HO v Her Majesty's Revenue and Customs (TC)
| Jurisdiction | UK Non-devolved |
| Judge | Judge Wright |
| Neutral Citation | [2018] UKUT 105 (AAC) |
| Court | Upper Tribunal (Administrative Appeals Chamber) |
| Subject Matter | Tax credits,family credit,Tribunal procedure,practice,family credit - other,practice - tribunal jurisdiction,Wright,S |
| Date | 16 March 2018 |
| Published date | 12 April 2018 |
HO –v- HMRC (TC) [2018] UKUT 105 (AAC)
IN THE UPPER TRIBUNAL Appeal No: CTC/865/2016
ADMINISTRATIVE APPEALS CHAMBER
Before: Upper Tribunal Judge Wright
DECISION
The Upper Tribunal allows the appeal of the appellant.
The decision of the First-tier Tribunal sitting at Fox Court on
5 October 2015 under reference SC242/14/05428 involved an
error on a material point of law and is set aside.
The Upper Tribunal redecides the appeal and gives the
decision the First-tier Tribunal ought to have given. That
decision is that the appellant was entitled to child tax credit,
but not working tax credit, amounting to £9,110.12 for the tax
(credit) year from 6 April 2013 to 5 April 2014.
This decision is made under section 12(1), 12 (2)(a) and
12(2)(b)(ii) of the Tribunals, Courts and Enforcement Act
2007.
Appearances: The appellant (claimant) appeared at the
first hearing of the appeal (which was
rendered ineffective due to the late arrival of
the interpreter) but neither appeared nor
was represented at the second (substantive)
hearing of the appeal.
Ms Galina Ward of counsel appeared on
behalf of the respondent at both hearings.
REASONS FOR DECISION
Introduction and background
1. The issue that this decision seeks to address is how decisions of the
First-tier Tribunal take effect under the Tax Credits 2002, particularly
in the context of the basis, if there is such, of HMRC’s ability to change
such decisions under that Act.
HO –v- HMRC (TC) [2018] UKUT 105 (AAC)
2. Given the nature of the main issue with which this appeal is concerned
and given HMRC’s concessions on the appeal, it is unnecessary to
identify in any detail the underlying factual circumstances that led
HMRC and the First-tier Tribunal to ‘remove’ (to use what I hope is a
neutral, non-statutory word) the appellant’s working and child tax
credits for the tax (credit) year 6 April 2013 to 5 April 2014. It is
sufficient to say that the tax credits were removed on the basis that the
appellant had not in fact worked sufficiently in that year and as a result
also did not have a right to reside as a qualified person in the United
Kingdom under regulation 6(1) of the Immigration (European
Economic Area) Regulations 2006 (as were then in force). The sole
ground on which I gave the appellant permission to appeal concerned
the child tax credit part of the award and was on the basis:
“Did HMRC and the First-tier Tribunal investigate sufficiently and
explain adequately the basis for non-entitlement to child tax credit in
that year[?] Being in work of itself is not a necessary condition for
qualifying for child tax credit. As an Italian (i.e. E U) national it might
provide a basis under the right to reside test for saying [the appellant]
was not a qualifying person based on her being a “worker” (that is, in
work) in 2013/2014. However given her evidence…..about having
worked in the UK since 2011 and the school age of at least two of her
children, did HMRC and the First-tier Tribunal look sufficiently at
whether she could in 2013/2014 have had what is called a ‘derivative
right to reside’ under article 10 of Regulation (EU) No. 492/2011 based
on her work in 2011 (assuming it can be properly evidenced) a nd her
children being in education? In other words, if the basis for the child
tax credit decision was the right to reside test, ought HMRC and the
First-tier Tribunal [to] not have addressed and explained why [the
appellant] did not have a derivative right to reside under article 10 of
Regulation (EU) No. 492/2011?”
Subject to the jurisdictional issue to be explored below and the issue of
the statutory basis of the decision which was under appeal, HMRC now
concede that the First-tier Tribunal did err in law in the way I raised
when giving permission to appeal. Indeed, they go further and concede
that the appellant was on the facts entitled to child tax credit for the
year 2013 to 2014. In the circumstances, I do not investigate the
factual issue of entitlement to child tax credit any further.
HO –v- HMRC (TC) [2018] UKUT 105 (AAC)
3. The issue identified in the opening paragraph of this decision arises in
the context of an appeal which reveals yet again the inadequacy of first
instance decision making conducted by HMRC under the Tax Credits
Act 2002 and the inadequacy of HMRC’s explanation for its decision
making in its decisions and appeal responses provided to the First-tier
Tribunal. That has been the subject of commentary in, regrettably, too
many Upper Tribunal decisions. HMRC’s own submission writer in his
submissions to the Upper Tribunal described HMRC’s decision making
process in this case as “somewhat perplexing” and that its “administration
of its decisions and the appeal in this case has been entirely inept, and it is
HMRC’s submissions that led the [First-tier Tribunal] down an incorrect
path”.
4. This submission was based, at least in part, on that submission writer’s
view that the decision under appeal to the First-tier Tribunal, said to be
dated 8 September 2014, could not have been made under section 16 of
the Tax Credits Act 2002 as it was made after the tax (credit) year to
which it related, that being the year 6 April 2013 to 5 April 2014. If
section 16 was the basis of the 8 September 2014 decision then that
submission is plainly correct: see, for example, paragraph 13 of DG –v-
HMRC and EG (TC) [2016] UKUT 0505 (AAC).
5. However, in fairness to the original decision maker(s) within HMRC, it
is not correct to say that they consistently ascribed the legal basis for
their decision to section 16 of the Tax Credits Act 2002; though the
inconsistency in HMRC’s approach may itself qualify as being “inept”.
6. HMRC’s appeal response to the First-tier Tribunal gives the decision
date of 8 September 2014. It is described in that response as “The
Decision: Final entitlement for tax year 2013-2014: [the appellant] was not
entitled to tax credits for 2013 – 2014”, and the appeal response states that
the legal basis for the decision was section 18 of the Tax Credits Act
2002. The appeal response includes the (at least then) standard
passage stating that HMRC had not included a copy of this decision as
it was unable to do so. For the reasons I gave in paragraph 26 of DG –v-
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