Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Case No.  CTC/1055/2014

ADMINISTRATIVE APPEALS CHAMBER

Before: A. Rowley, Judge of the Upper Tribunal

Decision:  I allow the appeal.  As the decision of the First-tier Tribunal (made on 2 December 2013 at South Shields under reference SC230/13/02032) involved the making of an error in point of law, it is set aside under section 12(2)(a) and (b)(i) of the Tribunals, Courts and Enforcement Act 2007 and the case is remitted to the tribunal for rehearing by a differently constituted panel.  Directions for the re-hearing are set out in the conclusion below.

REASONS FOR DECISION

1.    This is an appeal by the claimant from a decision of the South Shields First-tier Tribunal dated 2 December 2013.  The tribunal upheld the decision issued on 17 February 2012 of Her Majesty’s Revenue & Customs (“HMRC”) to the effect that the claimant was entitled to a nil amount of Working Tax Credit (“WTC”) and a nil amount of Child Tax Credit (“CTC”) for the tax year 2010-2011.

2.    The issues on this appeal are: whether the tribunal should have adjourned the hearing; whether the tribunal gave any or any adequate consideration to a document provided by the claimant; and whether the tribunal was entitled to make the findings it did on the evidence before it.  It is also relevant for me in this case to consider the quality of HMRC’s submission to the First-tier Tribunal (see paragraph 32 below).

3.    I gave permission to appeal to the Upper Tribunal.  HMRC supports the appeal.

The claim for tax credits

4.    Section 3 of the Tax Credits Act 2002 sets out criteria for a claim for a tax credit.  If a claimant is a member of a couple, the claim must be made jointly.  If the claimant is not a member of a couple he or she claims for him or herself.  By section 3(5A) the definition of “couple” includes:

“(a) a man and a woman who are married to each other and are neither-

(i) separated under a court order, nor

(ii) separated in circumstances in which the separation is likely to be permanent,

(b) a man and a woman who are not married to each other but are living together as husband and wife.”

Background

5.    The claimant had received an award of tax credits of some £10,900.64 for the period 18 April 2010 to 5 April 2011, on the basis (amongst others) that she was a single person.

6.    HMRC says that it received information that another adult (“Mr. H”) may have been living at the claimant’s address during the relevant period.  Accordingly, HMRC wrote a letter dated 3 February 2012 to the claimant (p5), informing her that it had that information.  The claimant was asked to telephone a certain number by 17 February 2012. 

7.    It seems that the claimant provided some information, namely:

(i) voting notification dated February 2012;

(ii) council tax bill dated 9 November 2011;

(iii) voting by post advice dated February 2012.

8.    HMRC wrote a letter dated 15 February 2012 to the claimant (p7).  It informed the claimant that HMRC had completed its checks and had considered the information which she had provided.  However, it said that HMRC could not accept the information, as it had “numerous associations between [Mr. H] and your household to cast sufficient doubt over your single claim entitlement.  I will amend your award for the year to 5 April 2011 based on the information we hold.”

9.    The claimant appealed to the tribunal.  The matter went before an “appeal settlement officer” of HMRC who wrote a letter dated 18 October 2012 (p9).  He said that he would consider all the facts of the claimant’s case and look at the evidence supplied by the claimant.  He went on to say that in order for HMRC possibly to change the original decision, he would need to see “factual documentary evidence” for the relevant period.  He provided the following examples: a legal separation order or legal documents from a solicitor showing the commencement of such proceedings; rental/tenancy agreement, utility bills including council tax showing Mr. H residing at an address other than the claimant’s address; Mr. H’s car insurance documents for the period in question; the claimant’s “six months bank statements.”

10. The letter informed the claimant that if the appeal settlement officer was unable to come to a settlement agreement with her, he would send the appeal, including documentation and the evidence HMRC had found during the course of the investigation to an independent tribunal (my emphasis).  The letter continued that the claimant must inform HMRC how she wished to proceed, as her appeal would continue unless she indicated otherwise, and if she did not respond HMRC was required by law to escalate her appeal to the tribunal.  The claimant was told that if she did not agree with the decision and would like to continue her appeal, she should provide reasons and evidence in support, and HMRC would then arrange for the appeal to be considered by the tribunal.  The claimant did not respond to that letter.

11. The matter accordingly went to the First-tier Tribunal.  On the appropriate form the claimant indicated that she did not wish to attend the hearing.  The matter was listed to be heard on 2 December 2013.  The tribunal had before it an undated letter written and signed by the claimant (p3),  in which she said that she had lived at the relevant address with Mr. H, whom she described as her ex partner, for fifteen years.  She made the following points:

(i) She understood that the decision was based on the fact that mail addressed to Mr. H was being delivered to her address.  She said that she could not deny that, but she had asked him repeatedly to change his mailing address, but her requests had been ignored.  He collected his mail via the children.  The claimant said that she could only assume that his not wanting to change his postal address may have been for credit rating reasons, or because he had no fixed abode.

(ii) She had tried to remove Mr. H’s name from the electoral roll approximately three years beforehand, but was informed that this could only be done when the person in question registered from another property.

(iii) Mr. H had not been on council tax records for her address for over two years.

(iv) She had informed the DVLA (on an unspecified date) that Mr. H no longer lived at her address.

12. Significantly, despite what it had said in the letter dated 18 October 2012, highlighted in italics in paragraph 10 above, HMRC did not provide for the tribunal  copies of any documents relating to or substantiating the information which it said that it had and which showed that Mr. H may have been living at the claimant’s address.

13. The tribunal refused the claimant’s appeal, and confirmed the decision of 17 February 2012. 

14. The claimant sought permission to appeal.  On the file between the Decision Notice and the Statement of Reasons are two documents (pp 13, 14).  The first is in identical terms to the claimant’s letter at page 3 of the file, referred to above.  The second is a letter purporting to be from Mr. H, but it is un-signed and un-dated.  Given the position of the documents at pages 13 and 14 in the file, for the purposes of this Decision I will assume that they were not before the tribunal.  Of course, the document at page 3 clearly was on file at the time of the hearing of the appeal.

The appeal to the Upper Tribunal

15. I gave permission to appeal to the Upper Tribunal on a number of grounds.  HMRC supports the appeal.  I will deal with each of the relevant issues in turn.

Should the tribunal have adjourned the hearing?

16. By rule 2(1) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 a tribunal must give effect to the overriding objective when it exercise any power under those Rules.  The overriding objective is to enable the tribunal to deal with cases fairly and justly.  So, the power to hear an appeal on the papers should only be exercised where it is fair and just to do so, taking into account all relevant factors including those in the non-exhaustive list in rule 2(2).

17. Two further rules of the 2008 Rules fall to be considered in this case, namely rule 27(1) and rule 24(4)(b).

18. By rule 27(1) – subject to exceptions which do not apply in this case - a tribunal must hold a hearing before making a decision which disposes of proceedings unless:

“(a) each party has consented to, or has not objected to, the matter being decided without a hearing; and

(b) the Tribunal considers that it is able to decide the matter without a hearing” (my emphasis).

19. Rule 24(4)(b) provides that the decision maker must provide, with the response to the tribunal:

“copies of all documents relevant to the case in the decision maker’s possession, unless a practice direction or direction states otherwise.”

20. The tribunal explained its decision not to adjourn the hearing in this way:

“No-one requested a hearing.  Each party to this appeal is entitled to have the appeal determined promptly and efficiently.  There is sufficient information to enable the tribunal to make a decision.  It is not appropriate to adjourn to obtain additional evidence or to enable the appellant to attend a hearing.  The appellant’s choice not to attend a hearing has been considered and the tribunal considered it proper to proceed without imposing the unwanted formality and level of participation the appellant wishes to avoid.  The overriding objective in Rule 2 has been considered and applied.  The tribunal is satisfied that it is able to decide the appeal on the papers and that it is in the interests of justice to proceed.”

21. It is, accordingly, right to say that the tribunal expressly referred to rule 2 (but not rule 27(1)), considered whether it was appropriate to proceed on the papers, balanced certain factors, and in the exercise of its discretion decided not to adjourn.  The issue is whether the tribunal’s consideration of the question whether or not to adjourn was adequate. The writer of HMRC’s submission to the Upper Tribunal submits that it was not.  He notes that HMRC had singularly failed to provide to the tribunal copies of any documents relating to or substantiating its position that the claimant and Mr. H were in a relationship that was akin to living together as husband and wife during the relevant period, in breach of rule 24(4)(b).  In those circumstances, HMRC’s submission to the Upper Tribunal doubts that the tribunal could possibly have correctly applied rule 27(1)(b) and/or rule 2.

22. I respectfully agree.  HMRC had said that it had “numerous associations” between Mr. H and the claimant’s household to cast sufficient doubt over her entitlement to claim as a single person (p7) but not one shred of evidence was adduced by it in support of that contention.  There was an abject failure on its part to comply with rule 24(4)(b), a significant matter to which the tribunal did not even refer. 

23. Further, HMRC’s submission to the First-tier Tribunal had not identified or explained the relevant statutory provisions, and it had not addressed the claimant’s contentions which had been set out in her letter at p3.  Nor, as the writer of HMRC’s submission to the Upper Tribunal submits, did the enquiries of 3 February 2012 and 18 October 2012 indicate adequately just what evidence would be appropriate.  (He accepts that some examples were provided in the letter dated 18 October 2012 (set out above), but he suggests that it is arguable that they were inappropriate in this case for the following reasons.  He doubts that it was reasonable to ask for a legal separation order when the claimant and Mr. H were never married.  He doubts that it was reasonable to expect the claimant to provide documents such as utility bills showing Mr. H at an address other than hers or his car insurance documents when her case was that she did not live with him.  He also doubts that the provision of six months bank statements would carry any weight on their own on the issue of whether the claimant was living with Mr. H).  In those circumstances, it is perhaps not surprising that the claimant had not adduced further evidence in addition to her letter at page 3.

24. Taking into account my observations above, together with the fact that the claimant was unrepresented and there was a significant amount at stake, in my judgment the only fair and just course of action in this case was for the tribunal to adjourn and give directions for the provision by HMRC of a supplemental submission and copies of all documents relevant to the case which were in its possession.  That would have given to the claimant an opportunity properly to consider HMRC’s contentions, to adduce evidence in response and, if she wished, attend an oral hearing.  The tribunal’s failure to do so amounted to an error of law.

25. Even if, contrary to my view, the tribunal had been entitled to proceed with the hearing on the papers, in my judgment it made further errors of law.  I now turn to those.

Did the tribunal adequately consider the claimant’s case?

26. The claimant made a number of observations in relation to her case in the letter at page 3 (the thrust of which is set out at paragraph 11 above).  The tribunal failed even to refer to this letter, and there is nothing in its Statement of Reasons to indicate that it considered or addressed it.  That, in my judgment, amounts to an error of law.

Was the tribunal entitled to make the finding that it did?

27. There was no primary evidence before the tribunal that Mr. H was living at the claimant’s address at the relevant time.  At best there was reference to that allegation in the letter dated 3 February 2012 (p5), and the reference to the “numerous associations” between Mr. H and the claimant in the letter dated 15 February 2012 (p7).

28.  The writer of HMRC’s submission to the Upper Tribunal submits that all the tribunal’s findings seem to be in the context of the claimant not having provided sufficient evidence to answer HMRC’s enquiry of 3 February 2012 or the claimant not having provided a response to the appeal settlement officer’s enquiry of 18 October 2012 (p9), and the tribunal having drawn adverse inferences in the absence of such evidence.  He submits that there will be many instances where, notwithstanding a claimant’s failure to provide certain evidence, no adverse inference can properly or reasonably be drawn, and that this case is one of them.

29. I agree.  In Kerr v Department for Social Development [2004] UKHL, 23, [2003] 1 WLR 1372 Baroness Hale (with whom the rest of their Lordships agreed) approved the approach of Mr. Commissioner Henty in CIS/5321/1998, when he said in relation to provision of information by a claimant: “A claimant must to the best of his or her ability give such information to the [adjudication officer] as he reasonably can, in default of which a contrary inference can always be drawn.”  So, the decision maker is required to inform a claimant or the information and evidence (s)he should provide, and then it is for the claimant to supply such information or evidence as best (s)he can.  And where a claimant fails to provide information or evidence (s)he can reasonably be expected to provide, an inference, may if appropriate, be taken against him or her.

30.  As I have already said, I agree with the writer of HMRC’s submission to the Upper Tribunal that there was an inadequate indication to the claimant of what evidence would be appropriate in this particular case.  The absence of a clear indication of what the claimant was being asked to provide constitutes a reasonable explanation as to why the claimant did not provide appropriate further information or evidence.  Consequently, she could not have been reasonably expected to provide it.  Accordingly, I find that the tribunal was not entitled, in this case, to draw the adverse inference that it did.  In those circumstances, given the lack of primary evidence that Mr. H was living at the claimant’s address at the relevant time, in my judgment there was insufficient evidence upon which the tribunal could make the finding that it did, and consequently it erred in law. 

Conclusion

31. For the reasons set out above the tribunal erred in law and I set aside its decision.  As further findings of fact are required. I remit the case to be re-heard by a differently constituted tribunal.  The hearing will be an oral hearing unless the claimant informs the First-tier Tribunal otherwise within one month after the date on which HMRC’s supplemental submission (referred to below) is sent to her.

32. I must say that HMRC’s submission to the First-tier Tribunal was not of an acceptable standard.  As noted by the writer of the submission to the Upper Tribunal, it failed to set out the details of the case and the legislation that was applied in making the decision; it did not provide any evidence to support its position; it did not address the claimant’s contentions set out in her letter at page 3; and it did not explain why the officer had drawn the adverse inference against the claimant. I agree with the writer of HMRC’s submission to the Upper Tribunal that one would have expected to have seen full reasons for any such approach to have been documented together with an explanation as to why in all the circumstances it was reasonable to draw the adverse inference.

33. I direct that within one month of the date on which this decision is sent to the parties HMRC provides to the claimant and the First-tier Tribunal a full supplemental submission which complies with rule 24 of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 and which addresses the matters set out at paragraph 32 above. 

34. The new tribunal must undertake a complete reconsideration of the issues that are raised by the appeal and, subject to the tribunal’s discretion under section 12(8)(a) of the Social Security Act 1998, any other issues that merit consideration.  In particular, the new tribunal must consider whether, during all or part of the tax year 2010-2011 the claimant and Mr. H were living together as husband and wife.

35. If the claimant has any further written evidence to put before the tribunal, this should be sent to the tribunal within one month after the date on which HMRC’s supplemental submission is sent to her.  The claimant may find it helpful to get assistance from a law centre, neighbourhood advice centre or Citizens’ Advice Bureau (CAB) in relation to the new tribunal’s re-hearing of the appeal.

1. Rowley, Judge of the Upper Tribunal

(Signed on the original)

Dated 26 August 2014