UK Social Security and Child Support Commissioners' Decisions

[2008] UKSSCSC CH_3584_2007 (13 June 2008)

 


[2008] UKSSCSC CH_3584_2007 (13 June 2008)

CH/3584/2007

DECISION OF THE DEPUTY SECURITY COMMISSIONER
1. The claimant's appeal against the tribunal's decision of 9^th March 2007 made with leave of a Commissioner, succeeds for the reasons set out below. My decision and directions are set out in paragraph 43.

Background and procedural history

2. The claimant is a married man who lives with his wife and children in a house which he owns. During the relevant period the claimant worked as a self-employed machine mechanic for a single client. The claimant suffers from dyslexia which gives rise to organisational difficulties.
3. The claimant had been awarded council tax benefit ('CTB') by the relevant local authority ('LBH') from 14^th February 2005 on 1^st August 2005.
4. In April/May 2007 LBH began inquiries into the claimant's entitlement to CTB as they suspected that his circumstances may have changed.
5. On 19^th July 2006 payment of CTB was suspended from 24^th July 2006 as LBH had, for various reasons, been unable to arrange to visit the claimant at home and, as a result, had concerns as to whether the claimant was resident at the address to which the CTB award related (see letter of 19^th July 2006 at page 20 of the bundle).
6. On 14^th August 2006 the claimant was visited at home by a representative of LBH. The visiting officer was shown a copy of the claimant's self assessment tax return for tax year 04/05.
7. On 17^th August 2006 the claimant provided certain documents which he described as the 'documents requested by the verification visiting officer' and these included a three page self assessment tax computation for tax year 04/05 which gave a figure of £11,719 as his net profit for tax purposes for that year.
8. On 21^st August 2006 LBH wrote to the claimant (see page 39 of the bundle) giving a list of the information they required in order to 'make sure [he] was receiving the correct amount of benefit'. The list included the claimant's 'profit and loss accounts for 05/06' and certain information about tax credit awards. The claimant was given a calendar month from the date of the letter to reply and the letter asked that the information be provided ' straight away'. He was told that failure to reply would result in termination of CTB.
9. In an undated email (probably sent between 19^th and 21^st September 2006 (see page 44 of the bundle)) a representative of LBH repeated the request for 'profit and loss accounts for 05/06' and added:

'The Self-Employment accounts received were your old Self Employment accounts and will not be acceptable.'

10. The only 'accounts' in the papers before me are a copy of the claimant's three page self-assessment tax return and tax computation for the tax year 04/05 (at pages 36 to 38 of the bundle), the first page of which shows turnover of £13,700 and deductible expenses of £1,981 giving a net profit of £11,719 and the single page 05/06 personal tax computation which was produced to the tribunal (see page 90 of the bundle) and which shows taxable income from self employment of £11,896.
11. On 21^st September 2006 the claimant replied to LBH by email (see page 43 of the bundle):

'I do not as yet have from my accountant the profit and losses for 05/06 but was told that you will send me some equivalent form…Can I be explained what exactly is needed?'

12. The same representative of LBH replied to the claimant's email of 21^st September as follows (again in an undated email (see page 43 of the bundle)):

'As per your telephone conversation with my colleagues …on 20^th September 2006 and further to my email. I believe the misunderstanding has been clarified and you agreed to provide all the documents.'

It is not clear from the papers what the 'misunderstanding' was.

13. On 25^th September 2006 LBH wrote to the claimant terminating his CTB from 24^th July 2006 on the grounds that he had failed to provide the information requested, viz. 'Loss/Profit Accounts 05/06 (sic) and Working and Child Tax Credit 06/07' (see page 46 of the bundle).
14. On 29^th September 2006 the claimant produced a document headed 'Profit and Loss Declaration Self Employed Earnings' (marked as 'Seen 2^nd October 2006' by LBH) in the following terms:

'As nothing has changed in my circumstances since April 05 I can only reasonably expect my trading figures to be the same up to now and in the foreseeable future. I do not have any further accounts since the last that I have given you.'

(see page 49 of the bundle).

This 'declaration' appears to have been attached to an Interventions-ICL return which should have been dated 29^th September 2006 but which the claimant had mistakenly dated 29^th October (see page 48 of the bundle). On that return the claimant had written ' I hope this is all of the information requested contact me if not'. With the return the claimant also provided the outstanding information in relation to tax credits.

15. On 24^th October 2006 LBH wrote to the claimant in the following terms (see page 62 of the bundle):

'Your Council Tax Benefit has been stopped from 24^th July 2006 because there has been a change in your circumstances, the change is you did not supply evidence of your latest award of Tax Credits or up to date accounts from self-employment.'

The letter went on to calculate that an overpayment of CTB of £844 had arisen as a result. The claimant was notified of his right of appeal.

16. It appears that the letter of 24^th October was sent to rectify the fact that the earlier letter of 25^th September had not told the claimant he had a right of appeal against the decision to remove his entitlement to CTB.
17. The claimant appealed to the tribunal against the decision of 24^th October 2006.
18. On 9^th March 2007 the tribunal heard the claimant's appeal. The claimant attended the hearing and he was not represented. LBH were represented at the hearing.
19. The tribunal dismissed the claimant's appeal for the following reason:

'The issue before me was …whether or not the information had been reasonably requested, and whether or not the appellant had provided it. I found that the information had been reasonably requested in accordance with the regulations, and that the appellant did not provide it. Following a number of requests there must come a time when the Housing Authority make a decision based upon the likelihood of the information being forthcoming. That decision was appropriately and correctly made on 25/09/06.'

(see paragraph 30 of Statement of Reasons for Decision at page 108 of the bundle)

20. The claimant makes a late appeal against the decision of 9^th March 2007 with the leave of a Commissioner on the grounds that the tribunal made mistakes of fact, ignored relevant evidence, did not give him a fair hearing and did not take account of his dyslexia when conducting the hearing (see form OSSC 1 dated 20^th September 2007 at page 115 of the bundle).
21. In giving the claimant leave to appeal on 17^th March 2008 the Commissioner raised the following point:

'I remain unclear as to why, if a person is asked to provide a profit and loss account and says that the figures are the same as in the previous year's account, which the authority has seen, the person has failed to provide information or, indeed, evidence. The claimant had provided that information and evidence in his letter dated 29^th September 2006, which was 'seen' on 2^nd October 2006 (doc 49) before the decision under appeal to the tribunal. If that information had been put in the form of a new profit and loss account, it appears the local authority would have been happy. Even if the local authority had not been prepared to accept the figures, terminating the award would presumably have been on different grounds.'

Suspension and termination of CTB - the law

22. Regulation 14 of the Housing Benefit and Council Tax Benefit (Decisions and Appeals) Regulations 2001 (SI 2001/1002) (the '2001 Regulations') provides that CTB entitlement will cease:

(1) in relation to a person whose benefit has been suspended under regulation 11 (in one of the circumstances set out in regulation 11(2)) if that person subsequently 'fails' to comply with an 'information requirement' or

(2) in relation to a person whose benefit has been suspended under regulation 13 for 'failing' to comply with an 'information requirement'.

Cessation under regulation 14 does not apply until the end of the period provided for the furnishing of the information provided for in regulation 13(4) but takes effect from the date of suspension.

23. 'Information requirement' for the purposes of regulation 13 of the 2001 Regulations is defined in paragraph 14(3)(b) Schedule 7 Child Support, Pensions and Social Security Act 2000:

'…a requirement made in pursuance of regulations under section 6(1)(hh) of the [Social Security Administration Act 1992] to furnish information or evidence needed for a determination whether a decision on an award of [CTB] should be revised or superseded'

24. Regulation 72(1) Council Tax Regulations 2006 (SI 2006/215) (the '2006 Regulations) which is made under the power in section 6(1)(hh) Social Security Administration Act 1992 provides that a person to whom CTB has been awarded shall furnish:

'such certificates, documents, information and evidence in connection with … the award … as may reasonably be required by the relevant authority to determine the person's … continuing entitlement to CTB … within four weeks of being required to do so or such longer period as the relevant authority may consider reasonable.'

(Italics supplied)

This is the meaning of 'information requirement' for the purposes of regulations 13 and 14 of the 2001 Regulations.

The issue before the tribunal

25. The issue the tribunal had to consider was whether the claimant's entitlement to CTB had ceased with effect from 24^th July 2006 pursuant to regulation 14 of the 2001 Regulations. In order to come to a conclusion on this the tribunal had to answer the following questions:

(1) Had the claimant's CTB entitlement been suspended under regulation 11 or regulation 13 of the 2001 Regulations?

(2) If the suspension was under regulation 11, had there been a subsequent failure to comply with an 'information requirement?'

(3) If the suspension was under regulation 13, was it for failing to comply with an 'information requirement'?

The oral hearing

26. I held an oral hearing of the claimant's appeal from the tribunal's decision of 9^th March 2007 on 6^th June 2008. The claimant attended with his wife and represented himself. LBH were represented by Mr Nazeer Choudhury of Counsel.
27. An appeal to a Commissioner from a decision of the tribunal only lies if the tribunal has made a mistake of law.
28. The claimant's case before me was, in essence, that he had, within the time limit, provided all the information which LBH had requested which was in his possession. That information was sufficient to allow LBH to determine his entitlement to CTB. The tribunal's decision was not supported by the evidence before it and was therefore wrong.
29. In summary, Mr Choudhury submitted that there was no error of law in the tribunal's decision and therefore no grounds for an appeal. The nub of the reasoning by the tribunal was contained in paragraphs 25 to 30 of the Statement of Reasons for Decision (at pages 107 to 108 of the bundle) and, in Mr Choudhury's submission, the reasons given were adequate and cogent based on the evidence before the tribunal. The tribunal's decision was therefore unassailable.
30. Mr Choudhury's more detailed argument was as follows:

(1) CTB had been suspended on 19^th July 2006 under regulation 11 of the 2001 Regulations (see letter from LBH at page 20 of the bundle). The suspension was effective from 24^th July.

(2) LBH's subsequent request for a copy of the claimant's 'profit and loss accounts for 05/06' contained in the letter of 21^st August 2006 (see page 39 of the bundle) was the relevant 'information requirement' as this document was reasonably required by LBH in order to determine the claimant's continuing entitlement to CTB. .

(3) LBH gave the claimant a period of one calendar month from the date of the letter of 21^st August to provide the document. The claimant did not comply with the information request within the time limit, or at all, despite several further requests and reminders from LBH (for example, in undated emails at page 41 to 44 of the bundle (probably sent on various dates between 19^th and 21^st September 2006)).

(4) As there was a suspension of benefit under regulation 13 and a subsequent failure to comply with an information request, regulation 14 applied with the consequence that entitlement to benefit ceased from the date benefit had been suspended.

(5) The fact that a profit and loss account for 05/06 may not have existed at the time of the information request did not affect matters as the claimant could have provided the information which LBH were, in substance, seeking which was the figures for trading income and expenditure for the tax year ending on 5^th April 2006. The claimant was aware of this (the tribunal had found this as a fact - see third sentence of paragraph 25 of the Statement of Reasons for Decision at page 107 of the bundle).

(6) The 'profit and loss declaration' which the claimant had provided on 29^th September 2006 and which was before the tribunal (see page 49 of the bundle) was not sufficient to satisfy the information request as it did not contain any figures – it merely referred back to the figures for the tax year 04/05.

(7) As accounts of some sort had been provided for 04/05 it was reasonable for LBH to require them for 05/06.

Was the tribunal's decision erroneous in law?

31. It was necessary for the tribunal to identify the 'information requirement' formulated by LBH in order to decide whether the claimant had failed to comply within the appropriate time limit. The tribunal did not do this and for this reason its decision is wrong in law.

The information requirement

32. In my view, the 'information requirement' as framed by LBH was the request in the letter of 21^st August 2006 that the claimant provide two documents - 'Profit and Loss Accounts for 05/06' and the tax credits award letter for 06/07. By 2^nd October 2006 the claimant had provided the tax credit award documents.
33. In order to constitute an 'information requirement' for the purposes of regulation 14 the request must be for documents which are reasonably required by the relevant authority to determine the claimant's continuing entitlement to CTB.
34. For a self-employed earner, CTB entitlement is based on 'average weekly earnings' and regulation 28 of the 2006 Regulations provides that the earnings to be taken into account for this purpose are the claimant's 'net profit'. Net profit is to be calculated by taking into account the earnings over the assessment period less any expenses wholly and exclusively incurred in that period for the purposes of the self-employment. Certain payments specified in paragraphs 1 to 14 of Schedule 3 to the 2006 Regulations are to be disregarded.
35. As the claimant was a self-employed individual with an annual turnover below £15,000 a profit and loss account did not need to be produced by the claimant for any statutory purpose. In order to complete his income tax self-assessment for the year of assessment 05/06 (which was not due to be filed until 31^st January 2007 in any event) the claimant would need only to provide a so-called 'three line account' - total turnover less total expenses equals net profit. The three line account could also support a claim for Working Families Tax Credit.
36. In order to determine the claimant's CTB entitlement LBH needed to know the claimant's 'net profit' for the assessment period. It would therefore have been reasonable to request this information in terms. LBH did not do so. The request it made was for a particular document – the profit and loss account(s) for 05/06. Once it became clear that this document did not exist LBH could have made a further request for the information it required but there is no evidence that it did so.
37. The tribunal at paragraph 25 of the Statement of the Reasons for Decision dealt with this aspect of the matter as follows (at page 107 of the bundle):

'The appellant had been trading for 30 years on his own evidence, and it is hard to understand either why his accounts for the previous year would not be available, or why he was unable to give an estimate of when they would be'.

38. The tribunal continued:

'I note that the 04/05 accounts were sent to the Housing Authority prior to August 2005. Nonetheless it was made clear to him that if the accounts did not have to be prepared by an accountant; he could prepare a schedule of income and expenses upon which the authority could calculate his self-employed income for that year. I can see no reason for him to be unable to supply that information. The letter stating that his circumstances had not changed, and that he expected his trading figures to be the same up to now and in the foreseeable future was not adequate. This was made quite clear to him, and yet he has continued to fail to provide figure upon which a proper calculation can be made.'

39. I can find no evidence in the papers before me on which the tribunal could have based its conclusion that it was 'made quite clear' to the claimant that his declaration of 29^th September 2006 was not adequate. The claimant's evidence to the tribunal in this regard is summarised at paragraph 28 of the Statement of the Reasons for Decision dealt with this aspect of the matter as follows (at page 108 of the bundle):

'He said to me in evidence that he was told to send in a detailed declaration, and he sent in the declaration saying that it should be the same as last year because nothing had changed. (Page 49). He said that he was not told that it was not good enough.'

The tribunal gives no reason why it discounted the claimant's evidence.

40. The profit and loss declaration in effect incorporated the figures provided for 04/05 by reference. LBH might not have found it credible that the figures for 05/06 were unchanged from the year before but the claimant had provided the information nevertheless. It was open to LBH not to accept those figures and to make further inquiries.

Was the information requirement properly notified to the claimant?

41. Regulation 13(3) of the 2001 Regulations requires that the relevant authority notify the claimant of the requirements set out in regulation 13(4). These requirements are that, within the time limit of one month from the date on which notification of suspension of benefit under regulation 13(1) was sent, the claimant must:

(1) furnish the information or evidence (regulation 13(4)(a)); or

(2) satisfy the relevant authority either that the information or evidence does not exist or that it was not possible for him to obtain it (regulation 13(4)(b)).

The notification of 21^st August 2006 from LBH asks the claimant to provide the information 'straight away' and says that payment of benefit will be terminated if the claimant does not reply within a month - this is not an accurate summary of the first limb of regulation 13(4). The notification does not mention the second limb of regulation 13(4). For these reasons the notification does not comply with regulation 13(3). The tribunal did not consider whether LBH had complied with its duty to notify under regulation 13(3) and for this reason its decision is wrong in law.

Did the claimant fail to comply within the period allowed under regulation 13(4)?

42. In order for benefit entitlement to cease pursuant to regulation 14 of the 2001 Regulations there must be a failure to comply with an information requirement. If a document which is the subject of an information requirement does not exist at the time that the information requirement is notified to the claimant an omission to produce it is not a 'failure' for the purposes of regulation 14 of the 2001 Regulations.

Decision and directions

43. For the reasons set out above the appeal tribunal's decision of 7^th March 2007 is erroneous in point of law and I set it aside under paragraph 8 of Schedule 7 to the Child Support, Pensions and Social Security Act 2000. As I can do so without making further findings of fact, I have decided to exercise the power in paragraph 8(4) of Schedule 7 to substitute my own decision for that of the tribunal. My decision is that the claimant's appeal against the against the decision of 24^th October 2006 succeeds. The award of CTB did not fall to be terminated from 24^th July 2006 under regulation 14 of the 2001 Regulations. It remains open to LBH to revise or supersede the award on other grounds, including grounds arising out of the claimant's net profit for the assessment period.

……………………..

A L Humphrey

Deputy Commissioner

13^th June 2008