UKSC 18
On appeal from:  EWCA Civ 56
Humphreys (FC) (Appellant) v The Commissioners for Her Majesty's Revenue and Customs (Respondent)
JUDGMENT GIVEN ON
16 May 2012
Heard on 14 and 15 March 2012
Richard Drabble QC
(Instructed by Ford Simey LLP)
(Instructed by HMRC Solicitors Office)
LADY HALE (with whom Lord Walker, Lord Clarke, Lord Wilson and Lord Reed agree)
Child Tax Credit
"The Child Tax Credit will create a single, seamless system of support for families with children, payable irrespective of the work status of the adults in the household. This means that the Child Tax Credit will form a stable and secure income bridge as families move off welfare and into work. It will also provide a common framework of assessment, so that all families are part of the same inclusive system and poorer families do not feel stigmatised."
"For the purposes of child tax credit the circumstances in which a person is or is not responsible for a child . . . shall be determined in accordance with the following Rules.
1.1 A person shall be treated as responsible for a child … who is normally living with him (the 'normally living with test').
1.2 This Rule is subject to Rules 2 to 4.
2.1 This Rule applies where –
(a) a child . . . normally lives with two or more persons in –
(i) different households, or
(ii) the same household, where those persons are not limited to members of a couple, or
(iii) a combination of (i) and (ii), and
(b) two or more of those persons make separate claims (that is, not a single joint claim made by a couple) for Child Tax Credit in respect of the child . . .
2.2 The child . . . shall be treated as the responsibility of –
(a) only one of those persons making such claims, and
(b) whichever of them has (comparing between them) the main responsibility for him (the 'main responsibility test'),
subject to Rules 3 and 4.
3.1 The persons mentioned in Rule 2.2 (other than the child . . .) may jointly elect as to which of them satisfies the main responsibility test for the child . . ., and in default of agreement the Board may determine that question on the information available to them at the time of their determination."
"Together [the Act and the regulations] create a system that ensures that the family with main responsibility for a child will be provided with a suitable level of support, depending on their needs. That is similar to many current systems of support for children, and we believe that – currently - it provides the most suitable means to ensure that we can focus support on raising children out of poverty.
Our present aim is to enable one family to claim support for any particular child at any one time. That is the principle on which the Bill, the draft regulations and the business systems being developed are based. There are several sound reasons for that approach. Usually, the person or couple who have the main responsibility for care of a child bear more of the everyday responsibilities for the child, and meet the everyday expenditure for him or her. It is vital, especially for families on lower incomes, that enough support is directed to that family to lift the child from poverty, or to keep him or her out of poverty."
The test for justification?
"The scope of this margin will vary according to the circumstances, the subject-matter and the background. As a general rule, very weighty reasons would have to be put forward before the Court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention. On the other hand, a wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the Court will generally respect the legislature's policy choice unless it is 'manifestly without reasonable foundation.'"
"The fact that there are grounds for criticising, or disagreeing with, these views does not mean that they must be rejected. Equally, the fact that the line may have been drawn imperfectly does not mean that the policy cannot be justified. Of course, there will come a point where the justification for a policy is so weak, or the line has been drawn in such an arbitrary position, that, even with the broad margin of appreciation accorded to the state, the court will conclude that the policy is unjustifiable."
Is the rule justified?
|SINGLE PAYMENT||SPLIT PAYMENT||EXTRA PAYMENT|
|Precedent||• Option generally adopted across benefit system: child benefit, income support child premium, housing and council tax benefit||• Supplementary Benefit rules allowed sharing of child's scale rate
• Tax allowance of Children's Tax Credit, until 2003
|Rationale||• CTC aims to protect children from poverty
Single payment ensures that the main carer has sufficient income to keep children out of poverty
|• Split amount of single payment between parents actively participating in care of child
• Targets financial support at both carers, tailored to time in which they are chiefly responsible for care of a child, and according to individual incomes
|• Would extend CTC to minority carers without reducing support to primary carers|
|Impact on benefits system||• Myriad of other benefits based on single payment even where child actually lives in more than one household||• Immediate impact on WTC, assessed in tandem to CTC and contains elements for lone parents & childcare
• Pressure for reform of other benefits also based on single payment
|• Immediate impact on WTC, assessed in tandem to CTC and contains elements for lone parents and childcare
• Pressure for reform of the benefits also based on single payment
|Public expenditure||• No additional expenditure required
• Maximises amount of current resources going to child
|• No additional expenditure on benefit paid
• But greater expenditure on administrative costs
|• Substantial additional expenditures required on benefit
• Some additional admin costs, as increased number of claims
|Support for shared parenting||• Can be paid to minority carer by agreement, or if more than one child
• Responsive to changes in care arrangements
|• Recognises financial contribution of both carers
• But financial incentive for greater proportion of care may lead to greater conflict over care arrangements
|• Recognises additional costs of caring for children in two households|
|Administration||• Avoids difficult administrative and IT changes||• Administratively complex, requiring extensive redevelopment of IT and business systems
• Decisions on appropriate split problematic (time spent with, money spent by, each carer, their other financial resources etc)
• Care pattern difficult to verify without formal agreement, and can change regularly
• Compliance risk re monitoring shared care arrangements
|• Some implications for IT and business systems but not as complex as splitting
• Additional burden of investigating shared care arrangements
• Offering more generous support for separated couples creates incentive for collusive arrangements
|Other factors||• Children in shared care arrangements treated in same way as children in nuclear family||• Money moved away from primary carers, usually lone parents, risking increase in child poverty
• Adverse implications for level of support if total award based on both parents' income
• Pro rata award to each carer based on household income will lead to lower level of support where minority carer has higher income
• Difficult questions arise on repartnering
|• Government policy announced in Parliament is not to put shared care households in a better position than family which stays together|