Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case Nos.  CTC/3271/2011

ADMINISTRATIVE APPEALS CHAMBER CF/3272/2011

 

1. These are appeals by the Commissioners for Her Majesty’s Revenue and Customs, brought with the permission of a Judge of the First-tier Tribunal, against decisions made by a First-tier Tribunal sitting at East London on 3 March 2011. For the reasons set out below those decisions were in my judgment wrong in law and I set them aside. In exercise of the power in s.12 of the Tribunals, Courts and Enforcement Act 2007 I re-make the First-tier Tribunal’s decisions as follows:

 

The Claimant’s appeal against the decision made on 24 July 2009 in respect of tax credits is dismissed. The Claimant is entitled to tax credits from 5 June 2008, and not from any earlier date.

 

The Claimant’s appeal against the decision made on 5 August 2009, as revised on 22 February 2010, in respect of child benefit is allowed to the extent that the revising decision made on 22 February 2010 is set aside. The decision of 5 August 2009 awarding child benefit from 9 June 2008, and not from any earlier date, was correct.

 

2. The Claimant is a man now aged 49. The issue in these appeals arises in broadly this way. The Claimant, who is of Nigerian origin, obtained leave to remain in the UK from 29 August 2003, conditional on not having recourse to public funds, under the highly skilled migrant programme (HSMP). (The initial grant of conditional leave to remain was for one year, and it was then renewed for 3 years on 11 May 2004, and for a further 3 years in May 2007). He was therefore a person “subject to immigration control”, and not entitled to claim social security benefits. The original terms of the programme were that a person would be able to obtain indefinite leave to remain (ILR) after 4 years’ continuous residence under the programme, but with effect from 3 April 2006 that was increased to 5 years. By virtue of that change the Claimant was therefore not considered to be entitled to ILR until 29 August 2008. He was in fact granted it from 20 or 25 August 2008 (I am unclear which – it does not matter). He then applied for tax credits and child benefit, which were awarded from the dates of claim. However, as a result of decisions of the Administrative Court on 8 April 2008 (Newman J) and 6 April 2009 (Cox J), the Home Office was required to accept that the change from 4 to 5 years should not have been applied to those, like the Claimant, who had been given conditional leave to remain under the programme before 3 April 2006. Accordingly, on 30 June 2009 the Home Office wrote to him notifying him that he was deemed to have been given ILR, and to have been free from immigration restrictions, from 28 August 2007 (after 4 years). The Claimant then applied for backdating of his tax credit and child benefit awards to 28 August 2007. HMRC decision makers considered that there was no power to backdate by more than 3 months before the actual dates of the claims for benefit. However, the First-tier Tribunal, by the decisions now under appeal to me, allowed the Claimant’s appeals and held that the awards should be backdated to 28 August 2007.

 

The First-tier Tribunal’s reasoning

3. The First-tier Tribunal’s reasoning was brief, and I should set out the material paragraphs in full.

 

“3. The Appellant was granted Indefinite Leave to Remain (ILR) in the UK after succeeding in his Judicial Review (JR) proceeding at the High Court on 30 June 2009. The Appellant had applied for ILR for himself and his family challenging an earlier decision by the Home Office refusing ILR. He succeeded in his application for JR and the Home Office confirmed by a letter dated 30 June 2009 ….. which declares that the Appellant “… is deemed as having been given ILR on 28 August 2007. You are therefore considered to have been free from immigration restrictions from the date specified ….”

 

4. The Appellant could not have applied for the benefits in question because the conditions of his right to remain in the UK did not permit him to do so. Furthermore the Respondent’s website informs people not to apply for these benefits as long as there are limitations on the right to remain.

 

5. The point of making an application for JR is that an Appellant who disagrees with a decision by, in this case, the Home Office. In this case the application was successful and the decision by the Home Office was ‘quashed’ by the High Court and another one in favour of the Appellant ‘substituted’. He was found deemed to have been granted ILR from 28/8/2007.

 

6. It is not disputed that there are regulations which enable refugees to have their claims backdated where they are successful in their JR and they are deemed as refugees from the date at which they claimed for refugee status.

 

7. I do not see why the same principle should not apply in these appeals. The Appellant should not, in my view, be penalised for Home Office decisions which are later ‘quashed’ by the High Court. The Respondent seeks to argue that the Appellant was not a refugee but a ‘skilled migrant worker’, but I don’t see the difference. The relevance is the successful JR applications.

 

8. I therefore find that the claims for Child Benefit, Working Tax Credits and Child Tax Credit should be deemed to have been made on the first relevant date after 28 August 2007 for each of the benefits in question.”

 

4. I should state here that the First-tier Tribunal was mistaken when it referred to a judicial review application by the Claimant. The judicial review proceedings were in fact taken by HSMP Forum (UK) Ltd, a body formed to support and assist skilled migrants in the UK. Nothing turns on that, however.

 

The legislation

5. The legislation relating to tax credits and child benefit provides that “a person subject to immigration control” has no entitlement to benefit: see reg. 3(1) of the Tax Credits (Immigration) Regulations 2003; s.115(1) of the Immigration and Asylum Act 1999 (re child benefit). By s.115(9) of the 1999 Act (which applies for the purpose of both the tax credits and child benefit provisions) “a person subject to immigration control” includes a person who has leave to enter or remain in the UK which is subject to a condition that he does not have recourse to public funds.

 

Child benefit

6. It is a condition of entitlement to child benefit that a claim for it is made: s.1 of the Social Security Administration Act 1992. By reg. 6(1) of the Child Benefit and Guardian’s Allowance (Administration) Regulations 2003:

 

“The time within which a claim for child benefit or guardian’s allowance is to be made is 3 months beginning with any day on which, apart from satisfying the conditions for making the claim, the person making the claim is entitled to the benefit or allowance.”

 

7. The effect of those provisions is that a claim for child benefit can be backdated for up to 3 months, but no longer. Regulation 6(2)(d) and (3) of the 2003 Regulations provide for an exception in the case of claims for asylum, in the following terms:

 

“6(2)(d) a person who has claimed asylum and, on or after 6 April 2004, makes a claim for [child benefit or guardian’s allowance] and satisfies the following conditions –

 

(i) the person is notified that he has been recorded as a refugee by the Secretary of State; and

(ii) he claims that benefit or allowance within 3 months of receiving that notification.

 

(3) In a case falling within paragraph (2)(d) the person making the claim shall be treated as having made it on the date when he submitted his claim for asylum.”

 

Tax credits

8. By s.3 of the Tax Credits Act 2002 entitlement to a tax credit for the whole or part of a tax year is dependent on the making of a claim for it. Regulation 7 of the Tax Credits (Claims and Notifications) Regulations 2002 is as follows:

 

“(1) In the circumstances prescribed by paragraph (2), a claim for a tax credit received by a relevant authority at an appropriate office shall be treated as having been made on the date prescribed by paragraph (3).

 

(2) The circumstances prescribed by this paragraph are those where the person or persons by whom the claim is made would (if a claim had been made) have been entitled to the tax credit either –

(a) on the date falling 93 days before the relevant date ……; or

(b) at any later time in the period beginning on the date in subparagraph (a) and ending on the relevant date.

 

(3) The date prescribed by this paragraph is the earliest date falling within the terms of paragraph (2)(a) or (b) when the person or the persons by whom the claim is made would (if a claim had been made) have become entitled to the tax credit.”

 

9. By reg. 4 of the 2002 Regulations “the relevant date” means (in this case) the date on which the claim is received.

 

10. The effect of the somewhat convoluted provision in reg. 7 is that a claim for tax credits is backdated for a period of up to 3 months, to the extent that the claimant would have been entitled to credits during that period had a claim been made. However, reg. 3(4) to (9) of the Tax Credits (Immigration) Regulations 2003 contain a provision requiring additional backdating in the case of a person “recorded by the Secretary of State as a refugee” to the same effect as the exception for refugees in relation to child benefit.

 

The facts

The Tax Credit claim

11. The claim for tax credits by the Claimant and his wife was received by HMRC on 6 September 2008. On 8 December 2008 HMRC notified them that a tax credit award had been made for the period 5 September 2008 to 5 April 2009. On 6 July 2009 the Claimant, having by then received the Home Office letter stating that he was deemed to have had ILR from 28 August 2007, requested that the start date of the tax credit payments be reviewed. He contended that they should have started from 28 August 2007. On 21 July 2009 a decision was made backdating the claim to 5 June 2008 – i.e. 3 months prior to the date of claim. The Claimant appealed against that decision.

 

The Child Benefit claim

12. The Claimant’s claim for child benefit was received on 3 September 2008. Child benefit was awarded from 25 August 2008 – i.e. the Monday following the date on which he was granted ILR.

 

13. By letter dated 2 July 2009 the Claimant requested that the award be backdated to 28 August 2007, the date from which he was deemed to have ILR. On 5 August 2009 a decision was made that the Claimant was entitled to child benefit from 9 June 2008 (i.e. in effect 3 months prior to the date of claim). Benefit was paid in respect of the additional period. The Claimant appealed. On 22 February 2010 the decision of 5 August 2009 was revised so as to award benefit only from 24 August 2008, on the ground that “[the Claimant] is not entitled to child benefit prior to 25 August 2008. This is because before that date he is subject to immigration control and does not satisfy the prescribed conditions.” The effect of that decision was that there had been overpayment of child benefit in respect of the period 9 June 2008 to 24 August 2008 in the sum of £482.90. HMRC accepted that that sum was not recoverable from the Claimant.

 

Analysis and conclusions

14. The Claimant submits that had the Home Office not wrongfully refused, until 20 August 2008, to grant him ILR, and had it granted him ILR on 28 August 2007, as it ought to have done, he would have been in a position to apply for tax credits and child benefit on and from 28 August 2007. He submits that he was unable actually to make a claim until he was granted ILR on 20 August 2008, and in the circumstances his claims should be treated as having been made from 28 August 2007.

 

15. In his submission in reply in these appeals he puts the matter as follows, in relation to the tax credits position.

 

“13. …… it is wrong for [HMRC] to consider my Tax Credit Application under Regulation 7 of the Tax Credits (Claims and Notifications) Regulations 2002. My application, as the First-tier Tribunal Judge has clearly stated falls under Regulation 3 of the Tax Credits (Immigration) Regulations 2003. The concept of “refugee” in this Act is generic and its application cannot be limited to only refugees as is generally known. It is an umbrella name and also applicable to other immigration categories like skilled migrants, entrepeneurs, domestic workers etc. The application of the provisions of the above Act is not because they are refugees, or because government wants to satisfy obligations under 1951 Convention. It is simply in recognition of the long time it takes to process asylum and immigration cases (sometimes up to one or more years), hence it will be unfair and inequitable to deny them their entitlements by not backdating their entitlements to the time they filed for asylum or application or the time they are considered free from immigration time restrictions (whichever is applicable).

 

14. By way of summary therefore the relevant sections of the Tax Credits (Immigration) Regulations 2003 deals with issues of processing of immigration status applications, and is applicable to all other categories of immigrants, including skilled immigrants.

 

15. In order to buttress this point further I wish to bring to the attention of the Upper Tribunal the fact that even backdating claims for WTC for people with Disability element under the Tax Credits (Claims and Notification) Regulations 2002, reg 8, makes it possible to backdate claims to the first date from which the benefit claimed, is payable. The point I am making here is that all these processes are to ensure fairness and equity, because of the complications and long time it takes to process certain applications, including immigration applications, and not to satisfy international convention rights.”

 

16. In HMRC’s application for permission to appeal to the Upper Tribunal it was asserted that “the Claimant could have applied for tax credits and child benefit as soon as he entered the UK as no restrictions applied to him or his family.” As the Claimant points out, that is clearly not correct. The Claimant was clearly “a person subject to immigration control” until ILR was granted on 20 August 2008. It might well have been risky, as matters then stood, to apply for tax credits and/or child benefit on 28 August 2007. As matters then stood the Home Office was taking the view that he did not have and was not entitled to ILR, and by claiming benefit he would arguably have been breaching the condition of his visa. However, it would probably have been possible, on or after 28 August 2007, to make a claim for tax credits and child benefit expressed to be conditional on it being established that the Claimant should be treated as having had ILR as at the date of claim. That ought to have avoided the risk of the Claimant being found to be in breach of the condition of his leave to remain, while at the same time being effective as a claim in the event of his argument about his immigration status succeeding. It is also worth noting that, according to his oral evidence to the First-tier Tribunal, the Claimant did after 4 years’ residence apply for ILR, but was told he could not apply until August 2008.

 

17. Nothing can in my judgment turn on whether any of what I said in the previous paragraph is right or wrong. It is irrelevant whether the Claimant could have made an effective claim in August 2007, and irrelevant whether he could have done anything more than he did to obtain ILR before August 2008.

 

18. The outcome of the appeal is in my judgment governed by the terms of the provisions of the legislation relating to the time for claiming and to backdating, and in particular that there is no provision which on the facts of the present case permits backdating by more than 3 months. The provisions for greater backdating in the case of refugees simply do not apply, and there is no way in which they can somehow be made to apply by way of analogy to the current situation. Neither does the provision in reg. 8 of the Tax Credits (Claims and Notifications) Regulations 2002, relating claims for working tax credit including a disability element, apply. I am not aware of any provision or doctrine which would enable a decision maker or tribunal to, as it were, award a greater amount of backdating simply because it would in all the circumstances be just to do so. It might of course be open to HMRC to make ex gratia payments of benefit in the circumstances, but that is not something which I have jurisdiction to consider. There might also be the possibility of a claim by the Claimant against the Home Office for having not granted ILR when it should have done, but again that is not something which I can consider.

 

19. HMRC submits that backdating should have been only to 20 August 2008 (in the case of tax credits) and 25 August 2008 (in the case of child benefit), and not to 5 June 2008 (tax credits) and 9 June 2008 (child benefit). HMRC contends that, although ILR is deemed to have been granted from 25 August 2007, in determining, for the purpose of a tax credit backdating claim, whether during the 3 month maximum permissible backdating period the claimant “would (if a claim had been made) have been entitled to the tax credit” (reg. 7(3) of the Tax Credits (Claims and Notification) Regulations 2002), it is necessary to look at the position as it actually was during that period, and the position during that period was that ILR had not been granted. In relation to child benefit HMRC similarly contends that, in determining whether a day during that 3 month period is a “day on which, apart from satisfying the conditions for making the claim, the person making the claim is entitled to the benefit or allowance” (reg. 6(1) of the Child Benefit and Guardian’s Allowance (Administration) Regulations 2003), it is necessary to look at the position as it actually was during that period.

 

20. HMRC therefore submits that the decision in respect of tax credits made on 21 July 2009, whereby benefit was backdated to 5 June 2008, was too generous to the Claimant. This will be of no practical consequence, in that tax credits for the additional period between 5 June 2008 and 19 August 2008 have been paid to the Claimant, and HMRC accepts that the (as they contend) overpayment cannot be recovered. HMRC similarly submits that it was correct to revise the awarding decision on 22 February 2010 so as to remove entitlement to child benefit in respect of the period from 9 June 2008 to 24 August 2008. This is again academic in the present case, in that the additional benefit was paid and HMRC accepts that it cannot be recovered.

 

21. HMRC relies in support of these contentions on the decision of Mr Commissioner Jacobs in CIS/2635/2008. However, that turned on the Commissioner’s conclusion that, as a matter of immigration law, the grant of ILR did not operate retrospectively to the date of the claim for it. The present case is different because the Claimant was expressly granted ILR retrospectively from 25 August 2007. In my view the days from 25 August 2007 were therefore days in respect of which the Claimant was (apart from satisfying the condition of having claimed) entitled to tax credit and child benefit respectively, for the purpose of reg. 7(3) of the 2002 Regulations and reg. 6(1) of the 2003 Regulations. In my judgment HMRC was therefore wrong to revise the child benefit awarding decision in the manner in which it did on 22 February 2010. That is reflected in the terms of my decision set out in paragraph 1 above.

 

 

 

 

 

 

 

Charles Turnbull

Judge of the Upper Tribunal

20 April 2012