevant circumstances were as specified or state any respects in which they were not, or
(b) inform the person … that he … will be treated as having declared in response to the notice that the relevant circumstances were as specified unless, by that date, he states ... any respects in which they were not.
….
(4) The notice must either—
(a) require that the person … must, by the date specified for the purposes of this subsection, declare that the amount of the current year income or estimated current year income (depending on which is specified) was the amount, or fell within the range, specified or comply with subsection (5), or
(b) inform the person … that he … will be treated as having declared in response to the notice that the amount of the current year income or estimated current year income (depending on which is specified) was the amount, or fell within the range, specified unless, by that date, he complies ... with subsection (5).
(5) To comply with this subsection the person … must either—
(a) state the current year income or his … estimate of the current year income (making clear which), or
(b) declare that, throughout the period to which the award related, subsection (1) of section 7 did not apply to him ... by virtue of subsection (2) of that section.
(6) The notice may—
(a) require that the person … must, by the date specified for the purposes of subsection (4), declare that the amount of the previous year income was the amount, or fell within the range, specified or comply with subsection (7), or
(b) inform the person … that he ... will be treated as having declared in response to the notice that the amount of the previous year income was the amount, or fell within the range, specified unless, by that date, he complies … with subsection (7).
(7) To comply with this subsection the person ... must either—
(a) state the previous year income, or
(b) make the declaration specified in subsection (5)(b).”
14. As regards the declarations to which s. 17 of the TCA refers, reg. 34 of the 2002 Regulations provides in relevant part:
“(1) This regulation prescribes the manner in which a declaration ... in response to a notice under section 17 of the Act must be made.
(2) A declaration ... must be made–
(a) in writing in a form approved by the Board for that purpose;
(b) orally to an officer of the Board; or
(c) in such other manner as the Board may accept as sufficient in the circumstances of any particular case.” (Emphasis added.)
15. S. 18 of the TCA provides in relevant part:
“(1) After giving a notice under section 17 the Board must decide—
(a) whether the person was entitled…to the tax credit, and
(b) if so, the amount of the tax credit to which he was entitled, or they were jointly entitled,
for the tax year.
(2) But, subject to subsection (3), that decision must not be made before a declaration or statement has been made in response to the relevant provisions of the notice.
(3) If a declaration or statement has not been made in response to the relevant provisions of the notice on or before the date specified for the purposes of section 17(4), that decision may be made after that date.”
16. Pending the receipt of the declaration in response to the relevant provisions of a s. 17 notice, HMRC may (in certain circumstances) continue to make tax credit payments in the new tax year. Such payments are treated as payments of tax credit for that tax year. See s. 24(4)-(5) of the TCA. The circumstances in which such payments may continue to be made are set out in reg. 7 of the Tax Credits (Payment by the Commissioners) Regulations 2002. Essentially, the circumstances are that either (i) a claim for tax credit for the next tax year has been made or treated as made by the date specified in the s.17 notice (i.e. 31 July 2007 in this case) or (ii) a claim for the next tax year has not been made, and HMRC has not made a decision under s.18(1) in relation to the previous tax year.
17. The second purpose of a s. 17 notice is that it enables the person to whom it is given to be treated as having made a new claim for a tax credit for the next tax year. This follows from reg. 11 of the 2002 Regulations, which - as it stood at the relevant time - provided in relevant part:
“(1) In the circumstances prescribed by paragraph (2) a claim for a tax credit is to be treated as made.
(2) The circumstances prescribed by this paragraph are where … a person has … made a declaration in response to provision included in a notice under section 17 of the Act by virtue of-
(a) subsection (2)(a) of that section;
(b) subsection (4)(a) of that section;
(c) subsection (6)(a) of that section; or
(d) any combination of those subsections.
The declaration made shall (subject to regulation 5(3)) be treated as a claim for tax credit by that person ... for the tax year following that to which the notice relates.
(3) The claim shall be treated as made—
(a) in a case where the declaration is made by 31st July next following the end of the tax year to which the claim relates, on 6th April preceding that date;
(aa) in a case where the declaration, not having been made by the date...
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