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RECLAIMING MOTION BY HER MAJESTY'S REVENUE AND CUSTOMSAGAINST MR ALI ADNAN AND MRS SAIMA ADNAN [2022] ScotCS CSIH_2 (18 January 2022)
URL: http://www.bailii.org/scot/cases/ScotCS/2022/2022_CSIH_2.html
Cite as:
[2022] CSIH 2,
[2022] ScotCS CSIH_2,
2022 SLT 97,
2022 GWD 2-32
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FIRST DIVISION, INNER HOUSE, COURT OF SESSION
[2022] CSIH 2
P880/20
Lord President
Lord Woolman
Lord Pentland
OPINION OF THE COURT
delivered by LORD WOOLMAN
in the Reclaiming Motion by
HER MAJESTY'S REVENUE AND CUSTOMS
Respondents and Reclaimers
against
MR ALI ADNAN AND MRS SAIMA ADNAN
Petitioners and Respondents
in the petition for
Judicial review of a decision of Her Majesty's Revenue and Customs in relation to the
petitioners' entitlement to child tax credits
Respondents and Reclaimers: Maciver; Office of the Solicitor to the Advocate General for Scotland
Petitioners and Respondents: M Dailly (sol adv); Drummond Miller LLP
18 January 2022
Introduction
[1]
Welfare benefits have come and gone in different forms over the years. The main
current benefit for those unable to work is universal credit. It was introduced by the
2
Welfare Reform Act 2012. It replaced the working tax credit and child tax credit regime
ushered in by the Tax Credits Act 2002.
[2]
Universal credit did not come into force on a single date. Instead it was
progressively rolled out by postcode area. It did not cover the whole of the United Kingdom
until 1 February 2019. Subject to a few exceptions, tax credits were abolished on the same
date.
[3]
The petitioners are a married couple who applied for asylum in 2013. They did not
attain refugee status until six years later. Their immigration history is as follows:
2013 2018
14 February 2013
application for asylum (subsequently refused and
unsuccessfully appealed to the First-tier Tribunal)
17 August 2015
appeal rights exhausted
20 January 2018
submitted further representations (subsequently
accepted by the Home Secretary as a fresh claim)
2019
4 October
granted refugee status
17 & 18 December
received formal confirmation of new status
23 December
successful claim for universal credit
2020
14 January
made claim for child tax credit backdated to 2013
27 March
HMRC refused to accept the claim
21 May
requested reconsideration of decision
18 September
HMRC confirmed its March decision
Present proceedings
[4]
In these proceedings for judicial review the petitioners contend that HMRC's
decisions refusing to accept their claim for child tax credit and confirming the refusal were
3
unlawful. They invite the court to reduce the two decisions. HMRC adopt the contrary
stance. They submit that the decisions correctly implemented the relevant legislation.
[5]
At an early stage, the parties reached agreement on two procedural issues. First,
HMRC (quite properly) declined to rely on the fact that the petitioners raised these
proceedings well outside the time limit for judicial review. It did so because the parties had
engaged in extensive correspondence about the correct mode of challenge for over a year.
Subsequently, the court extended the three month period. Second, if the petitioners'
arguments prevailed, HMRC would determine whether they would be entitled to receive
child tax credits from either: (a) the date of the original asylum claim - 14 February 2013; or
(b) the date of making fresh representations - 20 January 2018.
[6]
After a substantive hearing, the Lord Ordinary sustained the petitioners' first and
second pleas in law, repelled HMRC's pleas, and granted the orders sought.
Legislative framework
[7]
A thicket of subordinate legislation governs the 2002 and 2012 benefit regimes. The
dispute between the parties centres on four statutory instruments.
The 2002 Regulations
[8]
The Tax Credits (Claims and Notifications) Regulations 2002 specify that a tax credit
claim must be (i) made in writing, (ii) on an approved form, and (iii) contain information
about the applicant's national insurance number: regulation 5. Awards can be backdated by
up to 31 days (originally 3 months) from the date of claim: regulation 7.
The 2003 Regulations
[9]
The Tax Credits (Immigration) Regulations 2003 state that, in the first instance,
4
asylum seekers are not entitled to tax credit: regulation 3 (4). But if the Home Secretary
notifies a person that he has been recorded as a refugee, and that person makes a claim
within one month, he is eligible for tax credit: regulation 3 (5). Further, in terms of
regulation 3 (6):
"He shall be treated as having claimed tax credits - (a) on the date when he
submitted his claim for asylum, and (b) on every 6th April (if any) intervening
between [that] date ... and the date of the claim referred to in paragraph (5)(b), rather
than on the date on which he makes the claim referred to in paragraph (5)(b)."
The 2015 Order
[10]
Article 7 of the Welfare Reform Act 2012 (Commencement No. 23 and Transitional
and Transitory Provisions) Order 2015 Order provides that:
"(1)
... a person may not make a claim for ... a tax credit... on any date where, if
that person made a claim for universal credit on that date..., the provisions of the Act
listed in Schedule 2 to the No 9 Order would come into force under article 3(1) and
(2)(a) to (c) of this Order in relation to that claim for universal credit.
...
(8)
... for the purposes of this article--
(a)
a claim for ... a tax credit is made by a person on the date on which he
or she takes any action which results in a decision on a claim being required
under the [2002] Regulations; and
(b)
it is irrelevant that the effect of any provision of the [2002] Regulations
is that, for the purpose of those Regulations, the claim is made or treated as
made on a date that is earlier than the date on which that action is taken. ..."
The 2019 Order
[11]
The Welfare Reform Act 2012 (Commencement No. 32 and Savings and Transitional
Provisions) Order 2019 abolished tax credits on 1 February 2019: article 2. That was,
however, again subject to certain savings (article 3), which - as HMRC accept - apply to the
petitioners.
5
Are the petitioners entitled to claim backdated child tax credit?
[12]
The 2003 Regulations and the 2015 Order each appears to supply a different answer
to the central issue. Regulation 3 allows the petitioners to claim child tax credit. Article 7
does not.
[13]
HMRC submit that article 7 excludes the claim. They argue that its terms are
unambiguous. Once individuals are entitled to claim universal credit, they cannot claim
backdated child tax credit. The attractive simplicity of that construction runs into three
major difficulties.
[14]
First, it treats regulation 3 as being of no force or effect. The 2015 Order, however,
did not (as HMRC accept) expressly revoke or repeal it. Indeed it did not refer to the 2003
Regulations at all. In sharp contrast it materially amended the 2002 Regulations. As to
implied revocation or repeal, regulation 3 conferred a contingent right on asylum seekers.
Clear language is required to remove such a right: section 16 of the Interpretation Act 1978;
Bennion on Statutory Interpretation 8th ed. section 27.9. That language is absent here.
[15]
Second, since the 2015 Order came into force, regulation 3 has been amended on
three occasions: 10 March 2015, 20 July 2018, and 1 January 2021. HMRC submits that there
remained a small pool of individuals who were entitled to claim tax credits until they were
abolished on 1 February 2019. This only provides an explanation for amendments made
before this date. They fail to explain why amendments were being made after this date to a
redundant regulation.
[16]
Third, it yields an arbitrary result. A refugee's ability to claim backdated child tax
credit would turn on a random event - whether universal credit has been rolled out in a
particular area. In other words, it would truly be a "postcode lottery".
6
[17]
We prefer the alternative interpretation. The words "that date" in article 7(1) refer to
the deemed date of the asylum claim in terms of regulation 3(6). That construction
reconciles the two provisions. Neither takes primacy over the other. Instead they mesh. It
also avoids an absurd result.
[18]
Article 7(8)(a) does not assist HMRC. The petitioners have complied with
regulation 5 of the 2002 Regulations. There is nothing to prevent them from making a claim
under regulation 3(6). Article 7 itself contains a list of other exceptions where claims for tax
credit may be made. A mechanism must exist for such claims.
[19]
HMRC also advance a broader contention. They submit that Parliament could not
have intended to allow refugees to continue to benefit from backdated claims, while
excluding such claims for the majority. No material, whether in the nature of a policy
statement, ministerial statement to Parliament or any travaux préparatoires, was cited in
support of this contention. It is difficult to explain why article 7(8)(b) expressly excluded the
backdating of other tax credit claims under the 2002 Regulations, but only did so implicitly
in relation to regulation 3(6) claims.
[20]
The Lord Ordinary's decision was followed in R (on the application of DK) v HM
comity. He expressed some doubt about the conclusion. He queried why there had been no
express exception for refugees' tax credit claims in the 2015 Order. We understand the basis
for his doubt, but for the reasons given above hold that the result is sound.
7
Conclusion
[21]
We refuse the reclaiming motion. All questions of expenses are reserved.
