Upper Tribunal (Administrative Appeals Chamber)

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You are here: BAILII >> Databases >> Upper Tribunal (Administrative Appeals Chamber) >> JW v Revenue and Customs (TC) (Tax credits and family credit - other, Tribunal procedure and practice - tribunal jurisdiction) [2019] UKUT 114 (AAC) (25 March 2019)
URL: http://www.bailii.org/uk/cases/UKUT/AAC/2019/114.html
Cite as: [2019] WLR(D) 310, [2019] WLR 4778, [2019] 1 WLR 4778, [2019] UKUT 114 (AAC)

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JW v Her Majesty's Revenue and Customs (TC) (Tax credits and family credit - other) [2019] UKUT 114 (AAC) (25 March 2019)

The appellant was an author, musician, publisher and promoter of his own creative intellectual property. He had been in receipt of Working Tax Credit (WTC). He claimed WTC for the tax year 2017/2018. The Commissioners for Her Majesty's Revenue and Customs (HMRC) made an initial decision under section 14(1) of the Tax Credits Act 2002 to award him £2770.35 WTC, on the basis that he was working 30 hours a week in self-employment. On 13 November 2017, HMRC made a further decision, this time under section 16(1) of the 2002 Act, that the appellant was not eligible to receive WTC for the tax year 2017/2018. The appellant appealed to the First-tier Tribunal (F-tT). The F-tT refused the appeal against the section 16 decision finding that the appellant did not meet the entitlement condition for WTC of being self-employed, because his business activities were not carried on "on a commercial basis."

The appellant appealed to the Upper Tribunal (UT). The issues before the UT were: the definition of "self-employed" in the entitlement conditions in the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 and in particular what the requirement that a trade, profession or vocation is carried on "on a commercial basis" means.

Held, allowing the appeal, that:

1. it was an error of law to find that self-employment was not commercial on the basis it was unprofitable (paragraph 25);

2. the tests the tribunal actually has to apply are those set out in the legislation, including the full definition of self-employment and the various conditions in regulation 4 of the 2002 Regulations. "Genuine and effective" is not part of those tests and is best avoided (paragraph 27);

3. the tribunal's decision was made in error of law because it wrongly applied tests of profitability and genuine and effective to decide whether the claimant's business was carried on "on a commercial basis". What the tribunal should have done was apply all of the various conditions in the 2002 Regulations in order to decide whether the claimant was eligible for WTC (paragraph 28).

The Judge found that the F-tT erred in law and directed HMRC to have regard to her findings when making its further decision under section 18.

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