Upper Tribunal (Administrative Appeals Chamber)

IN THE UPPER TRIBUNAL Appeal No. CTC/4337/2014

ADMINISTRATIVE APPEALS CHAMBER

Before: Upper Tribunal Judge K Markus QC

The decision of the Upper Tribunal is to allow the appeal.  The decision of the First-tier Tribunal made on 31 July 2014 under number SC244/14/00144 was made in error of law.  Under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007 I set that decision aside and remake the decision.

The decision which I make is that the appellant is entitled to an award of working tax credit on his claim dated 23 November 2012. 

REASONS FOR DECISION

1.         This appeal concerns whether the appellant, who was a street entertainer, was in remunerative work for the purposes of his claim for working tax credits.

2.         The Secretary of State supports the appeal and in the light of his position it is unnecessary for me to set out in detail the background to the case or the evidence and arguments.  Neither party has requested an oral hearing and I am satisfied that it is appropriate for me to make the decision on consideration of the papers.

3.         The evidence before the First-tier Tribunal, which was not contested by the Secretary of State, was that the appellant worked in various town centres, playing his guitar and singing, and members of the public would donate money. 

4.         In refusing the appeal the tribunal accepted HMRC’s submissions that work carried out in a hope and desire of receiving payment does not qualify.  The tribunal relied on the EU decision C-16/93 R.J. Tolsma v Inspecteur der Omzetbelasting Leeuwraden.

Discussion

5.         It is a condition of entitlement to working tax credit that a person is “engaged in qualifying remunerative work”: section 10 Tax Credits Act 2002.  Regulation 4 of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 provides that a person shall be treated as engaged in qualifying remunerative work if and only if he satisfies the conditions set out there.  One of those conditions is that the work is done for payment or in expectation of payment. 

6.         The tribunal erred in relying on the decision in Tolsma.  That decision was directed to the question whether a street entertainer’s services were supplied for consideration and thereby subject to VAT.  It was not concerned with the question of payment or expectation of payment.  Indeed at paragraph 19 of its judgment the Court said that the question whether payment was expected was irrelevant.

7.         Whether work is done for payment or in the expectation of payment is a question of fact to be determined in a common sense way.  See R (IS) 1/93.  In this case the tribunal failed to make such a determination on the facts, and that also was an error of law.

8.         In the light of the tribunal’s errors I set its decision aside.

9.         The Secretary of State submits that the appellant’s work as a street entertainer was done for payment and that he met the minimum hours requirement of 30 hours per week, and on that basis he was entitled to an award of working tax credit on the claim made on 23 November 2012.  I agree and I have remade the decision accordingly.

Signed on the original Kate Markus QC

on 8 June 2015 Judge of the Upper Tribunal