[2023] UKUT 212 (AAC)

The claimant commenced receiving tax credits in 2006 as a single parent. At the time of initial receipt, she had one child whom I shall call child A. In February 2011 her second child was born. I shall call that child, Child B. Child A has disabilities and, in 2010, he was awarded disability living allowance (DLA). From that date and subject to the requirements of notification to HMRC, the claimant was entitled to have the child disability element included within her entitlement to her child tax credit. There is dispute as to whether the claimant ever notified HMRC as to the award of DLA. She says she did so during the course of telephone conversations with HMRC staff which took place in August 2010 and February 2011. HMRC’s position is that no such notification was made at those times. So, the child disability element was not put into payment.

At some point in 2016, as a result of what is sometimes referred to as a data sharing exercise, a part of which involved comparing HMRC data with data held by the Department for Work and Pensions (DWP) it became known to HMRC (though of course the claimant says she had disclosed this to HMRC already) that DLA had been awarded with respect to A. On 12 January 2017, as a result of that information then coming to its attention, HMRC amended the tax credits award to include the child disability element in the claimant’s child tax credit award from the start of the relevant tax year (tax year commencing 6 April 2016). That decision was made under section 16 of the 2002 Act which permits amendment or termination of an award “at any time during the period for which an award of a tax credit ismade” if HMRC have “reasonable grounds for believing” that an award ought not to have been made or an award ought to have been made at a different rate to that which it has. The claimant sought to challenge that decision (specifically she was seeking to challenge the fact that there had not been backdating to the date when DLA had been awarded) by way of a letter which is not dated but which was apparently received by HMRC on 8 February 2017. The letter is in the form of a “template” but it did not make reference to the claimed telephone notifications. Instead, the argument contained in the letter relied upon what was said to be an administrative failure caused by “a gap in the data feed between the DLA unit and the TaxCredits Office”. The thrust of the contention was that the failure of automatic notification from the DWP to HMRC amounted to an “official error” which enabled HMRC to revise decisions for the relevant earlier tax years notwithstanding the previous decisions made under section 18 of the 2002 Act with respect to those tax years. On 13 March 2017, HMRC issued a mandatory reconsideration notice “for the tax year 2016 – 2017” in which it indicated that its decision of 12 January 2017 was not to be changed. The claimant appealed to the F-T.

The F-tT held an oral hearing which took place on 9 October 2017. The claimant attended that hearing and gave oral evidence. The F-tT maintained a written record of the proceedings. The F-tT, having accepted the claimant’s evidence to it that she had made the above noted telephone notifications to HMRC, allowed the appeal and gave a brief explanation as to why it was doing so in a Decision Notice of 9 October 2017. HMRC asked for a statement of reasons for decision (statement of reasons) which was issued on 5 December 2017. On the same date the F-tT issued a directions notice in which it was said that the Tribunal Judge who had decided the appeal on 9 October 2017 had detected an error of law in his own decision which was described in this way: “The Tribunal did not take sufficient account of the definition of “official error” in the Tax Credits (Official Error) Regulations 2003 and the impact of the Upper Tribunal decision in AM v HMRC (TC) [2015]UKUT 345 (AAC). In consequence, the Tribunal did not adequately consider whether theappellant had contributed to the “official error” and made no findings of fact on the point”. The directions notice invited the parties to consider applying for permission to appeal. By letter of 14 December 2017 HMRC did so. On 11 January 2018 a District Tribunal Judge of the F-tT conducted a review under rule 40(2) of the F-tT’s above Rules of Procedure and decided that the F-tT which had determined the appeal had erred in the manner in which it had been suggested in the directions notice that it had. In the Decision Notice of 11 January 2018, the District Tribunal Judge continued “The decision of is [sic] therefore set aside, and the appeal is to be considered afresh by a differently constituted tribunal on the first available date aftertwenty-eight days from the date of issue of this notice”. Accordingly, the appeal was re-heard, by a differently constituted F-tT (that is to say a different Tribunal Judge) on 16 February 2018.

The hearing of 16 February 2018 was, as before, a face-to-face hearing at which the claimant gave oral evidence. On this occasion, however, the F-tT disbelieved the claimant’s evidence regarding telephone notification. As to that, the F-tT, according to its statement of reasons which was issued on 16 April 2018, was concerned by the claimant’s failure to mention the claimed telephone calls in the letter received by HMRC on 8 February 2017 at the time she was seeking mandatory reconsideration, by her failure to chase up the claimed telephone notification she had made, and by her failure to put anything in writing. The F-tT also noted her evidence to it that although she had received various written communications from HMRC regarding her entitlement she “did not really read them”. The F-tT rejected any argument based upon a requirement for different government departments to talk to each other” and that, in any event, if there was official error, she had “caused or materiallycontributed to the error” through her failure to (as it had found) to notify. The F-tT said it had regard to the case of AM, cited above. As to the previous F-tT hearing and decision (the decision which was set aside) the F-tT observed “there was a decision made 16th November 2017 by a different Tribunal. This decision was set aside. This Tribunal completely ignored that decision and those records of proceedings. This Tribunal considered matters completelyafresh.”

Permission to appeal to the Upper Tribunal was sought and given (see above).