IN THE UPPER TRIBUNAL Case No. CH/628/2010

ADMINISTRATIVE APPEALS CHAMBER

Before Judge Mark

Decision: The appeal is dismissed unless a further application is made to the Upper Tribunal in respect of the matters raised in paragraph 14 below within 14 days of the issue of this decision.

REASONS FOR DECISION

1.     This is an appeal by the claimant with the leave of a tribunal chairman from a decision of the Bexleyheath Appeal Tribunal given on 12 November 2009 insofar as that decision disallowed the appeal of the claimant from a decision of the respondent council issued on 1 June 2009 that there had been an overpayment of council tax benefit totalling £2561.24 for the period from 18 September 2006 to 1 April 2010 which was recoverable from the claimant by virtue of regulations 83 and 85 of the Council Tax Benefit Regulations 2006. At one point both parties had indicated that they wished to have an oral hearing, but both have since confirmed that they do not require such a hearing. I am satisfied that I can decide the issues of law which arise on this appeal without a hearing.

2.     The overpayment arose because the claimant, as the tribunal found, believed that she had reported to the council the fact that she had commenced employment as an employee in a nursery on 14 September 2006, but in fact failed to do so. The council first took account of the claimant’s employed income when it recalculated her entitlement to council tax benefit on 1 June 2009, having first become aware, as it claimed, of this income on 11 March 2009 in the course of a telephone interview with the claimant. The council claimed repayment for the period until 1 April 2010 on the ground that it had paid the whole of the benefit for the year to 1 April 2010 in advance, although I have seen no evidence of any payment whatsoever and I would expect such benefit to have been given by a periodic reduction in the amount of council tax payable as is indicated by the relevant award dated 7 March 2009.

3.     On this appeal the claimant accepts that, on the basis of the tribunal’s findings of fact, the excess council tax benefit for the period from 18 September 2006 to 14 September 2007 is recoverable but contends that the tribunal erred in law in determining that the subsequent overpayments were not due to official error and that it did not apply the correct test in determining whether the claimant could reasonably be expected to realise that she was being overpaid.

4.     The official error is said to have arisen because on 14 September 2007 the claimant provided to the council a copy of a letter or decision notice from HMRC awarding her tax credits for the year ending 5 April 2008 in which it was specifically stated that the claimant had earnings as an employee of £2,252. A copy of an amended letter or decision notice from HMRC containing that information was provided by the claimant to the council on 3 December 2007. The claimant contended that the failure of the council to act on that information as it should have done was official error. The tribunal found, however, that the omission to act would only be capable of forming the basis of an official error if it could be said that the claimant did not cause or materially contribute to the mistake, act or omission. The tribunal found that the claimant did so contribute by failing to notify the council when she commenced work in September 2006, by failing to provide a copy of her P60 in April 2007 and thereafter by failing to notify the council when she received details of how her council tax benefit had been calculated which did not take into account her employed earnings.

5.     In addition the tribunal found that the claimant could reasonably have been expected to realise that an overpayment of council tax benefit had taken place. She confirmed to the tribunal that when she received notification in March 2007 of her council tax benefit entitlement she had appreciated that her employed earnings had not been taken into account. This would also, the tribunal found, have been the case when she received subsequent notifications of the calculation of her benefit.

6.     Under regulation 83(1) and (2) of the Council Tax Regulations 2006, the admitted excess benefit is recoverable unless it was allowed in consequence of an official error and the claimant could not, at the time the benefit was allowed or on receipt of any notice relating to the allowance of that benefit, reasonably have been expected to realise that it was excess benefit.

7.     On this appeal it is contended on behalf of the claimant that the council’s failure to act on the information it had received from the tax credit decision notice received on 14 September 2007 was an official error, and that there was a further failure to act on receipt of the amended notice on 3 December 2007 which tipped the balance even further in favour of their being an official error. It is also submitted that the tribunal did not give sufficient reasons as to why it considered that the claimant could reasonably be expected to realise that excess benefit had been allowed given the evidence that she did not understand the calculations.

8.     Insofar as the second point is concerned, some reliance is put on a recent decision of Judge Levenson in CH/1903/2009. In that case the income omitted from the council’s calculations was child benefit. As to that the judge set out the position as follows:

“10. In the present case it is not disputed there were overpayments, that they arose in consequence of a mistake or mistakes made by the authority, and that the claimant did not cause or materially contribute the mistake or mistakes. That leaves the question of whether, at the time of receipt of payment or of any notice relating to a payment, the claimant could reasonably have been expected to realise that there was an overpayment.

The Tribunal

11. The tribunal was influenced by the instructions to the claimant in the covering letters to check the details, by the absence from the various sets of calculations of any reference to child benefit, by the claimant’s previous experience of claiming the relevant benefits, and by the fact that the mistake(s) related to the absence of a source of income rather than problems with the arithmetic. The key part of the tribunal’s statement of reasons was in paragraph 8 (page 142 of the file):

“The omission of a source of income is readily apparent. All the more so when comparison is made with the letters which had been sent to [the claimant] in connection with the ending of her previous claim less than 6 months earlier. I therefore do not accept that [she] could not reasonably have been expected to realise that there was an overpayment, since this would be the natural and foreseeable consequence of a failure to take a source of income into account in the calculation of an entitlement to an income-related benefit.”

12. It seems to me that the final part of this is expressed in a slightly obscure way. The real point is the tribunal’s finding that “The omission of a source of income is readily apparent”.

Conclusions

13. The parties have referred to particular decisions by Social Security Commissioners, but each case turns on its own facts and I have not found them helpful. Regulation 100(2) as set out above requires the tribunal to be satisfied that a particular claimant could not have reasonably been expected to realise that there was an overpayment (or an error that would necessarily lead to an overpayment).

14. It seems to me that the tribunal took inadequate account of the fact that the amount of benefit was less than the claimant had been led to expect, the complexity of her financial affairs and the mass of calculations faced by her. It seems to have assumed that because the omission of a source of income was readily apparent to the tribunal, it must have been readily apparent to this particular claimant. I also note that the claimant had made a further disclosure on 31^st October 2007, and that the tribunal ignored this in its decision relating to the period of the overpayment. These matters seem to me to mean that the reasoning was inadequate and that accordingly the decision of the tribunal was made in error of law. For that reason I set aside its decision.”

9.     In my judgment, the crucial distinction between that case and the present one is that in the present case the claimant was well aware that her employed earnings had not been taken into account. It was not simply a case of an assumption as to her knowledge being found by the tribunal, which the judge on appeal considered to be unjustified. In CH/1903/2009, there was no such acceptance by the claimant, and she had been trying to establish that she should have more benefit. Her affairs were described by the judge as complex and the missing child benefit could reasonably have been overlooked by the claimant.

10. Although the claimant in the present case found the calculations and the figures confusing, she read enough to know that a significant part of her income had been overlooked. The requirement that if she discovered any errors in the details shown in the letter she should contact the helpline is set out in capital letters on the first page. So far from there being a reduction in her benefit compared with the previous year, there had been an increase. There is a significant difference between a failure to understand the detailed calculations, which is wholly unsurprising, and a failure to understand that this is an income related benefit and that the amount payable depends on a number of factors, including earnings.

11. The test under section 83 is not whether she should suspect that there may have been an increase in her benefit, but whether she “could not … reasonably have been expected to realise that it was excess benefit.” For this purpose, she had to show that she could not reasonably be expected to realise that she was getting too much benefit. It appears to me that the tribunal was entitled in all the circumstances to conclude that she had failed to show that she could not reasonably have been expected to realise that she was getting too much benefit both for the reasons it gave and because she ought reasonably to have appreciated that she had had an increase in benefit despite a substantial increase in earnings over the previous year.

12. I am satisfied that the tribunal gave good reasons for its decision, but had I considered that the reasons were inadequate, I would have substituted my own decision to the same effect.

13. In the circumstances, it is unnecessary to consider the more difficult question whether the excess benefit was in consequence of an official error. I would add that, although the point does not appear to have been raised on this appeal, I have difficulty in seeing why the decision of 7 March 2009 in respect of the year to 1 April 2010 could not have been revised on the ground of mistake of fact at least as regards the remainder of that year. As it was put by Commissioner Rowland in CH/2995/2006 at paragraph 31:

“31. I understand that, in practice, a local authority making an award of indefinite duration often makes an adjustment to the claimant’s council tax account for the current financial year reflecting an assumption that entitlement to council tax benefit will continue for the remainder of the year. However, such an adjustment cannot itself be regarded as a payment of council tax benefit in advance. It would be inappropriate to make such a payment since there is no certainty that the award will not be revised or superseded. The legislation plainly contemplates that periodical payments of council tax benefit will be made in much the same way as periodical payments of housing benefit and it seems to me that it only works if the initial adjustment is regarded as the paper exercise it plainly is and if the reduction of council tax liability takes effect as a payment of council tax benefit only as each week passes while the award remains in force and has not been suspended. Any more literal approach would make it impossible to suspend payments when an adjustment had already been made to the council tax account.”

14. On this basis, there seems to have been no overpayment of council tax benefit from 1 June 2009 onwards, and I note that council tax benefit was suspended from 30 April 2009. The result would then be that any excess award in respect of a future period would simply not be credited as a result of the revision or supersession, rather than that it would be recoverable. The effect would appear to be the same. If, however, this point gives rise to any practical implications in the present case and either party wishes to raise any matter arising out of it, then they should do so within 14 days of the issue of this decision.

(signed) Michael Mark

Judge of the Upper Tribunal

31 August 2010