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HMRC’s non-ministerial position is also clear from the Explanatory Notes to the 2005 Act
HMRC’s non-ministerial position is also clear from the Explanatory Notes to the 2005 Act:
“Section 8: Power to transfer functions
57. The Act establishes HMRC as a non-Ministerial department. It would therefore not ordinarily be covered by the provisions of the Ministers of the Crown Act 1975, which allows the transfer of functions between Ministerial departments by Order in Council, thereby removing the need for primary legislation to achieve this.
58. This section amends the Ministers of the Crown Act 1975 to allow HMRC to be treated as a Ministerial department solely for the purposes of transferring functions under that Act. Functions may therefore be transferred into or out of HMRC by Order in Council subject to negative resolution procedures …
61. Subsection (3) operates to prevent the transfer from HMRC of any of the functions specified in section 5(1) of the Act, including the collection and management of revenues (i.e. taxes, duties and contributions) and the payment and management of tax credits …”
tax credits are “made out of funds provided by” HMRC. This is clear from s.2 of the TCA 2002:
“The Commissioners for Her Majesty’s Revenue and Customs shall be responsible for the payment and management of tax credits”.
Also, by s.28(1) TCA 2002, tax credit overpayments are to be paid to HMRC and by s.29(3) proceedings for recovery are generally taken by HMRC. Furthermore, it falls to HMRC to operate the penalty regime on tax credits. HMRC’s involvement therefore goes far beyond being a mere conduit for disbursing funds.
consistent with the above, the Explanatory Notes accompanying s.13 of the 2014 Act give an example of “other relevant childcare support” which is support paid by central government and they refer to s.13 as affecting “Government childcare support”:
Section 13: Neither the person nor his or her partner may be receiving other childcare support
Section 13 sets out the eighth condition of eligibility. This is that the person must not be receiving certain other types of childcare support. This condition must also be met by any partner of that person. This stops a person or their partner receiving support under the scheme when they are already benefiting from other childcare support.
For example, a person will not meet this condition if they are receiving support under the Childcare Grant administered by the Student Loans Company, which provides up to 85% financial support towards students’ childcare costs. However, a person will still meet this condition if they benefit from payments that are made directly to their childcare provider, such as free early years provision. Regulations may also be made to provide other exemptions from this condition.
Subsections (1) and (4) stipulate that, on the date that they make a declaration of eligibility, the person must not be entitled to receive other forms of Government childcare support, or have made a claim to such support, for a period which includes the date of declaration or coincides or overlaps with the entitlement period for which the declaration is made …”.
By regulation 45(3) of the Education (Student Support) Regulations 2011, the childcare grant is not available if the person has elected to receive the childcare element of WTC. This reflects an overarching policy intent in ensuring parents only receive support from one scheme and allowing parents the ability to choose which scheme best meets their circumstances at any given time.
also consistent (but perhaps of more limited assistance given that it HMRC’s own guidance), HMRC’s manual states that tax credit awards are not “other relevant childcare support”:
“TFC12150 - Other customers who cannot make a TFC declaration: receiving other childcare support
On the date of their declaration to TFC, a person must not be receiving any other relevant childcare support at any point during the entitlement period (including the date of the declaration), and there must be no claim or intention to make a claim that would result in any other relevant childcare support becoming payable to the person in the entitlement period. This does not apply to tax credit awards (see TFC 40100 – Termination of a Tax Credit claim)”.
s.30 expressly envisages that someone can make a “declaration of eligibility” at a time when an award of a tax credit has been made. If the claimant is right, a person with a childcare element of WTC can never apply for TFC and there is therefore no need for a statutory mechanism to terminate the tax credit award
- Heading
- Section 1
- w as HMRC v RS (No.2) (TC) [2022] UKUT 246 correctly decided in its interpretation of Article 7(6) of the Welfare Reform Act 2012 (Commencement No.23 and Transitional and Transitory Provisions) Order
- SC946/21/00244 (on appeal UA-2023-001612-TC ) dated 9 December 2020 that he had made a valid declaration of eligibility for tax-free childcare and so his entitlement to tax credits was correctly termi
- SC946/19/02420 (on appeal UA-2023-001611-TC ) dated 9 August 2019 that he was not able to make a new claim for tax credits for any period after 19 March 2019
- The Tribunal’s Statement of Reasons
- The Statutory Framework
- The Claimant’s Submissions
- entitlement period and therefore terminated his tax credits award immediately prior to that date following that termination, HMRC issued various decision notices and other notices, which were subject to a previous appeal. The Upper Tribunal in UA-202
- the 2018/2019 tax year. The decision notice was issued to the claimant on 11 December 2020
- Ground 2: The alleged “declaration of eligibility” was not “valid”
- he was in fact an eligible person, because tax credits were not payable in respect of the relevant period
- Issues raised by HMRC
- Ground 3: S.30 of the 2014 Act no longer applies
- UA-2023-001611-TC
- in relation to Appeal SC946/21/00244 (“Appeal 1”): on 14 March 2019, the
- in relation to Appeal SC946/19/02420 (“Appeal 2”): he was not permitted to apply for tax credits in August 2019
- Factual Background
- The TFC Scheme
- Appeal 1
- The Legal Framework
- by s.5(1) the length of the “entitlement period” is 3 months, subject to any regulations altering that length
- the day on which the declaration was made was 14 March 2019. This was the claimant’s first application
- the “relevant day” was 20 March 2019
- The declaration question
- https://webarchive.nationalarchives.gov.uk/ukgwa/20190317223446/https:/www.gov.uk/tax-free-childcare which contained the portal which the claimant would have used to make his application
- ( https://webarchive.nationalarchives.gov.uk/ukgwa/20190321044737/https:/www.gov.uk/apply-30-hours-free-childcare )
- The validity question
- in this regard, the position is similar to that in HMRC v Secretary of State for Work and Pensions and GS [2023] UKUT 9 (AAC) where the Upper Tribunal considered a regulation containing a requirement
- The “other relevant childcare support” question
- HMRC’s non-ministerial position is also clear from the Explanatory Notes to the 2005 Act
- if he is right, a recipient of the childcare element of WTC would necessarily
- The ceasing to have effect argument
- comity: should the Upper Tribunal follow RS (No.2) in the interests of comity?
- The Legal Framework
- RS (No.2)
- Comity
- The “for the next tax year” argument
- Discussion
- The validity question
- The “other relevant childcare support” argument
- The ceasing to have effect argument
- Appeal 2
- Conclusions