DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)

The DECISION of the Upper Tribunal is to allow the Appellant’s appeal.

The decision of the London Hatton Cross First-tier Tribunal dated 2 April 2013 under file reference SC242/12/15221 involves an error on a point of law and is set aside.  The Upper Tribunal re-makes that decision in the following terms:

“The Appellant’s appeal against HMRC’s decision of 21 May 2012 is allowed.

The overpayment of child benefit amounting to £3,950.30 for the period from 3 August 2009 to 15 April 2012 is not recoverable from the Appellant. She did not either misrepresent or fail to disclose any material fact.

HMRC’s decision in relation to her child benefit claim issued on 21 May 2012 is revised accordingly.”

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

REASONS FOR DECISION

Introduction
1.	The Appellant, who was a person subject to immigration control, made a claim for child benefit for her two children. Her Majesty’s Revenue & Customs (HMRC) made her an award of child benefit. Three years later HMRC realised that the Appellant was a person subject to immigration control and decided both that she had been overpaid nearly £4,000 in child benefit and that she was liable to repay that amount.

2.	The First-tier Tribunal (“the tribunal”) agreed with HMRC’s decision on the recoverability of the overpayment. For the reasons that follow, its analysis was legally flawed and the tribunal’s decision cannot stand. I am allowing the appeal, setting aside the tribunal’s decision and substituting my own decision that the overpayment was not recoverable from the Appellant.

The factual background
3.	The Appellant is a Nigerian national. She arrived in the UK in September 2008 as the spouse of a student. The papers include a copy of the entry clearance visa in her passport, described as “visa student dependant”, valid until 30 April 2009 and with the condition “no recourse to public funds” stated on its face. 

4.	The Appellant’s eldest child was born in July 2009. She applied for and was awarded child benefit with effect from 3 August 2009. The decision letter was not issued until 14 January 2010. This may imply that HMRC was making enquiries about her immigration status, but I can make no finding to that effect on the limited evidence available. 

5.	The Appellant’s younger child was born in September 2010. She applied for an increase in her child benefit which again was awarded.

6.	There matters appear to have rested until April 2012, when the Appellant applied for a further extension of leave. It seems that she told the immigration authorities that she was in receipt of child benefit and they advised her to contact HMRC, who duly made enquiries and on 21 May 2012 decided that the Appellant (i) was not entitled to child benefit as she was a person subject to immigration control; and (ii) was liable to repay the overpayment of £3,950.30 (for the period from 03.08.2009 to 15.04.2012) because of “the misrepresentation”. The notice of the decision did not elaborate on the nature of the alleged misrepresentation.

7.	On 12 June 2012 the Appellant lodged an appeal. In her notice of appeal she stated that (a) her award had been approved without HMRC’s Child Benefit Office being misled; (b) she had telephoned the HMRC office before the birth of her eldest child to check her eligibility and had been advised to send an application in; (c) she had declared on her original claim form that she was “subject to immigration control”; and (d) the award had not been obtained by fraud.

8.	HMRC’s submission to the tribunal stated that the overpayment “was as a result of [the Appellant’s] misrepresentation that she was not subject to immigration control.” Furthermore, the submission writer asserted that “for the claim to have been awarded she had to indicate she was not subject to immigration control, I submit that she clearly misrepresented a material fact at that point, whether innocently or otherwise”. The submission further argued that this misrepresentation must have been made in respect of both claims. Moreover, there were no records of the Appellant having contacted the Child Benefit Office helpline before April 2012.

The First-tier Tribunal proceedings and decision
9.	The tribunal held a preliminary hearing on 22 December 2012. That hearing was adjourned to allow HMRC to produce a copy of the Appellant’s claim form and for disposal thereafter on the papers. The adjournment notice stated “this is crucial because [she] says that she indicated that she was subject to immigration control.” HMRC provided a supplementary submission stating that both claim forms were “no longer available having been destroyed in accordance with normal administrative procedures.”

10.	The tribunal judge then considered the matter further on the papers on 2 April 2013. He first considered whether he needed to adjourn for an oral hearing, but concluded that this was unnecessary in the light of rules 2 and 27. Secondly, the decision notice recorded his conclusion that “it was more likely than not that [the Appellant] had said she was not subject to immigration control. If she had said she was subject to control her claim would have ended then.” Accordingly the tribunal dismissed the appeal and confirmed HMRC’s decision on the recoverability of the overpayment.

11.	In its statement of reasons, the tribunal elaborated somewhat on that finding. It stated that the visa dated 05 March 2010 clearly stated “no recourse to public funds” (statement of reasons at [9]) and so when she applied for child benefit the Appellant would have known she had no entitlement (at [10]). The judge repeated that if she had disclosed her status she would not have been awarded benefit and “I found that she had not told them” (at [12]). The tribunal concluded (at [19]) that “it was unfortunate that the claim form was not available, but I was satisfied on the balance of probabilities that [the Appellant] had not told the Respondent that she was subject to immigration control”. 

The Upper Tribunal’s grant of permission to appeal
12.	I gave the Appellant permission to appeal against the tribunal’s decision. In doing so, I made the following preliminary observations:

“2. First, HMRC’s case was that the Appellant had made a misrepresentation on a form which it was not able to produce. However, the tribunal does not in terms refer to the Appellant’s evidence on the point or make a direct finding of fact; paragraph [12] seems to work on the assumption that official decision makers never make mistakes. Nowhere does the tribunal say that the Appellant was lying, had misremembered, was confused etc.

3. Second, the tribunal’s statement at paragraph [9] was incorrect; this was the 2008 visa. Was this error material?

4. Third, the tribunal’s statement at paragraph [10] was also at least technically incorrect. The stamp did not say she had no entitlement; it said that she could not claim, which is by no means the same thing (thus e.g. before the Immigration Act 1999 it was possible to claim a benefit yet be expelled for doing so).

5. Fourth, the tribunal seems to have proceeded on the assumption that any telephone call would have been recorded. However (i) I am not sure HMRC’s policy is expressly stated as such anywhere in the evidence; (ii) the tribunal seems to have assumed (again) that officials never make mistakes; (iii) there is no direct finding as to whether calls were made; and (iv) the 2010 call was in any event said to have been an outgoing call from HMRC to the Appellant, not a call to the helpline, so presumably would not have been archived with the helpline calls in any event.”

The parties’ submissions on the appeal to the Upper Tribunal
13.	Mr David Eland has provided a comprehensive and helpful submission on behalf of HMRC, supporting the appeal to the Upper Tribunal. He very fairly acknowledges that HMRC’s submission to the tribunal “did not deal with the matter with particular clarity”. As noted above, he observes that the original decision failed to particularise the nature of the misrepresentation allegedly made. He also rightly concedes that the logic of the HMRC submission was that “the award of child benefit was itself evidence that the claimant must have completed the claim forms incorrectly”. In other words, HMRC were simply assuming what they were seeking to prove but without more. As Mr Eland acknowledges, that cannot stand with authority. For example, in MK v Secretary of State for Work and Pensions (DLA) [2011] UKUT 12 (AAC), Judge Ward held that “while I can accept that there may be circumstances in which it is possible to rely on a misrepresentation in a claim form without the claim form itself being available in evidence, there would have to be sufficient secondary evidence and here there was none” (at paragraph 16).

14.	Mr Eland goes on to argue that the tribunal fell into the same trap as HMRC’s original decision and submission. In short, it failed to explain with sufficient clarity the basis for its conclusion that the overpaid child benefit was recoverable from the Appellant.

15.	The perspicacious Mr Eland has also spotted a further aspect of the appeal which I must admit I had overlooked when giving permission to appeal. In her correspondence to the tribunal, the Appellant had stated that when she made her second claim “I filled the child benefit form electronically quoting my first Child Benefit Number thus certain areas in the form were greyed out”. Mr Eland now confirms that the electronic version of the claim form then in use did not require an applicant already in receipt of child benefit to answer the questions relating to nationality and immigration status – “the options were indeed greyed out”. Thus on her second claim the Appellant had not been asked to answer those questions in any event. By definition, therefore, there could have been no misrepresentation on her part.

16.	The Appellant has also made further submissions on the appeal, reiterating some of her earlier arguments and thanking Mr Eland for supporting the appeal and “especially his fair and impartial conclusions and the supporting documentation provided”.

The Upper Tribunal’s analysis
17.		I have absolutely no hesitation in allowing this appeal. I agree with Mr Eland that the tribunal erred in law for the reasons outlined above. Moreover, the tribunal appears to have proceeded on the assumption that decision makers never make mistakes, a position which is simply unsustainable (see, by analogy, e.g. OO v Secretary of State for Work and Pensions (SPC) [2013] UKUT 0335 (AAC)). Instead, the tribunal needed to weigh the competing cases. I have to say that I also have serious reservations about the tribunal’s decision to proceed to final determination on the papers, without giving the Appellant the opportunity to respond to the further HMRC submission following the adjourned hearing. However, I did not invite submissions on that point and do not need to rely on it in reaching my decision.

18.	Mr Eland proposes that I therefore allow the Appellant’s appeal, set aside the tribunal’s decision and remit the matter to a fresh tribunal for re-hearing. However, given the evidence which is available about the second on-line claim for child benefit, he accepts that the only point of contention is the Appellant’s answer to the question about immigration control in the claim that she made for her eldest child.

19.	Mr Eland also suggests that if I remit the matter to a new tribunal, I should invite HMRC to provide a further submission clarifying what it is that the Appellant is said to have done (or not done) to make the overpayment recoverable from her. He further suggests that it would be appropriate for HMRC to produce secondary evidence as to what was in the destroyed claim forms.

20.	I take the view that the proportionate way to dispose of this appeal is to re-make the decision under appeal myself. HMRC has conceded it cannot produce the original claim forms. We now know in any event that the second claim form did not ask the Appellant the questions to which HMRC had originally argued she had misrepresented the answers. It is difficult to see what secondary evidence HMRC can produce as regards the first claim, except perhaps for a blank copy of that form and its standing instructions to decision-makers. I also bear in mind that the onus is on HMRC to demonstrate that there has been a recoverable overpayment. In addition I note that the Appellant’s account has been consistent throughout and that she has been shown to be correct in her recollection as to the circumstances of the second claim.

21.	Against that background I am satisfied that the Appellant neither misrepresented nor failed to disclose any material fact in relation to either claim for child benefit. It follows that although she was overpaid child benefit, that overpayment is not recoverable from her.

Conclusion
22.		I conclude that the decision of the First-tier Tribunal involves an error of law for the reasons set out above. I therefore allow the appeal and set aside the decision of the tribunal (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)). The decision that the FTT should have made is as follows (section 12(2)(b)(ii)):

“The Appellant’s appeal against HMRC’s decision of 21 May 2012 is allowed.

The overpayment of child benefit amounting to £3,950.30 for the period from 3 August 2009 to 15 April 2012 is not recoverable from the Appellant. She did not either misrepresent or fail to disclose any material fact.

HMRC’s decision in relation to her child benefit claim issued on 21 May 2012 is revised accordingly.”

Signed on the original			Nicholas Wikeley
on 01 May 2014				Judge of the Upper Tribunal