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[2008] UKUT 28 (AAC) (03 December 2008)

 


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 Newport appeal tribunal dated 29 May 2008 under file reference 201/08/00732 involves an error on a point of law.

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 Secretary of State's decision dated 9 December 2007 is remitted to be re-heard by a different First-tier Tribunal.

This decision is given under section 12(2)(b)(i) of the Tribunals, Courts and Enforcement Act 2007.

REASONS FOR DECISION

The decision in summary

1. The appellant's appeal to the Upper Tribunal (formerly the Social Security Commissioner) is allowed. The decision of the Newport appeal tribunal dated 29 May 2008 under file reference 201/08/00732 involves an error on a point of law. It has to be set aside.
2. The appellant's appeal has to be reheard by a new tribunal. The new tribunal should hold an oral hearing at the venue most convenient to the appellant (presumably Portsmouth or Havant).
3. The outcome of that tribunal may or may not be to the appellant's advantage. This is because of further facts which have come to light in the course of this appeal. There are also further steps which the Secretary of State and appellant should take before the rehearing (see the Directions at paragraphs 31 and 32 below).

What this appeal is about

4. The issue in this appeal was whether the appellant was entitled to personal allowances for her children as part of her income support claim at the relevant times. This appeal is not about any overpayment that may or may not have resulted. This appeal is also not directly about the mother's entitlement (or non-entitlement) to child benefit for the periods during which her children stay with her.

T An explanation of the impact of the new tribunal system on this case

5. This case started as the appellant's appeal to the Social Security Commissioner against the appeal tribunal's decision. On 3 November 2008 the Tribunals, Courts and Enforcement Act 2007 replaced the appeal tribunal with the Social Entitlement Chamber of the First-tier Tribunal. The 2007 Act also replaced the Social Security Commissioner with the Administrative Appeals Chamber of the Upper Tribunal with effect from the same date. These changes have been made with a view to improving the system of administrative justice as a whole.
6. A Judge of the Administrative Appeals Chamber of the Upper Tribunal, rather than a Social Security Commissioner, has therefore decided this appeal. However, these changes only affect the procedures (and tribunal titles) involved – the law about entitlement to income support remains the same as before.

The background to the appeal to the tribunal

7. The appellant is a single woman who has two children, now aged nearly 15 and 12 respectively. Since September 2001 she has received income support. Initially this was on the basis that she was a single parent looking after two children. However, the children now live (principally) with their father, who is separated from the mother. The appellant still receives income support, apparently now on the basis of her incapacity. It appears that at some stage she has had a brain operation.
8. On 21 November 2007, according to a computer screen print, the income support office received an e-mail from the short-term benefits section (presumably the incapacity benefit office), stating that "cust. [customer] advised them in Sept that children living with their father. Claim susp. [suspension] letter to cust." It was noted that the appellant would provide a letter.
9. On 3 December 2007 it was noted, following a telephone call, that the appellant would visit the income support office "tomorrow with a residency order showing the children haven't been in her care since 3.6.06" and also that she was advised about an overpayment.
10. On 9 December 2007 a decision maker appears to have made a decision that the children should no longer be on the appellant's income support claim. I use the word "appears" advisedly, as the documentation is less than clear.
11. The computer screen print for 9 December 2007 states "O/P [overpayment] 31/05/06 – 20/11/07 – £6119.96 – dependants left H/H [household] 03/06/06. Ref. [reference] to Debt Centre. I.S. [income support] dec ltr [decision letter] to cust." It is unclear from this shorthand what decision or decisions had actually been made.
12. On the face of it there may have been a decision that the appellant had been overpaid income support for the period from 31/05/06 to 20/11/07 amounting to £6119.96. But an overpayment decision can only have been made if there had been a revision of an earlier decision on the appellant's entitlement to income support (see section 71(5A) of the Social Security Administration Act 1992). So there might have been a decision superseding an earlier decision to award income support on the basis of a change in circumstances (e.g. that since the initial decision the children had moved to live with their father and/or that the mother had ceased to be entitled to child benefit).
13. Mr Commissioner Mesher, when granting permission to appeal, asked the Secretary of State to produce a copy of the actual decision dated 9 December 2007, as there was no such decision on the tribunal file. The Secretary of State has not been able to do so. However, a copy of a Jobcentre plus letter to the appellant dated 9 December 2007 has been produced. The material passage reads:

"Changes in Income Support

We have looked at your claim again following a change to do with your dependants leaving your household in June 2006, which could have resulted in a reduction of your benefit between 31/05/2006 and 20/11/2007. An overpayment of benefit may have occurred; you will be contacted about this later."

14. This letter is also less than clear. It certainly does not appear to convey a decision that there has actually been an overpayment of benefit. At best, and reading between the lines, the implication is that a decision had been made that the appellant was no longer entitled to any allowance under the income support scheme for her two children with effect from 31 May 2006 up to 20 November 2007 (the day before the suspension took effect).
15. When she received that letter the appellant certainly knew that she was no longer receiving any allowance for her children as part of her income support. She sent in a letter of appeal, "appealing against the decision of getting no money to feed my children". She explained that the children were in her care half of the holidays and every other weekend, adding that "I was told I was getting the right benefit by a member of your staff".
16. An internal reconsideration form is perhaps the best second-hand evidence available as to the nature of the decision. This refers to a "Decision made on 9 December 2007 – claimant not entitled to a personal allowance for her children from 31 May 2006". On 20 April 2008 a decision maker refused to change that decision.
17. The appellant later wrote to explain that "I advised them in June/July 06 when [the father] had custody of my children. I telephoned them and I was told by them I was getting the right amount of benefit". She added that "The reason they have no details of my children is because they were deleted off the computer in September when I was called in. This is why I say it was their mistake and not mine". The reference to being called in during September may be a reference to some dealings that took place with the incapacity benefits section in September 2007 (which perhaps prompted the e-mail to the income support office).

The Newport appeal tribunal's decision

18. The appellant's appeal was heard at a paper hearing at Newport on the Isle of Wight. The tribunal, comprising a lawyer member sitting alone, considered the evidence on file. The tribunal's decision was to confirm the Secretary of State's decision and so to dismiss the appeal.
19. The tribunal chairman subsequently issued a full statement of reasons. She explained that "the children were no longer in her care from 3.6.06 and as she no longer had the children in her care she could not be treated as responsible for the children and was therefore not entitled to a personal allowance for them from 31.5.06." The tribunal chairman also (rightly) noted that she was concerned solely with an appeal on the issue of entitlement, not with an appeal against any overpayment decision.

The proceedings before the Commissioner and now the Upper Tribunal

20. The appellant's main concern is understandably with her current benefit entitlement. In her application she explains that she still has shared care of her children but is not receiving benefit for periods when they are living with her. She added that "I feel I am entitled to child benefit on the times I have my children". It is not clear whether the appellant understands the difference between child benefit and the (separate) personal allowances under the income support scheme for children.
21. However, the current case does not directly concern child benefit. If the appellant wishes to challenge the arrangements for that benefit she will have to contact the Child Benefit Office of Her Majesty's Customs & Revenue (HMRC) at P.O. Box 1, Newcastle upon Tyne, NE88 1AA.
22. Mr Commissioner Mesher granted the appellant leave to appeal against the tribunal's decision. The Secretary of State's representative supports the appellant's appeal, although the further material produced may not actually help the appellant in the long run.
23. The Secretary of State's representative argues that the tribunal's decision cannot stand because there was no evidence before the tribunal as to the date on which the claimant's award of child benefit had actually stopped. The tribunal had also failed to consider any such evidence in the light of regulation 15 of the Income Support (General) Regulations 1987 (SI 1987 No. 1967), which deals with a claimant's responsibility for a child.
24. I agree that the tribunal's decision involves an error of law. For that reason I must set it aside. I am not in a position to re-make the decision under appeal as not all the facts are clear. It therefore follows that the appellant's appeal against the Secretary of State's decision dated 9 December 2007 must be re-heard by a different First-tier Tribunal. In doing so the Directions below should be followed. My decision is given under section 12(2)(b)(i) of the Tribunals, Courts and Enforcement Act 2007. It may help if I explain briefly what happens to child benefit when a couple separates.

What happens to child benefit when a couple separate?

25. Typically (but not always) child benefit will be paid to the mother when a couple are living together. As part of the background to this case, it is important to understand what happens to that child benefit entitlement when a couple separates. The HMRC website (http://www.hmrc.gov.uk/childbenefit/child-lives-someone-else.htm) explains the position as follows:

Child Benefit if your child lives with someone else

If your child goes to live with someone else, you may be able to keep getting Child Benefit for up to eight weeks. You might be able to get it for longer if you keep contributing towards your child's upkeep.

The first eight weeks after a child leaves home

If your child leaves home to live with someone like a friend or relative, we'll usually keep paying you Child Benefit for the first eight weeks. But it may be less than this if the person your child's gone to live with also makes a claim for your child.

26. In doing so, the website is summarising in lay terms the effect of sections 143 and 144 of the Social Security Contributions and Benefits Act 1992 and Schedule 10 to that Act (see also Commissioner's decision CF/3348/2002). In the Annex to this decision, I refer to some of the other considerations that may apply to competing child benefit claims where there is shared care of children. But this appeal is about the mother's income support claim, not about any application for child benefit. I must stress that any dispute over child benefit entitlement has to be taken up in the first instance with HMRC's Child Benefit Office. However, a change in the child benefit award may affect an income support award.

What is the effect of a change in child benefit entitlement on income support?

27. A person's entitlement to income support is based on their "applicable amount" (section 135(1) of the 1992 Act). At the time in question the definition of "family" included a child for whom the claimant was responsible and who was a member of the same household (section 137(1) of the 1992 Act). In addition, the applicable amount, used to calculate income support entitlement, included personal allowances for any child or young person who was "a member of [the claimant's] household" (regulation 17 of the Income Support (General) Regulations 1987). Regulation 15(1) of the 1987 Regulations provides that a person is responsible for a child for whom he or she is receiving child benefit. Further, regulation 15(4) states that a child "shall be treated as the responsibility of only one person in any benefit week and any person other than the one treated as responsible for the child or young person under this regulation shall be treated as not so responsible".
28. The effect of these provisions is that an income support claimant's entitlement to personal allowances for her children ceases as soon as someone else starts receiving child benefit for those children. The tribunal in the present case was at a disadvantage as it only had limited evidence before it. It knew about the existence of the court order effective from 3 June 2006 from the screenprint. However, for the purposes of entitlement to child benefit what matters ultimately are not the formal terms of any court order but what actually happens with regard to the practical arrangements for the care of the children. Moreover, that consent order replaced an earlier order dated 11 April 2006, which is not on the present appeal file. In addition, and crucially, the tribunal had no evidence before it as to when child benefit actually stopped. On that basis, as explained above, the tribunal's decision involves a mistake of law.

The further evidence now available

29. The Secretary of State's representative has now produced a letter from the HMRC's Child Benefit Office. According to this letter, the appellant had been receiving child benefit when HMRC received a competing claim for child benefit for the same children in December 2005 (i.e. some six months before the court order). The HMRC explanation continued: "Under the laws outlined above, she could continue to receive the [child] benefit until 01 January 2006. On 02 January 2006 [the appellant's] child benefit would have been terminated and notification sent to her in writing. Unfortunately we do not retain paperwork for more than 11 months and therefore cannot obtain a copy of the original letter".
30. The Secretary of State's representative suggests that the case is sent back to a new tribunal for rehearing, with a direction to the new tribunal to make further findings of fact to establish the date from which the claimant's ex-partner started to receive child benefit. I agree that this course of action is appropriate. However, I do not regard the HMRC letter in the previous paragraph as going far enough. Presumably HMRC can confirm from their records the exact date that the father started to receive child benefit. The Secretary of State has the onus of establishing his case and is best placed to obtain that information direct from HMRC. He should do so before the rehearing.

Next steps

31. In preparation for the re-hearing the Secretary of State's representative should forward a new submission on the appeal. That supplementary submission should cover the following matters:

(i) What information if any was shared with the appellant's solicitors on or after 9 December 2005 following receipt of her permission to that effect (see screenprint)?

(ii) Based on more specific information to be obtained by the Secretary of State from HMRC, from what date did the appellant's ex-partner start to receive child benefit?

(iii) Is the Secretary of State arguing that the appellant was not entitled to income support allowances for her children from 31 May 2006 or from some earlier date? If the latter, it may be desirable for a fresh decision to be issued which will carry its own right of appeal.

(iv) What departmental records are there of any contact that the short-term benefits section had with the appellant in September 2007?

(v) Has the Secretary of State actually made and communicated any decision in relation to any liability the appellant may have for an overpayment of benefit?

32. The appellant is advised to seek assistance either from her former solicitors or from the Citizens Advice Bureau over the issues in this case. She is also encouraged to attend the re-hearing, as then she will be able to make her points in person. If and when the Secretary of State makes a decision that an overpayment of income support is actually recoverable from the appellant, she will have to make a separate appeal against that decision. This is because technically there may be separate decisions about entitlement to income support and the recoverability of any consequential overpayment. In the event of an appeal having been lodged against an overpayment decision, and not just the entitlement decision, it would be helpful if the appellant could explain the following matters to the tribunal:

(i) What was the nature of the discussions she had with her solicitors about her social security benefits in December 2005?

(ii) Which office did she contact in June /July 2006 about her ex-partner having residence of the children? What did she tell that office and what information did they give her?

(iii) What happened when she was called into the office in September 2007? Which was the office and what was the nature of the conversation?

Conclusion

33. I must allow the appeal. The tribunal's decision involves an error of law. This error of law is such that I must set the tribunal's decision aside. The appellant's appeal against the Secretary of State's decision dated 9 December 2007 is accordingly remitted so that it may be re-heard by a differently constituted First-tier Tribunal.
34. I must stress that the fact that the claimant's appeal to the Upper Tribunal has succeeded should not be taken as any indication as to the outcome of the rehearing before the new First-tier Tribunal. The new tribunal might find in the claimant's favour and allow her appeal against the Secretary of State's decision. Alternatively, depending on the view it takes of the facts, that new tribunal may end up coming effectively to the same decision as the previous tribunal, in which case the appeal will be disallowed. The new tribunal will have to form its own judgment on the evidence before it in this case.

Directions for the rehearing

35. I make the following specific directions for the rehearing. All these directions are subject to amendment by any later directions by a District Tribunal Judge.

Directions to the Secretary of State

(1) The Secretary of State's representative should forward a supplementary submission to the Tribunals Service covering the various matters set out at paragraph 31 above, and in particular whether there has been an overpayment decision as well as an overpayment decision.

Directions to the appellant

(2) The present appeal concerns the issue of her entitlement to income support personal allowance for her children; if and when there has been a separate decision about the alleged recoverability of any consequential overpayment, the appellant will need to ensure that she has lodged an appeal against that decision as well.

(3) If the appellant wishes to challenge the child benefit award in respect of her children, she has to take that matter up separately with HMRC's Child Benefit Office.

Directions to the Tribunals Service

(4) The rehearing should be at an oral hearing;

(5) The oral hearing should be arranged for the venue most convenient for the appellant (presumably Portsmouth or, if the planned change of local venue has taken effect, Havant);

(6) The new tribunal should be heard by a tribunal judge who did not hear the original appeal;

(7) The file should be placed before a District Tribunal Judge for any further Case Management Directions as she or he sees fit (e.g. as to whether appeals relating to entitlement and overpayment decisions should be heard together).

My decision is therefore as set out above.

Signed on original Nicholas Wikeley

on 3 December 2008 Judge of the Upper Tribunal

ANNEX TO CIS/2457/2008

A1. Paragraphs 25 and 26 of this decision summarise what happens to child benefit entitlement when a couple separates. In this context I should also mention the decision of Collins J. in the Administrative Court in R on the application of Chester v Secretary of State for Social Security [2001] EWHC 1119. At the time that case was decided the Secretary of State for Social Security, not HMRC, was responsible for the administration of child benefit, although the rules governing entitlement were essentially the same.

A2. The facts in Chester were very similar, but not identical, to those in the present case. A couple with two children had separated. The children spent term times and half the holidays with their father, and weekends and half the holidays with their mother. Following their separation, child benefit was paid to the father as the primary carer. The mother applied for judicial review of that decision, as there was no right of appeal.

A3. Collins J. quashed the decision of the Secretary of State because he had "failed to have regard to a relevant consideration, namely that as a matter of law he could have approached this case in a way which could have reflected more exactly the division of care that took place" (at paragraph [19]). In particular, Collins J explained that there were two possible ways forward:

17. It seems to me that it would have been possible for the Secretary of State to have considered a very much more refined approach. There was nothing in principle to prevent him taking the view that, for example, during the school holidays the wife should have the amount for one and the husband for the other, because that would produce an equitable result on the basis that each was being looked after for half the school holidays. I talk about the period of the school holidays because I am told that there is a minimum period of four weeks during which entitlement must persist, that is to say that it would not be possible to say that, for example, because for two weeks the children were being looked after by the wife, the wife could have the child allowance for those two weeks; that would be too short a period.

18. It is perfectly clear in my judgment that there is scope for producing what on any view would be a fairer result by taking a period to reflect the fact that the wife has the children for at least half the school holidays together with of course the weekends. Equally, it is possible, although I reach no final view on this, for the reasons I have already indicated, that there may be a possibility of using Regulation 34 so that the claimant receives some extra amount, and that that amount does not affect her entitlement to the allowances that she already has. If that is possible under Regulation 34, and I am not deciding one way or the other whether it is, that is a matter which also can be considered.

A4. The reference in paragraph 18 of that judgment to regulation 34 refers to the Social Security (Claims and Payments) Regulations 1987 (SI 1987 No. 1968). It provides for payment of benefit to another person in certain circumstances. However, although this may have been a possibility at the time that Chester was decided, that option does not apply now, as today the Claims and Payments Regulations apply to HMRC only in the context of (the now abolished) working families' tax credit. They do not apply to child benefit.

A5. However, the suggestion of Collins J in paragraph [17] of Chester might be relevant in the context of the present case. There was further discussion of the problems posed by shared care in Barber v Secretary of State for Social Security [2002] EWHC 1915 (Admin) and in R on the application of Ford v Board of Inland Revenue [2005] EWHC 1109 (Admin). At present, however, it appears that there has been no application to HMRC in connection with child benefit.

A6. I also reiterate that any such challenge has ultimately to be way of judicial review, as there is no right of appeal against an HMRC decision as to the exercise of its discretion under paragraph 5 of Schedule 10 to the 1992 Act (see Social Security Act 1998, Schedule 2, paragraph 4). Historically an application for judicial review has had to be brought in the High Court. Since 3 November 2008, however, some judicial review applications to the High Court may be transferred by the High Court to the Upper Tribunal, and there are also certain circumstances in which an application for judicial review may be made direct to the Upper Tribunal.