[2023] UKUT 212 (AAC)

Adjudication on claims for tax credit is governed by the Tax Credits Act 2002 (the 2002 Act) and the Tax Credits (Claims and Notifications) Regulations 2002 (the C and N Regulations). A claim for tax credit is made under section 3(1) of the 2002 Act. According to that sub-section, “Entitlement for the whole or part of a tax year is dependent on the makingof a claim for it”. Section 5 limits an award to a maximum of one tax year, and then a new claim must be made for each subsequent tax year. HMRC makes an initial decision on the application under section 14 of the 2002 Act, as to whether or not to award tax credit and, if so, at what rate. Payment is then made on that basis. At or around the end of the tax year in respect of which an award has been made under section 14, HMRC sends the claimant a notice under section 17. That notice specifies the relevant circumstances held by HMRC and requires a claimant to make a declaration either confirming that those circumstances are correctly recorded or notifying the respects in which they are not. Then, once the relevant tax year has ended, HMRC makes what is intended to be a finalised decision as to what entitlement, if any, the claimant had during that tax year.

Regulation 11 of the C and N Regulations provides that the section 17 declaration (see above) also constitutes a new claim for tax credits for the following tax year. That then leads to a further initial decision under section 14 of the 2002 Act and the process set out above continues. It is also worth pointing out, at this stage, that section 6 of the 2002 Act provides for the making of regulations providing that “any change of circumstances of a prescribed description which may increase the maximum rate at which a person or persons may be entitled to a tax credit is to do so only if notification of it has been given”.

The Tax Credits (Official Error) Regulations 2003 (the OE Regulations) are made pursuant to section 21 of the 2002 Act. Regulation 2(1) defines “official error” as follows:

“Official Error” means an error relating to a tax credit made by –

(a)

an officer of the Board

(b)

an officer of the Department for Work and Pensions

(c)

an officer of the Department for Social Development in Northern Ireland, or

(d)

a person providing services to the Board or to an authority mentioned in paragraph (b) or (c) of this definition, in connection with a tax credit or credits, to which the claimant or any of the claimants, or any person acting for him, or any of them, did not materially contribute, excluding any error of law which is shown to have been an error by virtue of a subsequent decision by a Social Security Commissioner or by a court”.

Although a decision made under section 18 of the 2002 Act is described or regarded as a final decision, section 21 of that Act provides that “Regulations may make provision for a decision under section 14(1), 15(1), 16(1), 18(1), (5), (6) or (9), 19(3) or 20(1) or (4) to be revised in favour of the person or persons to whom it relates if it is incorrect by reason ofofficial error (as defined by the regulations)”. The OE Regulations then provide for revision on the grounds of “official error” being an error “relating to a tax credit” to which the claimant “did not materially contribute…”. However, regulation 3(3) of the OE Regulations limits the reach back period to “any time not later than five years after the date of the decision”.

The Tribunals, Courts and Enforcement Act 2007 relevantly, for the purposes of this appeal, provides:

“Review of decision of First-tier Tribunal

9.

– (1) The First-tier Tribunal may review a decision made by it on a matter in a case, other than a decision that is an excluded decision for the purposes of section 11(1) (but see subsection (9)….

(4)

Where the First-tier Tribunal has under subsection (1) reviewed a decision, the First-tier Tribunal may in the light of the review do any of the following –

(a)

correct accidental errors in the decision or in a record of the decision;

(b)

amend reasons given for the decision;

(c)

set the decision aside.

(5)

Where under subsection (4)(c) the First-tier Tribunal sets a decision aside, the First-tier Tribunal must either –

(a)

re-decide the matter concerned, or

(b)

refer that matter to the Upper Tribunal…

(8)

Where a tribunal is acting under subsection (5)(a) or (6), it may make such findings of fact as it considers appropriate…”

It is to be noted that Rule 40(2) of the Tribunal Procedure (First-tier Tribunal) (Social Entitlement Chamber) Rules 2008 provides that the F-tT may only review a decision where it first identifies an error of law.