CTC/0720/2010

 

DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

 

Decision

 

1. This appeal by the claimant succeeds. In accordance with the provisions of section 12(2)(b)(ii) of the Tribunals, Courts and Enforcement Act 2007 I set aside the decision of the First-tier Tribunal sitting in Fox Court (London) and made on 3^rd September 2009 under reference 242/09/05453. I substitute my own decision. This is to the effect that in connection with the relevant claim(s) for child tax credit and for the purposes of regulation 26A(3)(a) of the Tax Credits (Claims and Notifications) Regulations 2002 effective notification of the fact that disability living allowance (“DLA”) had been claimed for her child was given on 14^th February 2007.

 

2. I refer to Her Majesty’s Revenue and Customs (“HMRC”) questions relating to the implementation of this decision together with other changes to the existing awards of tax credits that have been referred to in the papers before me.

 

Hearing

 

3. I held an oral hearing of this appeal on 9^th November 2010. The claimant attended in person but was not represented. HMRC were represented by Mr Gwion Lewis of counsel. I am grateful to them for their assistance.

 

Background and Procedure

 

4. The claimant is a woman who was born on 1^st December 1967. She and her partner have a son who was included in an award of child tax credit made to them in respect of the period 6^th April 2007 to 5^th April 2008. Child tax credit is administered by HMRC. Before the commencement of that period, their son had been diagnosed as suffering from ADHD (and perhaps other conditions – the details are not clear to me and it is not necessary to particularise them for the purposes of this decision).

 

5. On 14^th February 2007 the claimant telephoned an office of the Department for Work and Pensions (“DWP”) and informed the Department that her son had now become and/or had been diagnosed as disabled and that she wished a claim for DLA to be made on his behalf. This was treated (quite properly) as the date of claim for the subsequent written claim. At this stage there was no separate notification to HMRC (or their predecessors). On 1^st May 2007 the Secretary of State refused to make any award on this claim (page 87 of the Upper Tribunal file). On behalf of her son, the claimant appealed to the First-tier Tribunal against this decision of the Secretary of State and on 15^th October 2007 the First-tier Tribunal allowed the appeal and awarded middle rate care component of DLA for two years from 14^th February 2007 (page 25). On 3^rd December 2007 the claimant informed HMRC of that decision by telephone.

 

6. The maximum amount of child tax credit that can be awarded is increased (by the disability element) in respect of a child who is entitled to DLA. It is not necessary for my purposes to go into the calculations, but on 5^th December 2007 HMRC made a decision to increase the amount of child tax credit to which the claimant was entitled, to reflect the addition of the disability element. The increase was in respect of the period from 3^rd September 2007, three months prior to the telephone notification of 3^rd December 2007. The claimant was of the view that the increase should be paid in respect of the period from 14^th February 2007, the date from which DLA had been awarded. HMRC did not agree and the claimant appealed again to the First-tier Tribunal, this time against the decision of HMRC. The tribunal considered this appeal on 3^rd September 2009 but confirmed the decision of HMRC. On 22^nd January 2010 the Regional Tribunal Judge of the First-tier Tribunal refused the claimant’s application for permission to appeal to the Upper Tribunal against the decision of the First-tier Tribunal. She now appeals by my permission, given on 11^th May 2010. On 2^nd August 2010 I directed that there be an oral hearing of the appeal to the Upper Tribunal. HMRC oppose the appeal and support the decision of the First-tier Tribunal.

 

The Relevant Law

 

7. The relevant provisions are to be found in the Tax Credits (Claims and Notifications) Regulations 2002. These were amended with effect from 6^th April 2009 but those amendments cannot be read back into the present case. I set out below the relevant regulations as they were at the relevant time.

 

8. Regulation 20 provided as follows:

 

20(1) Any change of circumstances of a description prescribed by paragraph (2) which may increase the maximum rate a which a person or persons may be entitled to tax credit is to do so only if notification of it has been given in accordance with this Part [of the Regulations].

 

(2) The description of changes of circumstances prescribed by this paragraph are changes of circumstances other than those in consequence of which [HMRC] has given notice of a decision under section 16(1) of the [Tax Credits Act 2002] in accordance with section 23 of the Act.

 

9. It is clear that becoming disabled, receiving a diagnosis, claiming DLA and being awarded DLA, can each be regarded as a change of circumstances and that the award of DLA in this case could increase the maximum rate. It has not been suggested that the situation is covered by any section 16 notice.

 

10. Regulation 22 provided:

 

22(1) This regulation prescribes the manner in which a notification is to be given.

(2) A notification must be given to a relevant authority at an appropriate office.

(3) A notification may be given orally or in writing.

(4) [not relevant to the present case]

 

 

 

 

11. Regulation 25 deals with when notification is treated as having been given:

 

25(1) Where a notification of a change of circumstances which may increase the maximum rate a which a person or persons may be entitled to tax credit is given in the circumstances prescribed by paragraph (2), that notification is to be treated as having been given on the date specified by paragraph (3).

 

(2) The circumstances prescribed by this paragraph are where notification is given to a relevant authority at an appropriate office of a change of circumstances which has occurred …..

 

(3) The date specified by this paragraph is –

            (a) the date falling three months before the notification date; or

            (b) if later, the date of the change of circumstances.

 

Thus, the general rule is that the maximum tax credit may be increased from no earlier the date three months before the date that notification has been given, and that is the rule that HMRC applied in this case.

 

12. However, regulation 26A provides a different rule for child tax credit in certain circumstances:

 

26A(1) In the circumstances prescribed by either paragraph (2) or (3), the notification of a change of circumstances referred to in sub-paragraph (f) of either of those paragraphs is to be treated as having been given on the date specified by paragraph (4).

 

(2) [not relevant in the present case]

 

(3) The circumstances prescribed by this paragraph are where –

(a) a notification was given of a change of circumstances which might result in the person or any of the persons by whom the claim was made becoming entitled to the disability element … of child tax credit (“the original notification”);

(b) on the notification the decision of [HMRC] … was not to amend the award of the tax credit made to him or them;

(c) the reason for that decision was that the person or any of the persons was not entitled to the element …;

(d) at the notification date in relation to the original notification, the person or either of the persons had made, in respect of the child, a claim that had not been determined for [DLA] (“the other claim”);

(e) after that date, the other claim [the claim for DLA] was determined in favour of the person by whom it was made; and

(f) a further notification of the change of circumstances is given by the person or any of the persons, within three months of the date that the other claim [the claim for DLA] was determined.

 

            (4) The date prescribed by this paragraph is –

                        (a) the first date in respect of which the benefit claimed is payable; or

                        (b) …

 

13. “Benefit” in regulation 26A(4)(a) must mean DLA. There appears to be no dispute that the conditions in 26A(3) (a) to (f) have been satisfied. It is clear that what has been referred to as “double notification” under both 26A(3)(a) and 26A(3)(f) is required (and see the decision of the Upper Tribunal in CTC/2878/2008 [2009] UKUT 42 (AAC)). The remaining disputed question is whether the notification required by 26A(3)(a) was given.

 

14. Regulation 22(2) (above) requires notification to be given to a relevant authority at an appropriate office. Regulation 2 defines the underlined phrases as follows:

 

            “appropriate office” means an office of –

(a)    [HMRC],

(b)   The Department for Work and Pensions, or

(c)    The Department for Social Development in Northern Ireland;

 

“relevant authority” means –

(a)    [HMRC];

(b)   The Secretary of State or the Department for Social Development in Northern Ireland; or

(c)    [not relevant in the present case].

 

15. The claimant argues that her telephone call of 14^th February 2007 to an office of the Department for Work and Pensions was adequate notification for the purposes of regulation 26A(3)(a). I observe that regulation 22(3) allows a notification to be given orally. Mr Lewis argues that such notification would be effective only if given to HMRC.

 

Conclusions

 

16. I am persuaded by the claimant’s argument.. The definitions in regulation 2 do not refer to “whichever of the following offices and authorities as is appropriate to the case” or some such wording. Mr Lewis would read this into the definitions but the claimant argues that the literal reading of the provisions does not require this and that if Mr Lewis were correct there would be no place for the reference to the Secretary of State in Tax Credit regulations. I agree. I also note that if the Secretary of State had made the correct decision on DLA in the first place (by which I mean the decision made subsequently on the DLA claim by the First-tier Tribunal) the claimant would not have been in this position and there would have been no argument about the dates of entitlement. It seems unfair for there to be a considerable financial loss arising from the Secretary of State’s failure to make the correct decision

 

17. For the above reasons this appeal by the claimant succeeds.

 

 

H. Levenson

Judge of the Upper Tribunal

10^th November 2010