LS and RS v Commissioners for Her Majesty's Revenue and Customs (TC)
| Jurisdiction | UK Non-devolved |
| Judge | Judge Jacobs,Judge Markus,Judge Perez |
| Neutral Citation | [2017] UKUT 257 (AAC) |
| Subject Matter | Tax credits,family credit,Tribunal procedure,practice,family credit - other,practice - lapsing of appeals,Three Judge Panel |
| Court | Upper Tribunal (Administrative Appeals Chamber) |
| Date | 14 June 2017 |
[2018] AACR 2
LS and RS v HMRC
(Three-Judge Panel)
1
[2018] AACR 2
(LS and RS v Commissioners for Her Majesty’s Revenue and Customs
[2017] UKUT 257 (AAC))
Judge Jacobs CTC/3228/2015
Judge Markus QC CTC/1938/2016
Judge Perez
15 June 2017
Tax credits and family credit – a section 16 appeal to a First-tier Tribunal lapses when a
section 18 decision has been made
Tribunal procedure and practice – proper course for First-tier Tribunal to strike out the
proceedings under rule 8
Both cases involved the Commissioners for Her Majesty’s Revenue and Customs (HMRC) making an initial
decision u nder section 16 of the Tax Credits Act 2002, an appeal by the claimant against that decision and a
further HMRC decision under section 18. In the first case HMRC terminated the claimant’s tax credits for the
2013-2014 tax year under section 16 and her appeal against that decision was dismissed by the First-tier Tribunal
(F-tT) on 28 August 2015. However, by then HMRC had made a further decision on 2 March 2015 under section
18. The claimant says HMRC failed to notify her of the section 18 decision. The F-tT also appears to have been
unaware of it. The second claimant received child tax credit and working tax credit for the tax year 2014-2015
and both awards were terminated by HMRC under section 16. Following the claimant’s request for a mandatory
reconsideration HMRC reinstated the award of child tax credit and the claimant appealed to the F-tT. The
tribunal confirmed HMRC’s decision as originally made and the HMRC then made a decision under section 18
for the same tax year. Both claimants appealed to the Upper Tribunal (UT) and a three-judge panel was
appointed to hear the appeals as two recent UT decisions had been taken which not only conflicted which with
each other but also with the UT’s general approach in such cases: RF v Her Majesty’s Revenues and Customs
(HMRC) [2016] UKUT 399 (AAC) and JY v Her Majesty’s Revenues and Customs (HMRC) [2016] UKUT
407(AAC). Included among the issues before the Panel were whether a section 16 decision ceased to have effect
after a section 18 decision was made for the same tax year, what effect that had on an app eal against the section
16 decision and what a F-tT should do about it.
Held, dismissing both appeals, that:
1. a section 16 appeal to the F-tT lapses when a section 18 decision has been made (paragraphs 24 to 25);
2. the proper course is for that tribunal to strike out the proceedings under rule 8 of the Tribunal Procedure
(First-tier Tribunal) (Social Entitlement Chamber) Rules (paragraphs 52);
3. there is no scope for that tribunal to deal with the appeal as an academic issue, but the position is
different in the UT (paragraphs 33).
In both cases the Panel refused to set aside either decision of the F-tT even though they may have involved an
error on a point of law.
DECISIONS OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
CTC/3228/2015
This decision is given under section 12(2)(a) of the Tribunals, Courts and Enforcement Act
2007:
[2018] AACR 2
LS and RS v HMRC
(Three-Judge Panel)
2
Even if the decision of the First-tier Tribunal under reference SC024/14/03767, made on 28
August 2015 at Birmingham, involved the making of an error on a point of law, it is NOT
SET ASIDE.
CTC/1938/2016
This decision is given under section 12(2)(a) of the Tribunals, Courts and Enforcement Act
2007:
Although the decision of the First-tier Tribunal under reference SC024/15/02828, made on 21
January 2016 at Wolverhampton, involved the making of an error on a point of law, it is NOT
SET ASIDE.
We direct that a copy of our decision be sent to Mr Hignett, the representative for the
Commissioners in the early stages of this appeal, so that he may ensure that the claimant’s
application to set aside the First-tier Tribunal’s decision is treated as an application for review
under section 21A of the Tax Credits Act 2002.
REASONS FOR DECISION
A. What we have decided
1. As soon as the Commissioners for Her Majesty’s Revenue and Customs have made a
decision under section 18 of the Tax Credits Act 2002 for a tax year, any decision made under
section 16 for that tax year ceases retrospectively to have any operative effect, any appeal that
has been brought against that section 16 decision therefore lapses, the First-tier Tribunal
ceases to have jurisdiction in relation to that appeal and that tribunal must strike out the
proceedings.
B. Abbreviations and materials
2. We use “HMRC” to refer to the Commissioners for Her Majesty’s Revenue and
Customs. All statutory references are to the Tax Credits Act 2002 unless otherwise stated.
3. The relevant statutory material is in Appendix A and extracts from relevant cases are in
Appendix B.
C. Why a three-judge panel was set up
4. The general understanding used to be that, when a decision was made under section 18,
it replaced any previous decisions in respect of the same tax year, with the effect that an
appeal against any of those decisions lapsed. Then, last year, two judges of this Chamber gave
decisions that disagreed with that general understanding and with each other: RF v
Commissioners for Her Majesty’s Revenue and Customs (TC) [2016] UKUT 399 (AAC) and
JY v Commissioners for Her Majesty’s Revenue and Customs (TC) [2016] UKUT 407 (AAC),
both in Appendix B. In view of the different approaches, Charles J appointed a three-judge
panel to decide “the effect on appeal proceedings of decisions made under section 18”.
D. The issues
5. Three issues arise:
[2018] AACR 2
LS and RS v HMRC
(Three-Judge Panel)
3
• Does a section 16 decision cease to have operative effect when a section 18 decision is
made for the same tax year?
• What effect does that have on an appeal against the section 16 decision?
• What should the tribunals do about it?
We gave detailed directions on the questions relevant to these issues.
E. The oral hearing
6. We held an oral hearing of the appeal on 20 April 2017. Tom Royston of counsel
appeared for the claimants through the good offices of the Child Poverty Action Group.
Galena Ward of counsel appeared for HMRC. We are grateful to both of them for their
written and oral arguments.
F. The cases
LS - CTC/3228/2015
7. In this case, the section 18 decision was made before the First-tier Tribunal made its
decision on the claimant’s section 16 appeal, although she says that she was not aware of it. It
only came to light when submissions were made on the appeal to the Upper Tribunal.
8. We take the history of this case from HMRC’s submission to the Upper Tribunal
written by John Best. On 2 October 2013, the claimant’s award o f tax credits for the tax year
2013-2014 was terminated under section 16. The claimant exercised her right of appeal to the
First-tier Tribunal, which dismissed the appeal on 28 August 2015. By that time, there had
been a decision under section 18, which was made on 2 March 2015. The claimant says that
she was not notified of that decision; the First-tier Tribunal was unaware of it.
RS - CTC/1938/2016
9. In this case, the section 18 decision was made after the proceedings before the First-tier
Tribunal were concluded. The decision under appeal to that tribunal purported to have been
made under section 16.
10. We take the history of this case from HMRC’s submission to the Upper Tribunal
written by Mr A Hignett. On 13 April 2015, the claimant’s award of child tax credit and
working tax credit for the tax year 2014-2015 was terminated on the ground that she did not
meet the conditions of entitlement to either credit. That decision was said to be made under
section 16. On the claimant’s request for a mandatory reconsideration, this was changed to
reinstate the award of child tax credit. On appeal, the First-tier Tribunal confirmed HMRC’s
decision as originally made. Its decision was made on 21 January 2016. On 25 April 2016,
HMRC made a decision under section 18 in respect of the tax year 2014-2015.
11. Mr Hignett submitted that the appropriate course is for the claimant to challenge the
section 18 decision. He said that the claimant’s application to set aside the First-tier
Tribunal’s decision “can, and will, be treated as” a request for a mandatory reconsideration.
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