Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL                                                       Case No.  CTC/947/2013

ADMINISTRATIVE APPEALS CHAMBER

Before Judge Mark

Decision:  The appeal is dismissed on the basis that the Appellant has no right of appeal from a decision in proceedings to which he was not a party.   

REASONS FOR DECISION

1.    This would-be appeal once again highlights the problems which occur when there is a dispute as to which of two separated parents is entitled to child tax credit (CTC) as the person responsible for the child or children in question.  HMRC must decide which parent is responsible and make an award accordingly.  Where the other parent is dissatisfied with the result and appeals to the First-tier Tribunal, the parent with the benefit of the award from HMRC is not a party to the appeal, has no right to be heard as a non-party, no right to adduce evidence or argue the case, and is not bound by the result.  If the appeal is successful, the tribunal can substitute its decision for that of HMRC and award CTC to the appellant, but this then leaves two awards in place, one to each parent. 

2.    It may be that HMRC are then still in the position that they can revisit the initial decision to award tax credit to the other party but this is not always possible, and indeed it is submitted by HMRC on this appeal that they are out of time to do so.  Even if they do seek to remove the initial award, that can then be subject to a further appeal by that parent, on which the parent who was successful on the first appeal will have no right to be heard or adduce evidence, but where the parent who had no rights at the first appeal will be heard and may adduce evidence.  If that appeal succeeds, HMRC is left with two successful parents both of whom have been held to be entitled to a benefit that only one of them can lawfully have.

3.    These problems were identified many years ago by Mr. Commissioner Bano in CTC/2090/2004 and by Mr. Commissioner Williams in CTC/4390/2004, when both lamented the absence, in the tribunal procedural rules at that time, of a method or procedure by which a single composite decision could be made dealing with the conflicting claims.

4.    That procedural problem can now be dealt with by an order under rule 9(2) of the Tribunal Procedure (First-tier Tribunal) (SEC) Rules 2008 (the 2008 Rules) which provides that the Tribunal may give a direction adding a person to the proceedings as a respondent, giving consequential directions under rule 9(3) as it considers appropriate.  The result will be that the dispute can be determined so as to bind both parents, although it would seem that given the limited powers of HMRC to revisit an award under sections 19 and 20 of the Tax Credits Act 2002, if it has not taken appropriate action in time, it will not be every case where there is any point in joining the initially successful parent as a party.

5.    Since the question whether HMRC can revisit its decision in that parent’s favour is something that is in all probability within the knowledge of HMRC rather than the tribunal, and that there will be no point in joining that parent if that decision is not susceptible to revision or supersession, I consider that it should be for HMRC to consider at an early stage in an appeal whether it wishes to apply to have that parent added as a party, explaining the basis on which it would be able to revisit that decision if the appeal by the unsuccessful parent succeeded.

6.    Where there is such an application, the tribunal, if satisfied that the decision awarding benefit can be, or may well be able to be, revisited, should exercise its power to add the other parent as a respondent to the appeal and  should then give appropriate directions so that there can be a single composite decision on the question in dispute. 

7.    That is so even if the initially successful parent does not want to be added as a respondent.  If the other parent considers that he or she should not have been joined it is open to that parent to apply to set aside the order joining him or her, but would have to show good reasons why the order should not have been made.

8.    It is normal practice in judicial proceedings to ensure that so far as possible all parties directly affected by a decision are added as parties to a dispute.  In court proceedings, under the Civil Procedure Rules, persons who need to be added as parties can be added whether they consent or not.  It is then up to them to decide whether to take part but they are then bound by the result in any event.  This is done in many cases, including, for example, where there is a dispute which is a person’s last will and at least representative beneficiaries under all disputed wills may need to be joined or in trust proceedings where again beneficiaries may need to be joined when directions are sought by trustees or there is an attack on the way in which the trustees have dealt with the trust fund.  So too, where a party dies or becomes bankrupt, it is usually necessary to substitute his personal representatives or trustee in bankruptcy as a party in his place, without the need to obtain the consent of the substituted party.  In tribunal proceedings in the First-tier Tribunal Property Chamber, when an application is made or objected to by one of two joint proprietors of a registered title, it is also necessary and standard practice to add the other joint proprietor as a party whether or not they wish to be added.

9.    I see no reason why the same approach should not apply under the 2008 Rules. 

10. In ML v Tonbridge Grammar School [2012] UKUT 283, Judge Rowland observed at paragraph 31

“Rule 9(2) of the 2008 Rules gives the First-tier Tribunal a very broad power to add persons or bodies as respondents to proceedings, although a person or body should not, in my judgment, be added as a respondent without their consent unless the law requires it.” 

11. I do not take that as meaning that there must be some express provision of law that demands that they be added.  There is nothing in the rules to that effect.  It is sufficient that the addition of a respondent is reasonably required to deal with the case fairly and justly, which in this case includes taking into account the position of HMRC and the need for a single composite decision.  The overriding objective to deal with cases fairly and justly must be given effect to by the tribunal when it exercises any power under the 2008 Rules (see rule 2(3)(a)), and this includes when exercising its discretion under rule 9(2).  In many cases, such as that being dealt with by Judge Rowland, where it may be helpful to add another respondent, it may still be possible to deal with a case fairly and justly without doing so, and in those cases I would accept that the consent of the respondent should be obtained before being added.

12. The appellant was not added as a respondent in the present case.  Instead, he was invited to attend the hearing, and did attend, but was only given a set of papers 30 minutes before the hearing was due to begin.  Not having been added as a party, he had no opportunity either to adduce evidence (other than his own oral evidence to the tribunal) or to make submissions, or to be represented.  As he is not a party to the case and there is no other basis on which he can have a right of appeal, I reject his appeal on the basis that he has no right to make it, while emphasising that he is not bound by the decision and would have a separate right of appeal if HMRC did seek to remove his entitlement.

13. I would add that had the appellant been able to make this appeal, it would not have been possible to determine it without first giving notice to the other parent and giving her the right to be heard and make representations.  Surprisingly, no directions for this appear to have been given.

(signed)         Michael Mark

                        Judge of the Upper Tribunal

                        11 June 2014