Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
Upper Tribunal (Administrative Appeals Chamber)
You are here: BAILII >> Databases >> Upper Tribunal (Administrative Appeals Chamber) >> IB v Barnsley Metropolitan Borough Council [2009] UKUT 279 (AAC) (17 December 2009)
URL: http://www.bailii.org/uk/cases/UKUT/AAC/2009/279.html
Cite as: [2009] UKUT 279 (AAC)
[New search] [Printable RTF version] [Help]
IB v Barnsley Metropolitan Borough Council [2009] UKUT 279 (AAC) (17 December 2009)
DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
The DECISION of the Upper Tribunal is to dismiss the appeal by the appellant.
The decision of the Barnsley East First-tier Tribunal dated 4 July 2009 under file reference 138/09/01058 does not involve an error on a point of law.
This decision is given under section 11 of the Tribunals, Courts and Enforcement Act 2007.
REASONS FOR DECISION
The decision in summary
1. The appellant’s appeal to the Upper Tribunal is dismissed. The First-tier Tribunal (and the local authority before it) correctly interpreted and applied the statutory provisions which govern the calculation of the appellant’s entitlement to council tax benefit.
The issue in this appeal
2. The facts in this case are not in dispute. The issue in this appeal is a question of pure statutory interpretation. It relates to the proper application of the so-called ‘taper’ that applies in assessing entitlement to council tax benefit. This is a means-tested benefit; claimants with no income or an income below the “applicable amount” (effectively the ‘poverty line’) in principle receive full council tax benefit. Claimants with incomes above the applicable amount receive a proportion of what would otherwise be their full entitlement, with the amount of their benefit reducing as their income increases until such point as entitlement is removed altogether.
3. The council tax benefit taper is the mechanism by which this means-test is applied. Technically it is the percentage of the excess of any claimant’s income over their applicable amount, which is then deducted from the person’s maximum council tax benefit entitlement to arrive at their actual entitlement. It is thus a means of ensuring that the amount of benefit that a claimant qualifies for reduces or tapers away as that person’s income (and so also the excess or the amount of that person’s income over the ‘poverty line’) increases. The local authority and the tribunal applied a taper of 20 per cent to the appellant’s excess income. The appellant maintains that they should have used the specified “prescribed percentage”, which appears in regulation 59 of the Council Tax Benefit Regulations 2006 (SI 2006/215), namely 2 6/7 per cent.
The appellant’s argument
4. The appellant’s argument is therefore that both the local authority and the First-tier Tribunal have applied the wrong percentage figure in their calculations. So what did the local authority say?
5. The final part of the local authority’s award notice to the appellant read as follows:
“How your council tax benefit is worked out
The income you told us about £304.56
Less the amount the law says you need to live on £94.95
Excess Income £209.61
-----------
Eligible Council Tax £42.91
Less 20% of Excess Income £41.92
Weekly Council Tax Benefit Awarded £0.99”
-----------
6. The appellant’s main argument is that the local authority (and the tribunal) should have applied the statutorily prescribed percentage of 2 6/7 per cent, and not 20 per cent, at the penultimate stage of this calculation as set out in the preceding paragraph. On this basis, the appellant argues, the last three lines of that calculation should read as follows:
“Eligible Council Tax £42.91
Less 2 6/7% of Excess Income £5.97
Weekly Council Tax Benefit Awarded £36.94”
-----------
7. He therefore contends that his true entitlement to council tax benefit is not a mere 99 pence a week but in the order of £36.94 a week. The precise figure varies according to the stage at which rounding is applied, but the disparity is obvious.
The approach of the local authority and the tribunal
8. The local authority’s initial response to the appellant’s argument was to point out that council tax benefit is calculated on the basis of a daily rate of council tax liability, but that “in the benefit notifications sent to applicants the Council Tax Benefit is assessed on the weekly liability and therefore the taper is shown as 20 per cent (2 6/7 x 7)”.
9. In this context it is relevant to note that local authorities are required by law to issue decision notices which include statements as to various weekly amounts, such as the claimant’s weekly earnings or other income and also their “normal weekly amount of council tax benefit, which amount may be rounded to the nearest penny” (paragraphs 9(b) and 10 of Schedule 8 to the 2006 Regulations).
10. Tribunal Judge Macdonald in the First-tier Tribunal accepted the local authority’s arguments. She acknowledged the appellant’s point that the 2006 regulations do not use the figure of 20 per cent, but instead refer to 2 6/7 per cent. However, she agreed with the local authority’s submission that council tax benefit must be calculated on a daily basis under regulation 57 of the 2006 Regulations. She also agreed that as the eligible council tax benefit was expressed as a weekly sum, the figure representing the excess of income over the applicable amount had to be multiplied by seven, so explaining the decision maker’s use of the 20 per cent figure.
11. On this further appeal to the Upper Tribunal the local authority has repeated its understanding of the relevant law. It points out that as regulation 57 defines the maximum council tax benefit on a daily basis it follows that the taper that applies under regulation 59 must also be applied on a daily basis. The council also observes that the 2006 Regulations require a claimant’s income to be assessed on a weekly basis (see regulation 17). Given the council’s obligation to notify benefit entitlement in weekly terms, the daily taper figure has to be converted into a weekly amount, and 2 6/7 per cent multiplied by 7 produces the weekly equivalent taper of 20 per cent.
12. In order to understand how the appellant’s entitlement to council tax benefit is to be calculated, we need to go back to first principles.
The conditions of entitlement to council tax benefit
13. The conditions of entitlement to council tax benefit are set out in section 131 of the Social Security Contributions and Benefits Act 1992 (as substituted by section 103 of, and paragraph 4 of Schedule 9 to, the Local Government Finance Act 1992). The first point to note is that entitlement is determined “in respect of a particular day” (section 131(1)). The “main condition” of entitlement is that the claimant is “for the day” subject to a council tax liability and is not in a prescribed class of person (section 131(3)). The section then sets out two further entitlement criteria.
14. The first condition is that “there is an appropriate maximum council tax benefit in the case of the person concerned” (section 131(4)).
15. The second condition is defined by section 131(5) as follows:
“The second condition for the purposes of subsection (1)(a) above is that—
(a) the day falls within a week in respect of which the person concerned has no income;
(b) the day falls within a week in respect of which his income does not exceed the applicable amount; or
(c) neither paragraph (a) nor paragraph (b) above is fulfilled in his case but amount A exceeds amount B where—
(i) amount A is the appropriate maximum council tax benefit in his case; and
(ii) amount B is a prescribed percentage of the difference between his income in respect of the week in which the day falls and the applicable amount.”
16. In summary, therefore, section 131(5) applies a qualifying means-test for three different categories of claimants. First, those claimants who have no income at all qualify by virtue of section 131(5)(a). Second, those who have a very low income, below the applicable amount or statutorily defined ‘poverty line’, are entitled because of section 131(5)(b). For those claimants in these first two categories, their council tax benefit entitlement is simply “the amount which is the appropriate maximum council tax benefit” in their case (section 131(8)(a)). Third, claimants who have a modest income, above the ‘poverty line’, are covered by section 131(5)(c), but only if “amount A exceeds amount B”. The appellant falls into this third category, in which case entitlement is the difference between those two amounts (section 131(8)(b)). The next question is to identify “amount A” and “amount B”.
The meaning of Amount A in section 131(5)(c)(i)
17. “Amount A” is defined by section 131(5)(c)(i) as “the appropriate maximum council tax benefit in his case” (emphasis added). That expression in turn is defined by regulation 57 of the 2006 Regulations, as amended) as follows:
57. —(1) Subject to paragraphs (2) to (4), the amount of a person's maximum council tax benefit in respect of a day for which he is liable to pay council tax, shall be 100 per cent. of the amount A/B where—
(a) A is the
amount set by the appropriate authority as the council tax for the relevant
financial year in respect of the dwelling in which he is a resident and for
which he is liable, subject to any discount which may be appropriate to that
dwelling under the 1992 Act; and
(b) B is the number of days in that financial year,
18. In the present case nothing turns on the provisions in regulation 57(2) to (4). So, to paraphrase regulation 57(1) in plain English, or at least plainer English, a person’s daily “maximum council tax benefit” is in general terms a sum representing his or her annual council tax liability divided by the number of days in the financial year but less any non-dependant deductions (e.g. for adult children living at home). Amount A is thus clearly expressed as a daily figure.
19. The papers before the tribunal in the present case did not appear to set out the relevant total annual council tax liability, as required by regulation 57(1)(a). However, the award notice stated that the weekly equivalent of that sum was £42.91. The tribunal not unreasonably worked on the assumption that the daily council tax liability could be arrived at by dividing that figure by 7, which gives the daily figure of £6.13 for Amount A. The appellant does not dispute this part of the calculation.
The meaning of Amount B in section 131(5)(c)(ii)
20. The term “Amount B” is defined by section 131(5)(c)(ii) as “a prescribed percentage of the difference between his income in respect of the week in which the day falls and the applicable amount”. This is where the appellant takes issue with the approach adopted by both the local authority and by the tribunal.
21. It is plain that the calculation of Amount B can only be arrived at by assembling four separate pieces of information and then applying the equation required by the terms of section 131(5)(c)(ii). Working backwards, the figures to be identified are (1) the “applicable amount”; (2) “his income in respect of the week in which the day falls”; (3) the difference between figures (1) and (2); and (4) “a prescribed percentage”.
22. The first, the “applicable amount”, for any income-related benefit such as council tax benefit, is the “amount or the aggregate of such amounts as may be prescribed in relation to that benefit” (section 135(1) of the Social Security Contributions and Benefits Act 1992). In layperson’s terms it is often described in official literature as “the amount the Government [or sometimes ‘the law’] says you need to live on each week”. The relevant sums for applicable amounts for the purposes of council tax benefit are set out in regulation 12 of, and Schedule 1 to, the 2006 Regulations. In the present case there is no dispute that in the appellant’s case it was the then couple rate of the personal allowance, namely £94.95 a week. This is obviously a weekly figure.
23. The second figure required by section 131(5)(c)(ii) was the appellant’s “income in respect of the week in which the day falls”. In the present case that amount was agreed to be £304.56, again clearly a weekly figure.
24. The third piece of information required was the difference between the first two figures. Again, there is no argument that arithmetically the difference between those weekly amounts was £209.61.
25. The fourth and final element involved is the “prescribed percentage”, also known as the taper. The Act itself does not define what is the “prescribed percentage” in question. However, regulation 59 of the 2006 Regulations provides as follows (and is expressed in the same terms as its predecessor, regulation 53 of the Council Tax Benefit (General) Regulations 1992 (SI 192/1814)):
“Council tax benefit taper
26. This regulation may not be a model of clarity; nor is the drafting particularly elegant. Indeed the prescribed percentage is actually expressed as a fractional percentage: 26/7% or, rounding to three decimal points, 2.857%. The appellant agrees (and indeed vehemently asserts) that the appropriate percentage is at all times 26/7% and cannot be “inflated” to 20 per cent.
27. Once these pieces of information are to hand, the actual figure representing Amount B as defined by section 131(5)(c)(ii) can then be calculated. In the present case, it is defined in the words of the section as follows:
“amount B is a prescribed percentage of the difference between his income in respect of the week in which the day falls and the applicable amount.”
28. If this were child support legislation, the definition of Amount B would doubtless have been expressed algebraically in the following terms:
“B = PP x (WI - AA)
where –
PP is such percentage as may be prescribed;
WI is the claimant’s income in respect of the week in which the day falls; and
AA is the applicable amount for that claimant as is prescribed.”
29. Expressed arithmetically, Amount B is therefore:
26/7% x (£304.56 - £94.95) = Amount B
26/7% x £209.61 = £5.99
The appellant’s entitlement to council tax benefit
30. The appellant therefore qualifies for council tax benefit as amount A, the appropriate maximum council tax benefit (£6.13) exceeds amount B (£5.99). It should be recalled at this stage that Amount A is a daily amount (see the terms of regulation 57). Amount B is a figure which is arrived at by applying a specific percentage (26/7%) to a weekly figure (see section 131(5)(c)(ii)). However, there is nothing in section 131 which suggests that Amounts A and B must be converted or in some way recalibrated so that they are either both daily figures or are both weekly figures. The figures speak for themselves in accordance with the terms of the legislation.
31. The question then is how the appellant’s entitlement to council tax benefit is calculated. That quantification is governed by section 131(8) of the 1992 Act. This provides (emphasis added) that:
“Subject to subsection (9) below, where a person is entitled to council tax benefit in respect of a day, the amount to which he is entitled shall be—
(a) if subsection (5)(a) or (b) above applies, the amount which is the appropriate maximum council tax benefit in his case;
(b) if subsection (5)(c) above applies, the amount found by deducting amount B from amount A, where “amount A” and “amount B” have the meanings given by that subsection; and
(c) if subsection (6) above applies, the amount which is the alternative maximum council tax benefit in his case.”
32. There is no dispute that the relevant provision for the appellant is section 131(8)(b), as he falls within section 131(5)(c) (those with an income above the ‘poverty line’). As a result his entitlement is calculated simply by “deducting amount B from amount A”. Again, there is no requirement under the Act or the regulations that amounts A and B should both be figures expressed in relation to the same period of time, be that a day or a week. In other words, the appellant’s council tax benefit entitlement is:
£6.13 - £5.99 = £0.14
33. That figure, as the opening words of section 131(8) makes clear, is a daily amount. Multiplied by seven, it produces a weekly entitlement to council tax benefit of 98 pence, or 99 pence with rounding (in practice local authorities are advised to round to at least six decimal places: HB/CTB Guidance Manual, July 2009, paragraph 5.902).
34. In the present case the local authority duly assessed the appellant’s entitlement to council tax benefit as being in the sum of 99 pence a week. Tribunal Judge Macdonald confirmed that decision and dismissed the appeal. In my judgment she was entirely correct to do so. I accept the local authority’s submissions and dismiss the appellant’s appeal.
The Upper Tribunal’s further reasoning
35. The official HB/CTB Guidance Manual, in a passage describing how benefit entitlement is calculated in the context of weekly rates, describes the council tax benefit (CTB) taper thus (at paragraph 5.672):
“When the claimant’s net income is greater than the applicable amount, maximum CTB is reduced by a percentage of the difference. This difference is called a taper and is currently set at 20%. This amount is deducted from maximum CTB.”
36. This is, of course, only guidance. What matters ultimately is what the law states. In this context it is important to realise that the part of the award notice headed “How your council tax benefit is worked out” and cited at paragraph 5 above represents an abbreviated and simplified version of the rather complex legislative process described above. In the interests of clarity, the award letter omits certain stages in the arithmetical process. It quite reasonably seeks to avoid confusing the reader and so does not mention unhelpful statutory concepts such as “Amount A” and “Amount B”. It also puts into effect the legislative injunction to include a statement as to the weekly amounts of income and council tax benefit entitlement. In short, it strives to be user-friendly.
37. The crux of the appellant’s argument is that the percentage figure which is used in the summary explanation on the decision notice should be 2 6/7 per cent, in accordance with regulation 59, and not 20 per cent. However, that is to ignore the fact that the compressed nature of that explanation has omitted certain stages in the arithmetical process. When regulation 59 refers to “the prescribed percentage”, it is not referring to the percentage which happens to appear on this local authority’s summary of the award on the decision notice.
38. Rather, regulation 59 is referring to “the prescribed percentage for the purpose of sub-section (5)(c)(ii) of section 131” of the 1992 Act” (emphasis added). It is in that context that the figure of 2 6/7 per cent applies. Moreover, as explained in paragraphs 20-29 above, that calculation results in a figure representing Amount B, in this case being £5.99. That figure is then deducted from the appropriate maximum council tax benefit (in this case £6.13) to arrive at a daily rate of 14 pence, rounded to 99 pence a week.
39. The appellant may well regard Amount B as a weekly figure, although technically it is an amount arrived at by applying a prescribed percentage, being 26/7%, to a weekly figure. The appellant makes his point thus:
“The weekly figure in ‘amount B’ is correct, which is the weekly excess income multiplied by the 2.85% taper relief, but what is [wholly] and patently incorrect is to then deduct this figure from the daily figure in ‘amount A’ without firstly dividing ‘amount B’ by 7 to give the daily figure.”
40. I agree that Amount A is without doubt on the face of it a daily figure. But I repeat that there is no statutory warrant for multiplying Amount A by seven and then deducting Amount B from it to arrive at a weekly rate. Nor, alternatively, is there any legislative authority for dividing Amount B by seven and then deducting it from Amount A, and then multiplying by seven to arrive at the same result. Nor is there any statutory justification for dividing the weekly excess income figure by seven and then applying the prescribed percentage of 26/7% to arrive at a notional daily excess income figure, as the appellant has also argued.
41. Instead, the legislation provides simply that Amount B should be deducted from Amount A and that simple subtraction process provides the figure for council tax benefit entitlement without further ado. No further conversion into amounts representing particular periods is permissible. There is no periodical equivalence between Amount A and Amount B. They simply represent numbers in an equation.
42. This approach is entirely consistent with the general understanding that the housing benefit taper is 65 per cent and the council tax benefit taper is 20 per cent. Regulation 71 of the Housing Benefit Regulations 2006 (SI 2006/213) expressly provides that the housing benefit taper is 65 per cent, but a person’s maximum housing benefit is expressed in terms of a weekly sum (regulation 70). In contrast, as we have seen, a person’s maximum council tax benefit is defined as a daily figure (regulation 57 of the Council Tax benefit Regulations 2006). Given that the taper is expressed as 2 6/7 per cent, it must be multiplied by seven to arrive at the equivalent weekly percentage.
43. The logical consequences of the appellant’s argument are also enough to demonstrate that the legislation cannot have been intended to work like that. If the appellant is right, a person with a net income of more than three times the applicable amount would still qualify for £36.94 a week in council tax benefit, or 86 per cent of the same amount which an individual on an income of less than a third of the appellant’s would be entitled to. Indeed, applying the approach asserted by the appellant, a higher rate taxpayer in his situation with the same council tax liability and a net excess weekly income of £1,209.61, rather than £209.61, would still qualify for more than £8 a week in council tax benefit. It is difficult to imagine a means-tested benefit being that generous.
The appellant’s request for an oral hearing
44. The Upper Tribunal may make any decision without a hearing, but must have regard to the parties’ views as to whether there should be a hearing (Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698), rule 34).
45. The appellant has requested an oral hearing of this appeal in order that he may “properly debate this matter”. The local authority does not want an oral hearing.
46. I have considered both parties’ representations on the matter. I note that the appellant wishes to engage the services of a forensic accountant to help prove his point, on the condition that he can claim his costs. The Upper Tribunal has only a very limited power to make orders for costs (see rule 10 of the Rules), which would not cover such a facility.
47. I have decided in any event that an oral hearing is not necessary in this appeal. The appellant has set out his arguments with great precision and clarity in his various written submissions. There is nothing that he could realistically add to those representations at a hearing. However, this is not an appeal which turns on arithmetic, pure mathematics or accounting practices. It turns solely on a point of statutory interpretation. The parties’ respective arguments have been fully ventilated in the submissions.
Conclusion
48. Accordingly I refuse the request for an oral hearing and make the decision as set out above, dismissing the appellant’s appeal against the decision of the First-tier Tribunal.
Signed on the original Nicholas Wikeley
on 17 December 2009 Judge of the Upper Tribunal