DECISION ON THE APPEAL 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 London Hatton Cross First-tier Tribunal dated 19 March 2014 under file reference SC173/13/02678 involves an error on a point of law. The Tribunal’s decision is therefore set aside.

The Upper Tribunal is able to re-make the decision on the Appellant’s appeal against the original decision of Her Majesty’s Revenue and Customs (HMRC) dated 27 February 2012. The decision that the First-tier Tribunal should have made is as follows. The Upper Tribunal re-makes the decision accordingly:

The Appellant’s appeal against the three-part HMRC decision dated 27 February 2012 is allowed.

The first part of the decision related to the claimant’s entitlement to tax credits for 2009/10. The decision revising entitlement for 2009/10 cannot stand and is set aside. The original award decision dated 30 October 2010 stands.

The second part of the decision related to the claimant’s entitlement to tax credits for 2010/11. The decision in respect of the claimant’s entitlement for 2010/11 is set aside. It is replaced with a decision that the claimant was entitled to working tax credit in that year on the basis that he was in remunerative work throughout the year.

	The third part of the decision related to the claimant’s entitlement to tax credits for 2011/12. The decision that there should be no award from 6 April 2011 is set aside. It is replaced with a decision that the claimant is due an award of working tax credit from that date on the basis that he was in remunerative work on that date.

Finally, the case is remitted to HMRC to make the necessary administrative arrangements to give effect to these decisions. This will include arrangements for determining the claimant’s entitlement in 2011/12 and to what extent there should be an award as from the start of the 2011/12 tax year.

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.	Yesterday I issued a decision allowing a female claimant’s tax credit appeal (JR v HMRC (TC) [2014] UKUT *** [NCN to be allocated] (AAC) (CTC 3045 2014) which started with the following two introductory paragraphs:

	“1. This is (regrettably yet another) tax credits case involving a poorly assembled written response by Her Majesty’s Revenue and Customs (HMRC) to a claimant’s appeal to the First-tier Tribunal (FTT) against a decision to shut down her tax credits claim. 

	2. Unfortunately that problem was compounded when the FTT failed to identify whether there was any proper basis for the HMRC decision. The FTT therefore erred in law in dismissing the Appellant’s appeal. I now allow her appeal to the Upper Tribunal, set aside the FTT’s decision and replace it with a decision that in turn allows the Appellant’s appeal to the FTT, so setting aside the original HMRC decision in issue.”

2.	I can re-cycle those same two paragraphs in this decision, substituting “his” for “her” where appropriate (as the claimant in the present case is male). The FTT should have allowed the claimant’s appeal. It erred in law by failing to do so. I now allow the appeal to the Upper Tribunal and re-make the FTT decision under appeal so that the claimant succeeds.

The First-tier Tribunal’s decision
3.	On the day of the hearing, the FTT issued a decision notice dismissing the claimant’s appeal against the HMRC decision dated 27 February 2012, including summary reasons for doing so. The claimant’s argument all along was that he had been working for at least 30 hours a week as a self-employed painter and decorator and that he had supplied HMRC with all the paperwork it had required. However, the main passage in the FTT’s decision notice read as follows:

‘3. The evidence suggested that [the claimant] had not given enough information to the respondent. He said that he had submitted receipts and a table of hours worked. There was no evidence that this information had been received or, if it had, whether it was sufficient.

4. [The claimant] had no copies of the documents today and I felt that HMRC had made the correct decision.’

4.	The FTT later issued a statement of reasons, which added little more. The FTT’s principal reason for dismissing the appeal was expressed as follows:

‘7. I accept that [the claimant] may have supplied some information but he had not supplied enough. The Respondent had indicated what information was required and I found on the balance of probabilities this had not been supplied. If it had, the Respondent would have acted upon it.’ 

5.	The basis for the FTT’s generous assumption about HMRC that if the relevant information had been supplied, then “the Respondent would have acted upon it” was not articulated. It is true the claimant, who is not a native English speaker, had not brought copies of the documents to the FTT hearing. He had already sent them to HMRC. He was under the not unreasonable, but plainly misguided, impression that HMRC would in turn have provided them to the FTT.

The grant of permission to appeal to the Upper Tribunal
6.	I asked the claimant to provide the Upper Tribunal with copies of the relevant work receipts and records which he duly did. I then gave the claimant permission to appeal. I referred to rule 24(4)(b) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 (SI 2008/2685), which provides that “The decision maker must provide with the response…copies of all documents relevant to the case in the decision maker’s possession, unless a practice direction or direction states otherwise” (emphasis added; see further ST v Secretary of State for Work and Pensions (ESA) [2012] UKUT 469 (AAC)). I observed that there appeared to have been a breach of natural justice in this case as HMRC had failed to provide the FTT with the relevant documents. In doing so I commented as follows:

‘On the face of it that requirement [i.e. rule 24(4)(b))] simply has not been met in this case. If this is indeed so, HMRC are asked to comment on how this could have happened and what steps are in place to ensure such problems do not recur (I am conscious this is not the first such case I have dealt with).’

The HMRC response to the appeal before the Upper Tribunal
7.	I am greatly indebted to the HMRC representative (Mr D P Eland) who, with typical fairness, supports the Appellant’s appeal to the Upper Tribunal. Mr Eland accepts that the HMRC submission to the FTT in the present case was in breach of rule 24(4)(b) in that it was not accompanied by all the documents relevant to the case. Indeed, as he admits with refreshing candour, “the response doesn’t appear to have been accompanied by any documents relevant to the decision under appeal” (emphasis added). 

8.	Mr Eland accordingly accepts that the deficient HMRC submission to the FTT shared many, if not all, of the same faults as those identified by Judge Wright in SB v HMRC (TC) [2014] UKUT 0543 (AAC). The result, as Mr Eland explains, is that the FTT was erroneously lured into deciding the case on the basis that the claimant had allegedly failed to respond adequately to a letter sent to him by HMRC. This letter had been sent to him not just after the original decision had been made, but after the claimant had lodged his appeal. This is the stuff of Kafka.

The Upper Tribunal’s analysis
9.	The breach of natural justice identified in the previous two paragraphs amounts to an obvious error of law. I therefore allow the claimant’s appeal and set aside the FTT’s decision.

10.	Fortunately in his written submission Mr Eland has identified and corrected the weaknesses in HMRC’s previous consideration of the evidence provided by the claimant. Mr Eland also agrees that the claimant’s paperwork shows that for the majority of the time he was indeed meeting the 30 hours a week requirement. Mr Eland therefore invites me to remake the decision under appeal rather than send it back for re-hearing. I agree that that is the fair, sensible and proportionate approach.

The Upper Tribunal’s re-made decision
11.	As Mr Eland explains, the HMRC decision of 27 February 2012 under appeal to the FTT actually comprised three separate decisions for three different tax years.

12.	The first decision related to the claimant’s entitlement to tax credits for 2009/10. The relevant decision making power was section 20(4) of the Tax Credits Act 2002. However, there was no evidence to suggest that the conditions in section 20(4) were met. Accordingly the decision revising entitlement for 2009/10 cannot stand and is set aside. The original tax credits award decision dated 30 October 2010 stands.

13.	The second decision related to the claimant’s entitlement to tax credits for 2010/11. The relevant decision making power was section 18(5) of the Tax Credits Act 2002. The claimant has supplied the relevant evidence. Accordingly the decision in respect of the claimant’s entitlement for 2010/11 is set aside. It is replaced with a decision that the claimant was entitled to working tax credit in that year on the basis that he was in remunerative work throughout the year.

14.	The third decision related to the claimant’s entitlement to tax credits for 2011/12. The relevant decision making power was section 14(1) of the Tax Credits Act 2002. The claimant has supplied the relevant evidence. Accordingly the decision that there should be no award from 6 April 2011 is set aside. It is replaced with a decision that the claimant is due an award of working tax credit from that date on the basis that he was in remunerative work on that date.

15.	At Mr Eland’s invitation, the case is remitted to HMRC to make the necessary administrative arrangements to give practical effect to those decisions. This will include arrangements for determining the claimant’s entitlement in 2011/12 and to what extent there should be an award as from the start of the 2011/12 tax year.

Concluding comments
16.	In conclusion, I return to the question I posed when giving permission to appeal (see [6] above). Mr Eland has not directly answered the question as to “how this could have happened and what steps are in place to ensure such problems do not recur”. I do not need answers to those questions to allow this appeal and dispose of it to the claimant’s advantage.

17.	However, as it may be relevant to other appeals, I record Mr Eland’s response on this point:

“I can confirm that HMRC’s approach in the present case, and others like it, does not reflect the current approach which is that full details of the case are always included in the written response, and the response itself is accompanied by all relevant documents, in compliance with Tribunal Procedure Rules. The current and compliant approach has been in place since May 2014.”

18.	It is unclear (i) why the procedure before May 2014 was non-compliant; (ii) what triggered the change in practice in May 2014; and (iii) how that change was effected. It also remains to be seen whether the shift to a “current and compliant approach” is borne out in subsequent Upper Tribunal decisions dealing with tax credits appeals since May 2014.

Conclusion
19.	Finally, in the present case I therefore allow the Appellant’s appeal, set aside the First-tier Tribunal’s decision as involving an error of law (Tribunals, Courts and Enforcement Act 2007, section 12(2)(a)) and re-make the FTT’s decision under section 12(2)(b)(ii) of the same Act in the terms as set out at the head of these reasons.

Signed on the original			Nicholas Wikeley
on 22 April 2015					Judge of the Upper Tribunal