Hello long time listener first time caller.

I've got a real nasty Tax Credit Tribunal on a LT disallowance coming up and am in serious need of advice.

The IR (or whatever they are calling themselves this week)have to my utter amazement produced a solid resonable case supporting their LT decision. They have specificaly stated in the submission that "is is appropriate to use guidance provided in Commisioners decisions in relation to other benefits in considering such questions" so it's R(SB)17/81 all the way.

Fair enough. I can argue on established points, eccept that she isn't going to win on them.

My client seperated from her husband and claimed WTC and CTC as a single person. He had a series of heart attacks before he had time to leave the marital home. He stayed in hospital for months and was told he was for the chop. She let him back into her home because they thought he was going to die, she then became his carer.

They have three young children including one who was concieved just prior to the seperation. They share the bills, never got divorced and the situation has no been ongoing for two years.

Needless to say she dosen't consider herself to be living with him as a wife but I can't see a Tribunal allowing that one.

The thing is that she would have been entitled to much the same amount of Tax Credits if she had put in a joint claim. He has no income excepting IB.

The submission states that because she dosent fufil the criteria for a single claim the award is void and all monies, £18000, are recoverable. No consideration has been given to what she would have been entitled to with a joint claim, let alone an abatement of the OP.

There is no suggestion of deliberate fraud, the IR have concided this and no pentalty payments have been applied.

Does anybody have any experiance of these kind of full recoveries? Has anybody been to an Appeal and argued against this? Can the Tribunal even make a decsion on recoverability in Tax Credit cases? Is there anything that can be done accept hope for the mythical understanding Chair?

Honest I'm not useless on proper benefits but Tax Credits are weird!

Hi Rowan,

I think you will be doing very well to pull this one out the fire.

As you will probably be aware, the TC definition of coupledom when married is different to social security. Here is a clip from the TC compliance manual, which you can find at

www.hmrc.gov.uk/manuals/ccmmanual/CCM15035.htm

"CCM15035 - Undisclosed Partners: Married Couples

Section 3(5) defines a married couple as a man and woman who are married to each other and are neither

1. separated under a Court order nor
2. separated in circumstances where the separation is likely to be permanent.

From the date on which a couple marry they will be treated as a married couple for tax credit purposes even if they do not begin living in the same household. They might also have been living as an unmarried couple for tax credit purposes prior to this date.

Where the claimant says they are separated from their husband or wife you might find it helpful to consider the criteria at CCM15040 but remember the starting point is different. They are to be treated as a married couple unless the evidence shows they are separated and it is likely to be permanent."

CCM 15040 then lists the criteria to decide if a couple in non married cases. I think their link from married criteria to the unmarried criteria is questionable, as they themselves admit!

In this case, I suggest you focus on intention. There is good case law that says the reason two people are in the same place is important (can't remember the reference right now). In your case, they are together in same place because he needs looking after. I know this looks a little thin, considering all the circumstances.

The HMRC at one point earlier this year suggested they would apply "set off" principles to overpayments, along the lines of reg 104 of HB regs. I do not know if they are actually doing so. If yes, it might well help your client, because the underlying entitlement would have been the same, so no overpayment. Suggest you press them on this.

Lastly,it would be beyond the juristiction of the tribunal to entertain recoverability matters.

Good luck.

Steve

Rowan

just to add...

it isn't appropriate to give an L/T decision on a couple who are in fact husband and wife. in less-wierd income support , where 'separated at the same address' scenarios crop up, the test is whether they maintain separate households, in the same house. i'm not sure how this plays generally, given the IR definition steve highlighted above, and in admitting L/T case law, it would be consistent to admit the SS approach to separation, but in your case, you say they share the bills, and you haven't mentioned anything indicating that they live separately, so it looks very doubtful from here.

the lack of news about the offset situation is very vexing - i'm tired of banging on about this issue -and i'm not aware of anything materialising from the indication mentioned in an earlier thread (sorry i don't have time to search for it) that an offset policy was being introduced. what are they waiting for...a nice understandig campaign by the 'Sun'?

i'm pretty damn sure the Revenue knows it can't get away with sticking citizens with £18,000 bills on the basis of a legal nicety, much less as part of the Chancellor's flag-ship anti-poverty strategy - a demand related to incorrect completion of a form, rather than actual receipt of benefit the person shouldn't have had. 'Oh deary me - if she'd have declared her husband, we'd have paid her... the same amount, but she didn't, so there.'

anyway, Dawn Primarolo's anouncement about suspending automatic recoveries might be a sign that light is dawning...

jj

email received from the revenue ... referring to their guidance

'CCM15530 - Undisclosed Partners: Recovery of Overpayment - Notional Entitlement Where A Partner Still Lives With The Claimant'

http://www.hmrc.gov.uk/manuals/ccmmanual/CCM15530.htm

movement at last!

now another question. this guidance refers to offsets when the claim was a single claim, and at some point in the claim there was a partner. is there a reason the offset shouldn't apply in the reverse situation - a joint claim, and the seperation is undeclared?

jj

i've found some more, and the approach does seen to cover both ways...CCM 15500 states "where you establish the partner was always living with the claimant you should terminate the claim as of the date it was made because it was never a valid claim. Although the claim must be terminated in this way we may decide not to recover all of the resulting overpayment."


"Section 28 (1) says where an amount of tax credits has been overpaid the Board (HMRC Commissioners) may decide the excess or any part of it is to be repaid. Where possible we will remit part of the overpayment so that we only recover THE TRUE LOSS to the public purse" (my emphasis)

At last!

This ought to help with the above case. husband's income is going to be below the threshold, so married or single, there is no difference in CTC entitlement, right??? and no loss to public funds.

i am now hopelessly confused about what sec. 28 means and what jurisdiction the tribunal has.

the IR has come late to the realization that recovering thousands of pounds from claimants on technicalities of claim requirements, without a real loss to public funds is insupportable, but i wonder how much the 'overpayment' figures have been inflated in this way, and how much has been 'recovered' from disadvantaged claimants, which was never truly lost from the public purse in the first place? but better late than never...

jj

I relise that it is unfashionable to say so but the original question was how to deal with the appeal. Tribunals have no juristiction when it comes to S. 28 decisions, therefore the issue of whether the Revenue ought to consider its guidance whilst ultimately important to the claimant doesn't help with the appeal.

The options for the appeal therefore are

1. Deal with the facts

2. Deal with the law

3. Withdraw the appeal and throw the client on the mercy of the Revenue and its Guidance.

Since the facts may not be helpful and withdrawing the appeal is an anathema for most Welfare Rights advisers whats left is the law.

My question therefore is does the legal decision stand up to scrutiny? if it doesn't then its for the tribunal to address those issues.

You seem to be concentrating on the facts on this case which is understandable but can you tell me about the decision making process here. Is it up to scratch legally?

My question is is this a review following an examination, i.e. a decison made under S.16 of the Act a decision on entitlement following a S.18 decision or is it a decision made following an enquiry, i.e. a S.19 decision.

I thought I'd update you all as I now have the decision, issued 14.11.05, and it's rather interesting.

Basically the chair, who was incidentally the District Chair, didn't beleive the client regarding the LT and accordingly found her to be part of a unmarried couple BUT he has gone onto allow the appeal on more techinical grounds.

I reproduce the decison below omitting only the parts relating solely to the LT aspect.

The Appeal is allowed. I remit the matter back to HM Revenue and Customs with the following directions.

1. They recalculate, wihin 28 days of today's date Miss X's entitlement to a tax credit in respect of the year 06/04/03 until 05/04/05 on the basis that she was throughout that period living with Mr Y as an umarried couple. This recalculation should thereafter be intimated both to Miss X and Mr Y.

2. I reserve to Miss X the right to reapply to the Tribunal in the event that there is any dispute in relation to the arithmatic of that recalculation within 28 days of the decision being intamated to her, but not in relation to any other matter.

Miss X attended the appeal hearing. HMRC, despite having been directed to ensure that there was a presenting officer in attendance, have failed without any explanation or apology to do so.

(there is a lengthy discource regarding the LT aspects)

Taking all of the above factors into account, am persuaded on a balance of probability that Miss X should be treated as being part of an umarried couple throughout the perios in question.

However, the matter does not end there. HMRC have decided that since the claim should have been made on the basis that the couple were living together, that there is therefore no entitlement to a tax credit. I do not follow the logic of their position in this respect and, of course, there was no representative present to elaborate upon their position in respect of this matter. In the particular circumstances of this appeal, this is most regrettable.

This approacch does not commend itself as being particulary fair. There will be some cases where the issue of cohabitation or non-cohabitation will be a very narrow one and where there could be genuine difficulty on the part of a claimant in identifying the basis upon which a claim should be made.

I have accordingly had regard to the terms of the Tax Credits Act 2002. Section 3 of the Act deals with the making of claims. It envisages that a claim for tax credit "may be made" (reading the matter short) either jointly by members of an unmarried or unmarried couple or by a single person not entitled to make a claim as part of a married or unmarried couple.

Subsection 4 provides circumstances in which entitlement to a claim ceases where certain changes of circumstances occour. The section does not, however, specifically deal with or apparently envisage that a claim could be made on one basis but subsiquently be discovered to be appropriate only on another. I have also had regard to the terms of section 16 of the act. This provides a power which is clearly wide-ranging in it's nature where the board subsiquently have resonable grounds for believing that the rate at which tax credits has been awarded differs from the rate at which, in fact, the person is entitled, to amend or terminate the award. This power, it seems to me, is clearly wide enough to cover precisely the set of circumstances in this case. In other words, I am of the view that the board had the power to amend her award and determine that entitlement only exisits in the basis that the couple should be treated as an unmarried couple for the purposes of the tax credit claim.

I have accordingly remitted the matter back to HMRC to recalculate any entitlement on this basis. I have reserved to Miss X the rights to reapply to the Tribunal in the event that she disputes the arithmatic of that calculation, but not in relation to any other matter.

14.11.05

Interesting. How much you willing to bet that HMRC goes ape and shouts for the comissioner? Incidentally this particular chair gets very uptight when departments produce crap submissions or fail to send presenting officers.

Thats interesting. His thinking being presumably that there was no change in circumstances (cos they've always been a couple)so S3(4) of the TCA doesn't 'bite'. However s.16 means they have to go back and recalculate.

That does raise a slight anomaly where people who claim on the wrong basis from the start are in a better position than those whose circs do chage but they just don't get round to telling HMRC for 6 months or so.

very interesting. tax credits really are wierd, aren't they?

the law seems to use very different language and come from a quite different mindset to social security law. i can help trying to translate meanings into social security counterparts, but suspect that's a drawback. looking at the wording of sect. 16, i can't actually see any reason it couldn't be used on a change of circumstances...??

this isn't what HMCR are doing, but that doesn't prove a thing... but if it can be used, where does that leave sec. 3? with smaller teeth than first appearances...maybe...

it's looking as if sec. 16 may be used more flexibly than many of us thought, and much more flexibly than the HMCR does in practice...
a re-writing the COP through trial and error opportunity!- what fun!! : )

three cheers for your chairman, Rowan, and thanks to you - i was close to suggesting withdrawal and arguing about recovery/ offset, but this is much better.

jj

and a round of applause for loliver - all the time asking the right questions!!!

: )