MMcK-v-Department for Social Development (TC) [2016] NICom 14
Decision No:  C2/15-16(TC)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

TAX CREDITS

Appeal to a Social Security Commissioner
on a question of law from a Tribunal's decision
dated 27 November 2014

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	The decision of the appeal tribunal dated 27 November is in error of law.  The error of law identified will be explained in more detail below.  Pursuant to the powers conferred on me by Article 15(8) of the Social Security (Northern Ireland) Order 1998, I set aside the decision appealed against.

2.	For further reasons set out below, I am unable to exercise the power conferred on me by Article 15(8)(a) of the Social Security (Northern Ireland) Order 1998 to give the decision which the appeal tribunal should have given.  This is because there are further findings of fact which require to be made and I do not consider it expedient to make such findings, at this stage of the proceedings.  Accordingly, I refer the case to a differently constituted appeal tribunal for re-determination.

3.	In referring the case to a differently constituted appeal tribunal for re-determination, I direct that the appeal tribunal takes into account the guidance set out below.

4.	It is imperative that the appellant notes that while the decision of the appeal tribunal has been set aside, the issue of her entitlement to tax credits (TC) remains to be determined by another appeal tribunal.  In accordance with the guidance set out below, the newly constituted appeal tribunal will be undertaking its own determination of the legal and factual issues which arise in the appeal.

5.	As will be noted below, the application for leave to appeal has been supported by the Commissioners for HM Revenue and Customs.  In supporting the application, the representative has noted that the appeal tribunal approached its analysis and decision-making with care.  In addition, the representative has conceded that there may have been certain failings in the decision-making process giving rise to the decision under appeal to the appeal tribunal.

	Background

6.	In her comprehensive and helpful written observations on the application for leave to appeal to the Social Security Commissioner, Ms Whaley, for the Commissioners for HM Revenue and Customs, set out the following background:

‘In the 20011-2012 tax year, the claimant received tax credits on the basis that she was a single person responsible for two children.

Section 17 of the Tax Credits Act (hereafter known as ‘the Act’) is not a decision making provision, rather it provides HMRC the power for checking decisions.  After the end of each tax year, HMRC is required to issue a notice to every claimant detailing the circumstances on which the award for the previous year was made.  In the majority of cases, the claimant is required to make a return by a specified date.  A minority of claimants are not required to make a return but are deemed to have done so by a specified date.  The information on the declaration or deemed declaration serves two distinct and separate purposes.

It forms the basis for a S18 decision by which entitlement for the tax year just ended will be determined.  It also, in conjunction with regulation 11 of the Tax Credits (Claims and Notifications) Regulations 2002, enables the claimant to be treated as having made a new claim for a tax credit for the next tax year.

In this case, HMRC sent the claimant a S17 notice, in respect of the 2011-12 tax year, on 12 April 2012.  HMRC received the completed notice on 02 July 2012.

Section 18 of the Act gives HMRC the authority to establish entitlement exists to the tax credits already paid.

Both HMRC and the claimant have their parts to play in this.  HMRC, in knowing the conditions of entitlement, particularly in light of contradictory evidence, ask questions it deems relevant.  The onus is on the claimant to then reply to those questions.

On 18 July 2012 HMRC wrote to the claimant and explained her claim had been selected for checking because she had claimed as single person and information held showed there may be another adult, Mr McK, living at her address.  The letter asked the claimant to telephone HMRC to explain why she had not made a joint claim with Mr McK.

On 04 September 2012 HMRC wrote to the claimant advising her “I have considered the information that you let me have.  I am sorry, but I cannot accept the information.  This is because you did not provide evidence that proved Mr M McK lives at an alternative address.”

There is no record in the appeal bundle of a telephone call from the claimant and there are no copies of documents she provided, though there is a record on the tax credit computer system stating correspondence was received on 08 August 20012 in relation to the enquiry (copy record attached).

HMRC decided the claimant was not entitled to tax credits, in the single capacity, for the 2011-12 tax year.  This decision was made under Section 18(1) of the Tax Credits Act 2002.

A further record on the tax credit computer system shows that on 18 September 2012 HMRC received more documents from the claimant (copy record attached).

On 20 March 2013 HMRC received the claimant’s appeal (which HMRC’s response states was admitted as made in time by the tribunal, on 04 August 2014).

On 24 April 2013 HMRC invited the claimant to provide further evidence in support of her appeal.  Following receipt of documents from her, HMRC concluded that there was insufficient evidence to change the decision and referred the appeal to the tribunal.

HMRC’s response submitted that the claimant was not entitled to tax credits as a single person for the tax year 2011-12 as HMRC held information that showed the claimant was married to Mr McK and was neither separated under a court order, nor separated in circumstances in which the separation is likely to be permanent.’

What did the appeal tribunal decide?

7.	The appeal tribunal hearing took place on 27 November 2014.  The appellant had returned form REG2(i)(d)(TC) to The Appeal Service, where it was received on 9 October 2014, to indicate that she was content for the appeal to proceed without an oral hearing.  Accordingly the appeal tribunal proceeded to determine the appeal on the basis of the papers alone.

8.	The appeal tribunal disallowed the appeal.  In the statement of reasons for its decision the appeal tribunal stated that:

‘There was no evidence before the Tribunal of any court order, maintenance agreement or other court proceedings to support the contention that the parties had separated …

…

The Tribunal was satisfied having considered all the evidence that the appellant was living as a member of the same household with Mr McK at … The available evidence demonstrated that Mr McK continued to maintain his financial affairs from that address and that there continued to be a significant degree of financial support between the parties with no compelling evidence of any separation of domestic finances.

…

The Tribunal was satisfied having considered all the evidence that there was a continuing association between the parties and that they were repeatedly linked to (an address) where they lived together.’

	Errors of law

9.	A decision of an appeal tribunal may only be set aside by a Social Security Commissioner on the basis that it is in error of law.  What is an error of law?

10.	In R(I) 2/06 and CSDLA/500/2007, Tribunals of Commissioners in Great Britain have referred to the judgment of the Court of Appeal for England and Wales in R(Iran) v Secretary of State for the Home Department ([2005] EWCA Civ 982), outlining examples of commonly encountered errors of law in terms that can apply equally to appellate legal tribunals.  As set out at paragraph 30 of R(I) 2/06 these are:

“(i)	making perverse or irrational findings on a matter or matters that were material to the outcome (‘material matters’);
(ii)	failing to give reasons or any adequate reasons for findings on material matters;
(iii)	failing to take into account and/or resolve conflicts of fact or opinion on material matters;
(iv)	giving weight to immaterial matters;
(v)	making a material misdirection of law on any material matter;
(vi)	committing or permitting a procedural or other irregularity capable of making a material difference to the outcome or the fairness of proceedings; …

Each of these grounds for detecting any error of law contains the word ‘material’ (or ‘immaterial’).  Errors of law of which it can be said that they would have made no difference to the outcome do not matter.”

	The grant of leave to appeal

11.	On 12 January 2016 I granted leave to appeal.  In granting leave to appeal, I gave as a reason that an arguable issue arose as to whether the appeal tribunal failed to properly address the question which was before it.

	The submissions of the parties

12.	In her application for leave to appeal to the Social Security Commissioner, the appellant made the following submission:

‘I think that the Tribunal was wrong because when I claimed Tax credits as a single person it did not state that my separation had to be made legal within a court order.  We separated and believed this to be permanent.  Mr McK and I did not share finances or have a joint bank account.  We were not living together and I provided you with his new address and evidence of him living at that address.  All of this you choose to ignore.  Granted he may have used this address for some correspondence.  My eldest son has not lived at this address for 2 years and still uses this as a postal address.  Is this against the law?  I was not living with Mr McK as a married couple during the dates in question …’

13.	In her detailed written observations on the application for leave to appeal, Ms Whaley made the following submission:

‘I support the appeal as there is scope that the tribunal made perverse or irrational findings on a matter or matters that were material to the outcome, failed to give reasons or any adequate reasons for findings on material matters and failed to take into account or resolve conflicts of fact or opinion on material matters.

The tribunal may have approached the case with care, but it considered the state of the claimant’s relationship with Mr McK, it appears, based only upon financial connections between him and the claimant’s address and the fact that the claimant failed to provide any court documents verifying a separation.

Furthermore, HMRC’s submission focused on the fact that the credit reference agency reports indicated that Mr McK lived at the same address as the claimant.  From that, they decided that the claimant and Mr McK must therefore be living together; thus making the decision that the claimant was not entitled to claim tax credits as a single person.

I further submit that in this case HMRC’s obligation was to ask the necessary questions and request the relevant information in order to determine whether the conditions of entitlement are met.  Documentation indicated that Mr McK may be living at the claimant’s address and HMRC was perfectly entitled to enquire.  And while the appeal bundle contains HMRC’s letter to the claimant, requesting she telephone them, there is no record of whether she did so or the details of any conversation.  Presumably she did telephone, as HMRC’s records indicate documents were received on 08 August 2012 in relation to their enquiry (as mentioned in paragraph 12 above), though the appeal bundle makes no reference to what documents were received and provides no record of any reasoning from the decision maker as to why they were insufficient.  The only reference to information having been received is in HMRC’s letter to the claimant, dated 04 September 2012, which states, “I have considered the information that you let me have.  I am sorry, but I cannot accept the information.  This is because you did not provide evidence that proved Mr McK lives at an alternative address.”  It is also arguable therefore, that HMRC did not provide to the tribunal all of the evidence on which it based its decision.

Furthermore, after the claimant made her appeal, in addition to documents in relation to herself, HMRC requested the claimant provide Mr McK’s personal documents, including rent / tenancy agreement, utility bills, Council Tax and vehicle insurance to prove he was resident at an address other than hers.  And even though she provided several documents, HMRC, it appears, chose to disregard them, thus failing in their duties.

HMRC appears to have issued standard enquiry letters to the claimant requesting documents rather than asking pertinent questions to ascertain whether she was separated under a court order, or separated in circumstances in which the separation is likely to be permanent.
It also appears the tribunal placed importance on the continuing financial links between Mr McK and the claimant’s address and the fact that the claimant did not provide documents to prove she was separated.

Further, while the tribunal’s Decision Notice confirms HMRC’s decision and states their decision is also that the claimant “was married to Mr McK and neither separated under a court order nor separated in circumstances in which the separation is likely to be permanent”, in their Reasons For Decision the tribunal states the issue before it was whether the claimant “was living together as husband and wife with Mr McK throughout the relevant period.”

The Reasons for Decision also refers to the six admirable signposts, which are used as indicators to help form a sustainable view of whether two people are living together as husband and wife or as civil partners for the purposes of a tax credits claim, and commented on each in relation to the present case.  However, the signposts are not relevant in this case as the claimant and Mr McK are married and therefore the consideration is whether the claimant was separated under a court order or in circumstances in which the separation was likely to be permanent.  The Tribunal appears to have confused the applicable test in this case.’

	My decision

14.	I agree with the submissions which have been made by Ms Whaley and for the reasons which have been set out by her in her written observations, agree that the decision of the appeal tribunal is in error of law.

	Disposal

15.	The decision of the appeal tribunal dated 27 November is in error of law.  Pursuant to the powers conferred on me by Article 15(8) of the Social Security (Northern Ireland) Order 1998, I set aside the decision appealed against.

16.	The appeal is to be re-listed for oral hearing before a differently constituted appeal tribunal.  The appeal is to be listed for oral hearing and the appellant should note that it is in her interests to attend the oral hearing of the appeal.  The appellant should also give consideration to obtaining representation from one of the usual representative organisations.

17.	The Commissioners for HM Revenue and Customs are to prepare a further submission for the further hearing of the appeal.  The submission should set out the legal and evidential basis for the decision under appeal and should address the issues raised by the appellant during the decision-making process giving rise to the appeal and in the appeal itself.  The submission should draw on the detailed and valuable submissions which have been made by Ms Whaley during the course of the proceedings before the Social Security Commissioner.

18.	Thereafter it will be for the appeal tribunal to consider the submissions made by the parties to the proceedings on these issues, and any evidence adduced in support of them, and then to make its determination, in light of all that is before it.

(signed)  K Mullan

Chief Commissioner

4 February 2016