Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CI/1581/2010

ADMINISTRATIVE APPEALS CHAMBER

Before: Upper Tribunal Judge Rowland

Decision:  I allow the claimant’s appeal.  I set aside the decision of the First-tier Tribunal (Social Entitlement Chamber), dated 8 March 2010, and I remit the case to the First-tier Tribunal, which must be differently constituted.  I direct the Secretary of State to decide whether to revise the decision under appeal to the First-tier Tribunal in the light of my decision and, within one month of the date my decision is sent to his representative, either to send the claimant notice of a revision in the claimant’s favour or to make a written submission to the First-tier Tribunal explaining why the decision has not been so revised.  This time limit may be varied by a judge of the First-tier Tribunal.

REASONS FOR DECISION

1. On 9 March 2009, the claimant claimed reduced earnings allowance.  On 11 June 2009, the Secretary of State disallowed the claim on the ground that the claimant was not incapable of following an occupation of an equivalent standard to his former regular occupation as an underground mineworker.  This was on the basis that his current earnings as a general operative for a construction company were £879.96 p.w., compared with £821.96 p.w. which would be the earnings of the relevant grade of mineworker.  The claimant appealed on a number of grounds but the one material to this appeal was that his current earnings were in fact lower than £879.96 p.w. because that sum included a tax-free payment in respect of expenses of £29 per day for working away from home.  On 8 March 2010, the First-tier Tribunal dismissed his appeal, stating in respect of the expenses that they did not accept the claimant’s evidence as the payment had not been referred to by his employer and his P60 for 2008-09 showed taxable earnings of £855.35 pw, which it regarded as comparable to £879.96 pw.

2. The claimant now appeals, with my permission given after a hearing in Doncaster, and the Secretary of State’s support.  The claimant has provided salary slips and a letter from his employer showing that the £879.96 p.w. gross wage included a £175.03 p.w. non-taxable subsistence payment for living in digs near a construction site and away from home.  A payment designed to cover expenses is not remuneration for the purposes of deciding whether one employment is of an equivalent standard to another (R(I) 1/54). 

3. At first sight, the difficulty facing the claimant is that an appeal lies only on a point of law and the First-tier Tribunal did not err in law merely because it did not accept the claimant’s oral evidence, even though the new evidence produced on this appeal appears to show clearly that it erred in fact.  However, the reason for my granting permission to appeal and for the Secretary of State supporting the appeal is that the case had been inadequately investigated before the hearing, one consequence of which is that the claimant had not been put on adequate notice of the issues and the importance of producing documentary evidence in support of his case.  This was partly a consequence of a design flaw in form BI35 sent to the employer, which did not ask the employer to identify any non-taxable element of the earnings, but Mr Kendall for the Secretary of State also points out that the claimant’s ground of appeal to the First-tier Tribunal had referred to his earnings including a “lodge allowance” and submits that that should have been followed up.  The claimant had offered to fax his wage slips.  It is a pity that he did not think to take his wage slips to the hearing but, in the circumstances, I take the view that the First-tier Tribunal should have given the claimant an opportunity to send them to it before rejecting his oral evidence out of hand and that it erred in law in not doing so.

4. Mr Kendall submits that I should remit the case to the First-tier Tribunal because the case still requires further investigation to determine whether the payment in issue fell to be disregarded, as in R(I) 1/54, or taken into account, as in R(I) 24/59.  However, the claimant’s solicitors, Switalskis of Wakefield, submit that I should accept the evidence from the employers and that there is no need to remit the case.

5. In R(I) 1/54 it was clearly held that a payment in respect of expenses was not to be regarded as remuneration.  In R(I) 24/59 a “subsistence allowance” was held to be remuneration only because it was found, on the facts of the case, to be a “perquisite annexed to his wages”, being paid regardless of whether the employee worked away from home or not.  In the present case, not only has the employer said that the payment of £175.03 p.w. was “for living in digs near site away from home” but also the claimant gave evidence to the First-tier Tribunal that he was in fact working away from home up to October 2009 and the payslips show that the payment ceased then (compare doc 77 with doc 50).  It can also be seen that, on the basis that the allowance was just over £29 per day, it was paid in respect of six nights away from home per week at the time material to the claim (as in doc 77) but could be paid for seven nights away from home (as in doc 51).  This is clear evidence that the payments were made only when expense had been incurred.  In any event, the fact that the payments were shown in the wage slips as being non-taxable suggests that the payments were being made in accordance with HMRC guidelines designed to ensure that allowances do not include any element of profit.  For all these reasons, I would not consider it necessary to remit the case to the First-tier Tribunal in order for it to decide only whether the payments represented a reasonable reimbursement of expenses or were a perquisite.  I could decide that issue in favour of the claimant myself.

6. However, there are potentially other issues in the case and it seems to me preferable to remit the case, with the Secretary of State having the opportunity to revise his original decision only if minded to do so, rather than requiring the Secretary of State to make a new decision against which the claimant might have to make a fresh appeal.  If the Secretary of State does revise the decision in the claimant’s favour, the appeal will lapse.  If he does not, the appeal will be heard reasonably quickly.

7. I should record that Mr Kendall informs me that my observations when granting permission to appeal have been referred to the team responsible for designing forms, including form BI35.  This commitment by the Department for Work and Pensions to improving administrative procedures in the light of experience is an important element in the development of administrative justice that is sometimes overlooked and I am pleased to be able to draw attention to it here.

Mark Rowland

15 March 2011