Upper Tribunal (Administrative Appeals Chamber)

DECISION OF THE UPPER TRIBUNAL

(ADMINISTRATIVE APPEALS CHAMBER)

 

The DECISION of the Upper Tribunal is to allow the appeal by the appellant. The decision of the Stockport North First-tier Tribunal dated 08 June 2012 under file reference SC944/11/01775 involves an error on a point of law and is set aside.

 

The Upper Tribunal is not in a position to re-make the decision under appeal.  It therefore follows that the appellant’s appeal against the HMRC decision dated 30 July 2009 is remitted to be re-heard by a different First-tier Tribunal, subject to the Directions below.

 

There is to be no publication of the confidential further case management directions or of any matter likely to lead members of the public to identify the persons mentioned in those directions.

 

This decision is given under section 12(2)(a) and 12(2)(b)(i) of the Tribunals, Courts and Enforcement Act 2007 and rule 14 of the Tribunal Procedure (Upper Tribunal) Rules 2008.

 

DIRECTIONS

 

The following directions apply to the re-hearing:

 

(1) The re-hearing will be at an oral hearing.

 

(2) The new tribunal should not involve the tribunal judge who sat on the tribunal that considered this appeal at the hearing in Stockport North on 08 June 2012.

 

(3) If either the Appellant (the father) or the Second Respondent (the mother) has any further written evidence to put before the tribunal, this should be sent to the regional tribunal office of Her Majesty’s Courts and Tribunals Service (HMCTS) in Liverpool (“the FTT Office”) within one month of the issue of this decision. 

 

(4) HMRC is directed, within one month of the issue of this decision, to provide the FTT office with a supplementary submission setting out all entries in the HMRC “electronic case book” for tax credits claims, decisions and awards for both parents for the period from 6 April 2007 to 5 April 2010 (“supplementary submission No 1”).

 

(5) HMRC is also directed, within two months of the issue of this decision, to provide the FTT office with a further supplementary submission dealing with the matters referred to in the confidential case management directions for this decision (“supplementary submission No 2”).

 

(6) The new tribunal must consider all the evidence afresh and is not bound in any way by the decision of the previous tribunal. Depending on the findings of fact it makes, the new tribunal may end up reaching the same or a different result to the outcome of the previous tribunal.

 

These Directions may be supplemented by later directions by a Tribunal Judge in the Social Entitlement Chamber of the First-tier Tribunal. 

REASONS FOR DECISION

 

Summary of Upper Tribunal’s decision

1. I allow the Appellant’s appeal. The First-tier Tribunal (FTT)’s decision, concerning the application of the main responsibility test for tax credits where there are competing claims by separated parents, involves an error on a point of law. That tribunal’s decision is set aside. The case needs to be reheard by a new tribunal. It will be for the new First-tier Tribunal to decide what the true facts are.

 

The parties and issues of confidentiality

2. I refer to the parties to this appeal, both for ease of reference and to ensure confidentiality, as the father, HMRC (Her Majesty’s Customs and Revenue) and the mother. Technically they are the Appellant, the First Respondent and the Second Respondent respectively.

 

3. This decision, however, is a public document. It may be published on the Upper Tribunal website by way of guidance for tribunals dealing with similar cases.

 

4. The same does not apply to the confidential further case management directions. These directions, contained in a separate document, set out further directions to HMRC in respect of the re-hearing. The document contains personal information, in particular names and addresses, as well as personal data of another individual known to both parents. The confidential further case management directions should be sent to the father, mother, HMRC and the FTT office. It is not a public document and must not be placed on the Upper Tribunal website.

 

5. I accordingly make an order prohibiting the disclosure or publication of the confidential further case management directions, as that is likely to lead members of the public to identify the individuals concerned. In the light of those individuals’ interest in maintaining their privacy, I consider they should not be identified. This order does not prevent HMRC disclosing the relevant information to the various bodies referred to in the confidential directions. This order is made under rule 14(1) of the Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008/2698).

 

6. The general nature of the confidential directions is summarised in paragraph 27 below in a way that maintains the parties’ anonymity and confidentiality.

 

The issue in this appeal

7. The parents, who are separated, have a son, R. Entitlement to child tax credit (CTC) is governed by who is “responsible” for the child in question (Tax Credits Act 2002, section 8(1)). Where there are competing claims – e.g. by separated parents, as here – then CTC entitlement is determined by comparing their respective responsibilities and deciding who has “main responsibility” (Child Tax Credit Regulations 2002 (SI 2002/2007), regulation 3, rule 2.2(b)).

 

8. The former Social Security Commissioners, and now Upper Tribunal Judges, have given guidance on the interpretation and application of the main responsibility test in a number of cases: see e.g. CTC/1686/2007, KN v HMRC [2009] UKUT 79 (AAC) and CM v HMRC (TC) [2010] UKUT 400 (AAC).

 

9. The particular issue that arise in this appeal is who had main responsibility for R during the 2008/09 tax year. Both parents attended the FTT hearing and gave evidence.

 

10. The father’s case was that his relationship with the mother ended in the summer of 2007. He said that they shared care of R for 3/4 nights each a week from August 2007 until the end of February 2008. R had then lived with him from 29 February 2008 until the end of April 2009, during which period R stayed with his mother only occasionally at weekends. He said that he had, by agreement, taken over R’s full-time care for this 14-month period as R did not get on with the mother’s new partner (a Mr K). The father said that R went back to live mostly full-time with his mother from Mondays to Fridays as from April 2009, when the mother’s relationship with Mr K ended, although R still stayed with him for part of the week after that.

 

11. The mother’s case was that during the whole of the relevant period she and the father had shared care of R. She said that R would stay with her 4 nights one week and then 3 nights the next week, alternating, throughout this period. She denied that R had ever lived effectively full-time with his father. She said that she had been in a relationship with Mr K but had never lived with him, only staying with him occasionally.

 

The First-tier Tribunal’s decision

12. The FTT’s decision summarised the legal test, the steps taken by HMRC and the parents’ evidence (paragraphs [1]-[10]). The FTT correctly observed that, given the stark conflict on the evidence, only one of them could be telling the truth (paragraph 11). The FTT referred in outline to various questions that the judge had asked about aspects of R’s daily care (paragraph 12). The FTT then concluded as follows:

 

“13. Based on the replies from the parties the Tribunal found that the more probably correct account was that given by [the mother] to the effect that the matter of care was effectively equally split between the parties both in terms of residence as well as in respect of the other aspects of care examined by the Tribunal. It was considered as inherently improbable that [the mother] would have accepted that R would have stayed at her former partner’s house for over a year almost exclusively without complaint. What in fact happened according to her account is what one would expect, namely a joint custody arrangement with an equal split of time between the two parents and for that reason too this seemed to the Tribunal to be the more probable situation.

 

14. In the light of the above finding and the fact that a considerable period of time had elapsed since the matters giving rise to this appeal had occurred, the Tribunal was not minded to change the decision appealed. The status quo would be maintained. [The father’s] appeal was not therefore allowed.”

 

13. The FTT accordingly dismissed the father’s appeal and upheld the HMRC decision that he was not entitled to CTC from 6 April 2008 as he did not meet the main responsibility test.

 

The arguments before the Upper Tribunal

14. I gave the father permission to appeal to the Upper Tribunal. In doing so, I made the following preliminary observations.

 

“1. The appellant’s (the father’s) grounds of appeal are arguable; or, at least, there is an arguable point underlying his main ground of appeal (that the tribunal ignored information he had provided about the mother’s claim for child tax credit). 

 

2. The issue in this case was which parent had the ‘main responsibility’ for R during the period in issue (the 2008/09 tax year). The tribunal reviewed the evidence and then reached its conclusions with an explanation in paragraphs [13] and [14] of the statement of reasons (doc 14). It is arguable that paragraph [14] is unsatisfactory as it implies the tribunal took the view that there was a presumption that the HMRC decision should stand, rather than the tribunal itself undertaking the task of deciding the issue(s) under appeal.

 

3. However, there is a potentially wider problem with the statement of reasons. The impression it gives is that both parents made claims for CTC for R in 2008-09 and that at the time the HMRC investigated the position carefully and decided that the mother’s claim should be preferred (see e.g. the account at paragraph [5]). However, that is not what (seems to have actually) happened. The reality is that parallel claims were made and HMRC paid out CTC on both claims, and only discovered the duplication (and mistake) at the end of the tax year in the reconciliation process. The father’s CTC claim was retrospectively disallowed in July 2009 – but the evidence and reasons for that decision are unclear from the file.

 

4. There was then something of a delay and the matter was only looked at again – or so it seems – in August 2011, when the HMRC submission writer reviewed the file. It was his inquiries, 2 years later, that appear to have impressed the tribunal. The tribunal also do not seem to have had all the evidence about the case, given the further papers sent in by the father with this application to the Upper Tribunal. However, it should have been obvious to the tribunal that there was an overpayment behind this ‘main responsibility’ appeal (see the screen print at doc 30).

 

5. It therefore is arguable that the tribunal (i) misunderstood the adjudication history of this case; and (ii) failed to find appropriate facts and/or give reasons for its decision on the main responsibility issue. As to (ii), there was obviously a high level of shared care at various times. It is arguable that the tribunal did not really get to grips with those aspects of the case – e.g. the father’s evidence about the mother’s relationship with another partner in 2008/09 – and resolve the appeal before it. Instead, it arguably took the view that matters should rest where they were, which, if it is what happened, would plainly be unsatisfactory.”

 

15. In a detailed and helpful submission, Mr D. P Eland for HMRC supports the father’s appeal to the Upper Tribunal (but, understandably, expresses no view on the merits of the underlying dispute as to who really had main responsibility for R during 2008/09).

 

16. Mr Eland argues that the FTT’s approach was flawed in law because it avoided addressing head on the central issue in the case, namely the question of main responsibility. Even accepting that the FTT preferred the mother’s evidence that this was, in effect a case of equal shared care during the relevant period, the FTT still had to determine which parent had main responsibility for R, having compared all the material factors. Furthermore, although it had not been highlighted in the HMRC written submission to the FTT, this appeal had added significance because of the consequential overpayment – both parents having already been paid CTC for the year in dispute. On that basis it was plainly unsatisfactory and insufficient to decide the appeal on the basis of “maintaining the status quo”. Mr Eland also suggests that evidence of the contact details held by R’s school during the relevant period should have been obtained.

 

17. Both parents have made extensive written arguments. Understandably, they do not deal with the legal issues raised by the appeal. They both give chapter and verse as to why they say that their account is the correct one. Those are arguments which the new FTT will have to determine.

 

 

 

The Upper Tribunal’s analysis

18. This is a case where both parents made competing CTC claims for 2008/09 at the start of that tax year. HMRC failed to spot this at the time. HMRC only realised this in the summer of 2009 when they undertook a reconciliation process for the 2008/09 awards. It was only at this stage that HMRC began to investigate the true position, writing to and telephoning both parents and comparing their accounts. HMRC’s decision of 30 July 2009 was that the mother had main responsibility for R during the 2008/09 tax year.

 

19. The papers before the FTT which heard the father’s appeal on 8 June 2012 were also incomplete. They dealt solely with the issue of the main responsibility for R during 2008/09. The HMRC submission made no reference to the fact that the father’s appeal had originally been ruled out of time. This had led to an earlier FTT hearing before a different tribunal judge on 5 August 2011. That FTT had ruled that the appeal was in time and that the mother should be joined as a party to the appeal.  Those papers should have been before the FTT on 8 June 2012.

 

20. However, even without those papers, it should have been clear from the evidence in the bundle before the FTT on 8 June 2012 that there was an (unappealable) overpayment decision lurking behind the (appealable) main responsibility decision. The overpayment is question was in the order of £6,000.

 

21. The FTT in this case went wrong in law. It misunderstood the decision-making history on the claim. It did not have all the relevant papers before it. Although the FTT plainly preferred the mother’s account, which it was entitled to do, it did not then actually decide the critical question, namely who did have main responsibility, or give adequate reasons for such a decision. It could not simply leave the issue of main responsibility “lying on the table”, leaving matters as they were. There was no question of “maintaining the status quo”.

 

22. For the reasons explained above, the FTT’s decision involves an error of law.  I must therefore allow the appeal and set aside the decision of the tribunal (Tribunals Courts and Enforcement Act 2007, section 12(2)(a)). The case must be remitted for rehearing by a new First-tier Tribunal subject to the directions listed above (section 12(2)(b)(i)).

 

The First-tier Tribunal re-hearing

23. Both parents have made further factual allegations in their written arguments sent to the Upper Tribunal. Those factual disputes will have to be decided by the First-tier Tribunal which re-hears this case.

 

24. The father in particular has requested the Tribunal to pursue several lines of enquiry and to follow up various matters with official agencies, which he says will be able to provide further information supporting his account. The mother has made at least one similar suggestion. The father asks to be advised if the tribunal does not do so, so that he can employ a solicitor to take the necessary steps.

 

25. It is not the role of the Upper Tribunal to conduct the sort of inquiries which the father proposes. The Upper Tribunal’s primary function is to deal with appeals on points of law.

 

26. It is the job of the FTT to decide the facts. The FTT is also an inquisitorial tribunal. However, there are limits to the inquisitorial approach. The parties have the principal responsibility for providing the necessary evidence. The FTT may direct that evidence be produced, but it does not have the resources to undertake full-scale inquiries.

 

27. The appropriate way for the further matters raised by both parents to be investigated is for HMRC to make the necessary inquiries and to prepare a supplementary written submission for the re-hearing before the FTT. I therefore make further confidential case management directions for the re-hearing of this case. These further directions relate to matters such as (i) any police reports of being called out to domestic incidents; (ii) parental contact details held by R’s school; (iii) the mother’s sickness record for 2006/07 held by her employer; and (iv) DVLA records as to the mothers’ address. These issues all go to the respective credibility of each parent’s account.

 

28. HMRC has two months in which to prepare this supplementary submission given the need to liaise with external agencies.

 

29. HMRC should also provide the FTT with another supplementary submission, but this time within one month, dealing with the information it holds on its own “electronic case book” for tax credits claims, decisions and awards for both parents for the period from 6 April 2007 to 5 April 2010. The original HMRC written submission to the FTT stated that “there was no record of correspondence relating to the original decision to award CTC” to the mother. Even if the hard copy correspondence is not available, presumably the HMRC electronic case book should provide some data. All this information should be before the new FTT (see rule 24(4) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 (SI 2008/2685)).

 

Conclusion

30. The father’s appeal is allowed. The FTT’s decision is set aside as of no effect. There will need to be a re-hearing. HMRC should make inquiries and prepare the supplementary submissions referred to above and in the confidential further case management directions for the benefit of the parties and the new FTT. The new FTT should find the necessary facts, apply the main responsibility test and decide who had such responsibility for R during 2008/09.

 

 

 

 

 

 

 

Signed on the original Nicholas Wikeley

on 26 June 2013 Judge of the Upper Tribunal