The Motherhood Plan v HM Treasury
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Whipple |
| Judgment Date | 17 February 2021 |
| Neutral Citation | [2021] EWHC 309 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO24442020 |
| Date | 17 February 2021 |
[2021] EWHC 309 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Whipple
Case No: CO24442020
The Queen On the application of
Jude Bunting, Clare Duffy and Donnchadh Greene (instructed by Leigh Day and Co) for the Claimants
Julian Milford QC, Rupert Paines and Zoe Gannon (instructed by the Government Legal Department) for the Defendant and Interested Party
Hearing date: 21 January 2021
Approved Judgment
Introduction
On 30 April 2020, HM Treasury, the Defendant to this claim, introduced the Self Employment Income Support Scheme (the “Scheme”, or “SEISS”) by way of a direction under sections 71 and 76 of the Coronavirus Act 2020. The Scheme provided for payments to those who carried on a business, which business had been adversely affected by the coronavirus emergency. With some exceptions, payments under the Scheme were to be based on average trading profits (“ATP”) of the individual's business over the preceding three full tax years (ie 2016/17, 2017/18, 2018/19).
The First Claimant is a registered charity which aims to end discrimination faced by pregnant women and mothers by campaigning for changes to legislation, raising awareness of these issues in the media and working with employers to change business practice and culture. It is also known as “Pregnant then Screwed”. The Second Claimant is a self-employed energy analyst. She has three young children. Her second child was born in 2017 and her third was born in 2018. She took maternity leave of 39 weeks after each of those children was born. As a result of that, her business income reduced significantly in the tax years 2017/18, and 2018/19.
The Claimants challenge the Scheme on two main grounds:
i) Because it unlawfully discriminates against self-employed women who have taken a period of leave relating to maternity or pregnancy in the three preceding tax years, contrary to Article 14 read with Article 1 of Protocol 1 of the Human Rights Convention. This ground is advanced on the basis that the discrimination takes one of two forms, either “conventional” indirect discrimination or discrimination of the Thlimmenos type, in either case, resulting in unjustified disadvantage to this group of women.
ii) The Defendant breached the Public Sector Equality Duty in section 149 of the Equality Act 2010.
The Defendant and Interested Party resist this application for judicial review on the basis that there is no discrimination at all, of either sort; but in any event, were the Court to find that discrimination existed, such discrimination and the measure which caused that discrimination are justified. The Defendant takes issue on the facts to deny that there was any breach of the PSED.
Permission was granted on the papers by Henshaw J on 22 September 2020. He directed an expedited hearing and imposed cost capping on terms subsequently agreed between the parties.
At the hearing, which took place remotely, the Claimants were represented by Mr Jude Bunting, Ms Clare Duffy and Mr Donnchadh Greene; the Defendants and Interested Party were represented by Mr Julian Milford QC and Mr Rupert Paines. I am grateful to all counsel for their clear and focussed submissions.
The Self-Employment Income Support Scheme
In response to the pandemic, on 17 March 2020, the Chancellor of the Exchequer announced various measures to provide financial support to businesses and local authorities. On 20 March 2020, he announced various measures to support employed people and businesses, including the Coronavirus Job Retention Scheme, the Coronavirus Business Interruption Loan Scheme, a deferral of VAT payments and self-assessment income tax payments for certain people. This preceded the first national lockdown which commenced on 23 March 2020.
On 26 March 2020, the Chancellor announced his action plan to support the self-employed. That included the Scheme. In the terms of the announcement:
“The government will pay self-employed people, who have been adversely affected by the Coronavirus, a taxable grant worth 80% of their average monthly profits over the last three years, up to £2,500 a month.”
The Chancellor said that HMRC were working on the Scheme urgently and he hoped that it would be open for applications from June 2020.
On 30 April 2020, the Chancellor exercised powers under the Coronavirus Act to establish the Scheme by means of “The Coronavirus Act 2020 Functions of Her Majesty's Revenue and Customs (Self-Employment Income Support Scheme) Direction” (the “First Direction”). HMRC (the Interested Party in this claim) were to be responsible for the payment and management of payments under the Scheme.
The details of the Scheme were set out in a Schedule to the First Direction. Paragraph 2 of the Schedule states the purpose of the Scheme, in the following terms:
“The purpose of [the Scheme] is to provide for payments to be made to persons carrying on a trade the business of which has been adversely affected by the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease.”
Paragraph 4 described who qualified for a payment under the Scheme, being a person who had carried on a trade the business of which had been adversely affected by the pandemic, had delivered a tax return for a relevant year on or before 23 April 2020, had carried on a trade in the tax years 2018/19 and 2019/20, and intended to continue to carry on a trade in the tax year 2020/21. “Relevant tax year” was defined to mean all or any of 2016/17, 2017/18 and 2018/19, tax returns for those years then forming the basis on which the person's trading profit and relevant income “must” be determined for the purposes of the Scheme.
Paragraph 5 imposed a “profits condition”, which varied in its detail depending on whether the person was subject to the loan charge (as defined in paragraph 9), and whether the person had been in business for the three previous tax years, or for only one or two. Described generally, the profits condition required a person to have trading profits of less than £50,000 pa and for those profits to be equal to or more than the sum of the person's relevant income that year. For those who had carried on a trade for the three preceding tax years (as had the Second Claimant), the average of trading profits over those years had to be £50,000 or less.
Paragraph 6 set out the amount of the payment, which was the lower of £7,500 or an amount representing three months' worth of 80% of the person's average monthly trading profits during the relevant year or years. The calculation of trading profits was defined as total income minus losses.
The Scheme opened for applications on 13 May 2020; that window closed on 13 July 2020. The Scheme has twice been extended (on 1 July 2020 and 20 October 2020).
The development of the Scheme
The Court was shown two witness statements from the Defendant and Interested Party respectively, which described the background to the Scheme's introduction. The first of those was a statement dated 27 October 2020 from Ms Suzanne Kantor, co-Director Personal Tax, Welfare and Pensions at HM Treasury (the Defendant). Ms Kantor described the early stages of the pandemic, and made this observation in relation to the situation towards the end of March 2020:
“13. It was clear in light of the social distancing measures announced by the Prime Minister that large parts of the economy would be very substantially affected, and that large emergency measures would be required to deal with those effects. There was a risk that many sound businesses would permanently cease trading as a reaction to short-term pressure on cash flow from fixed costs and disappearing revenues. Preventing failures of otherwise sound businesses and large-scale job losses could only be achieved by quickly moving to alternative sources of cashflow.”
She goes on to describe the way the Scheme was designed and came into existence. The emergency was unfolding, and the situation was urgent, as she makes clear in the following paragraphs:
“40. It cannot be too strongly emphasised that SEISS was and had to be developed at great speed, so that it could be implemented as quickly as possible, against the background of the significant public health restrictions that were necessary to combat the Pandemic.
41. The pace of work on SEISS was intense. Everyone involved in the design and delivery of SEISS was conscious that it was likely that the Pandemic, and the public health response to it, would be likely to cause substantial difficulties for self-employed people, and that it was necessary to put a scheme in place to assist self-employed individuals with those difficulties so far as possible. There are around 5.75m such individuals, and there was no way of knowing (in the time available) what proportion of them would be affected by the Pandemic, and to what extent. Putting it bluntly, the overriding consideration when designing and implementing SEISS was to help as many eligible people as possible in as short a time as possible, without creating an unacceptable risk of fraud or error.”
In fact, the Scheme opened for claims on 13 May 2020, earlier than the Chancellor had anticipated in his announcement. Two extensions of the Scheme over the winter period were anticipated, those would of course serve to increase the value of claims for payments under the Scheme.
The Court was also provided with a witness statement dated 27 October 2020 from Mr Max Hacon, Project Director responsible for the delivery of the Scheme at HMRC (the Interested Party). He explained the decision to...
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