Upper Tribunal (Administrative Appeals Chamber)

Secretary of State for Work and Pensions v Stockdale [2009] UKUT 156 (AAC) (06 August 2009)
Income support and state pension credit
other: income support

THE UPPER TRIBUNAL Case No: CSIS/55/2009

ADMINISTRATIVE APPEALS CHAMBER

Appellant: Secretary of State

1st Respondent: James Stockdale

2nd Respondent: Her Majesty's Revenue and Customs

Heard at: Edinburgh

Date of Hearing: 29 July 2009

DECISION OF THE UPPER TRIBUNAL

A J GAMBLE

JUDGE OF THE UPPER TRIBUNAL

Oral Hearing

ON APPEAL FROM:

Tribunal: First-tier Tribunal (Social Entitlement Chamber)

Tribunal Case No: 897/08/00933

Tribunal Venue: Glasgow

Hearing Date: 31 October 2008

THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

DECISION OF THE UPPER TRIBUNAL JUDGE

Before: A J Gamble

Attendances:

For the Appellant: (Secretary of State); Mr I Artis, Advocate, instructed by Miss K Mulligan, Solicitor, of the Office of the Solicitor to the Advocate General.

For the Respondent: (Claimant): The respondent was neither present nor represented.

For the second Respondent (HMRC) Mr I Mowat, Solicitor, accompanied by Mr D Eland of HMRC (Preston)

The Secretary of State's appeal is allowed.

The decision of the First-tier Tribunal given at Glasgow on 31 October 2008 is set aside.

The case is referred to the First Tier Tribunal (Social Entitlement Chamber) for rehearing before a differently constituted tribunal in accordance with the directions set out in paragraph 13 of the Reasons.

The respondent is warned that, whatever the final outcome of these proceedings, HMRC may reconsider the correctness of his awards of working tax credit.

REASONS FOR DECISION

1. This is an appeal by the Secretary of State against a decision of the Glasgow First-tier Tribunal of 31 October 2008 which held that the claimant was not engaged in remunerative work between 20 June 2008 - 23 July 2008 and thus was entitled to income support in that period. The appeal is brought with the permission of a District Tribunal judge.
2. Because of the issues arising in this case, I directed that Her Majesty's Revenue and Customs (HMRC) be added as a second respondent. I also directed an oral hearing. That hearing took place before me on 29 July 2009. The representation of the Secretary of State and HMRC was as set out above. The claimant had intimated in advance that he was not going to attend the hearing. He did not do so. The claimant's representatives, the Glasgow East End Community Law Centre intimated by a letter dated 5 June 2009 that they were no longer acting as such and were not going to attend the hearing. A telephone conversation between a member of the Upper Tribunal staff and Mr Danny Mackenzie of the above organization indicated that Mr Mackenzie considered that he was still representing the claimant. Be that as it may, Mr Mackenzie signed and lodged a form intimating his non-attendance at the hearing. He did not appear. In these circumstances, I proceeded in the absence of the claimant and his representative under Rule 38 of the Upper Tribunal Rules 2008. Both the claimant and his representative had been notified of the hearing and each had stated that they were not intending to attend. Further, I considered that it was in the interest of justice to proceed. I am grateful to Mr Artis and Mr Mowat for their helpful contributions to the hearing.
3. The claimant is a forty seven year old single man. On 26 June 2008 he claimed income support for himself alone. He had made intitial contact with the Department for Work and Pensions on 20 June 2008. His claim has rightly been treated as having been made then. In his claim form, the claimant indicated that he was engaged in self-employment as a music producer for sixty five hours per week and that this business had commenced on 1 April 2006. He also stated that he had made no profit from his business and described his activities in self-employment as being "in process of set up and market research". See documents 12-14.
4. In response to the above claim, a decision maker, acting on behalf of the Secretary of State, held, on 23 July 2008, that the claimant was not entitled to income support because he was "engaged in remunerative work" under Section 124(1)(c) of the Social Security Contributions and Benefits Act 1992, as elaborated by Regulation 5(1) of the Income Support (General) Regulations 1987. The decision maker took the view that the claimant was so engaged in excess of sixteen hours per week and that his work was work for which payment was made or which was done in expectation of payment. His decision was confirmed on reconsideration. The claimant appealed.
5. At the date of his claim for income support, the claimant held an award of working tax credit which had commenced on 20 March 2006. In claiming that credit, he had disclosed similar information to HMRC to that disclosed to the Department for Work and Pensions in his claim to income support. For the purpose of entitlement to working tax credit, a claimant has to be "engaged in qualifying remunerative work" under Section 10(1) of the Tax Credits Act 2002. What constitutes "qualifying remunerative work" is elaborated by regulations made under Section 10(2)-(3) of the 2002 Act. The relevant provision is Regulation 4 of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002. Under that Regulation, the claimant's entitlement to working tax credit rested on him fulfilling the second and fourth conditions laid out in it i.e. being over twenty five and undertaking work of not less than thirty hours per week which was done for "payment or in expectation of payment", given that no issues regarding children or disability arose in his case.
6. The key issue is simply this. The claimant presented himself to the tribunal, asserting for the purpose of entitlement to income support that he was not engaged in work done for payment or in expectation of payment while at the same time holding an award of working tax credit which rested on an acceptance by HMRC of an assertion by him of the completely contrary position. In colloquial terms, the claimant seemed to be seeking to have his cake and eat it. To be fair, he did not conceal his working tax credit award in the proceedings. Indeed, in his letter of appeal which commenced them he refers, on at least two occasions, to that entitlement.
7. In their statement of facts and reasons, documents 32A - 32B, the tribunal make no specific reference to the claimant's entitlement to working tax credit. In particular, they do not refer to the fact that such entitlement rested on a decison by HMRC that the claimant was engaged in remunerative work. They ignore the existence of that decision. The submission of the Secretary of State laid out in documents 40-42 and elaborated orally by Mr Artis was that the tribunal's failure to deal with the relevant decision of HMRC was a material error of law. I accept that submission for the reasons laid out in detail in paragraphs 8-9 below.
8. In my view, it is clear that the existence of an HMRC decision to the contrary effect to the claimant's contention was an issue raised by the appeal. A perusal of documents 29-30, the tribunal's Record of Proceedings, indicates that the above matter was explicitly raised at the oral hearing by the presenting officer. Nevertheless the tribunal ignored it. That was a clear and material error of law on their part. The situation here is a fortiori of that in paragraph 26 of R4/01(IS)(T), document 211, where a Tribunal of Commissioners in Northern Ireland put matters thus -

"We conclude that if an issue on the evidence, is explicitly or implicitly before a tribunal, even though not raised by the professional representative, it is the tribunal's duty and responsibility to deal with such an issue."

In this case, the relevant issue was expressly raised by the representative of the Secretary of State at the oral hearing as well as being, in any event, explicitly before the tribunal. Given the view I have expressed at the start of this paragraph, it is not necessary for me to discuss the application to this case of Section 12(8)(a) of the Social Security Act 1998.

9. The tribunal's error in law was to fail to deal with the existence of the decision of HMRC relating to the claimant's entitlement to working tax credit at all. How should they have dealt with it? I agree with the submission of Mr Artis, with which Mr Mowat concurred, that the HMRC decision did not bind the tribunal. As Mr Artis rightly said, a decision on working tax credit and a decision on income support relate to different regimes. They address different entitlements under different regulations and, at least at first instance, fall to be made by different authorities. His submission is, in my view, supported by a dictum of Sir Thomas Bingham, MR, (as he then was) in Smith v Chief Adjudication Officer, R(IS)21/95 at p385-386, documents 163-164 where his Lordship puts matters thus -

"There is undoubtedly a degree of common language between the regulations relating to family credit and those relating to income support and it would certainly be unsatisfactory if those common expressions came to have different meanings within the context of the two forms of payment. Nonetheless it seems to me dangerous to approach the matter as if an applicant must fall within one benefit or the other, since there is no reason why that is so and there are various significant differences between the two benefits. I think, therefore, ...... that it is safer to concentrate one's attention very closely on the language in issue so far as income support is concerned and not to attempt what may be a somewhat uncomfortable reconciliation with other regulations dealing with a different benefit."

In my opinion, that dictum applies to the inter-relationship between working tax credit and income support. For example, a person of the claimant's age and circumstances who was engaged in remunerative work for twenty hours per week would fall outside both working tax credit and income support. Mr Artis rightly submitted that the above dictum begins to give the answer to the question I posed above. It indicates that, although not binding on them, the decision of HMRC should nonetheless have been taken into account by the tribunal. As I pointed out during the oral hearing, a closely analagous situation to the one arising in this case arose in R(H)9/04, an authority not cited by either representative which I drew to their attention. The approach indicated in that decision should have been followed by the tribunal. In R(H)9/04, it was held that a decision by an income support decision maker in the Department for Work and Pensions on whether a couple were living together did not bind a local authority when deciding the same issue regarding the same couple for the purpose of entitlement to housing benefit. The same applied e.g. to a decision taken by a Department of Work and Pensions decision maker on whether someone was "a person from abroad". The local authority were obliged to reach their own conclusion on such issues. However they were entitled to regard a parallel Department for Work and Pensions decision as evidence of the situation found to be established therein. Indeed, if the Department for Work and Pensions' decision was a considered one, they were entitled in the absence of anything to compel a contrary conclusion to regard its existence as satisfactory evidence of the conclusion reached by it. See especially paragraphs 37-41 of the above decision.

10. Very helpfully, Mr Mowat took me in detail through the documentation relating to the claimant's original claim for working tax credit, documents 59-64, especially document 62, along with his annual declarations, documents 65-76, a specimen claim form for working tax credit for the tax year 2005-2006 with accompanying guidance notes, documents 83-150, and finally a specimen renewal pack, again with accompanying guidance notes, documents 218-234. On the basis of the above documentation, he explained the course of the decision making process relating to a claim for working tax credit. During that exposition, Mr Mowat explicitly informed me that the claimant's statements regarding his self-employment would have been "accepted at face value". I then asked him whether or not he was submitting that the HMRC decisions on whether the claimant was engaged in remunerative work could be regarded as considered. In response, he sought a recess to consult with Mr Eland which I granted. When the hearing resumed, Mr Mowatt specifically conceded that the above decisions could not be regarded as considered. I accept and record that important concession.
11. I am satisfied for the reasons given in paragraphs 8-9 above that the tribunal erred in law and that their error was of sufficient materiality for me to set their decision aside. Mr Artis reneged from the written submission made in paragraph 11 of document 41 that I should remake the tribunal's decision and instead submitted that I should remit the case to a freshly constituted tribunal to start again. He argued that further fact finding was necessary and that fairness to the claimant demanded that he should have the opportunity to participate in that fact finding process by giving oral evidence, especially as he was absent from the Upper Tribunal hearing. That absence rendered it impossible for me to take oral evidence from him. In particular, Mr Artis suggested that the claimant should be given the chance to explain the apparently contradictory position which he had taken up in his claims for working tax credit and income support. I found these submissions compelling and I thus remit the case for redetermination by a freshly constituted tribunal. I have given that tribunal directions for the rehearing in paragraph 13 below.
12. Mr Mowat indicated that, in all the circumstances of this case, HMRC wished the claimant to know that they had the right whatever the final outcome of the present proceedings to reconsider the correctness of his awards of working tax credit. He agreed that fairness demanded that the claimant be given explicit notice of this in my decision, especially as he was absent from the hearing. I have given him such a warning in the text of the decision.
13. The new tribunal should proceed as follows. They should determine matters as they stood on the date of the decision maker's decision (23 July 2008). They are required to reach a conclusion of fact on whether the claimant was engaged in remunerative work for the purposes of Regulation 5(1) of the Income Support (General) Regulations 1987. In deciding that matter, they are not bound by the parallel decision by HMRC, although they must take account of it. They should not regard that decision as a considered one, in the light of the explicit concession made on HMRCs behalf recorded in paragraph 10 above. They should thus give it such weight as they consider appropriate along with all of the other evidence. If matters turn, as they very probably will, on whether the claimant's work was being done "in expectation of payment" then they must apply R(IS)1/93 to the facts of the case as they find them to be. In particular, they must only hold that an expectation of payment has been established if that expectation is a realistic one. They must also carefully consider whether as at the date of the claimant's claim for income support he was merely doing work to try and establish or set himself up in business or whether that stage had already passed. In that regard, they should follow the approach indicated in Smith v Chief Adjudication Officer, R(IS)21/95. All of these matters are issues of fact for them to decide on the basis of all of the evidence, recalling that the claimant bears the onus of proof.
14. The Secretary of State's appeal succeeds and the decision of the tribunal is set aside. The merits of the case however remain open and fall to be redecided by the new tribunal applying the directions laid out in paragraph 13 above.

(Signed)

A J GAMBLE

Judge of the Upper Tribunal

Date: 31 July 2009