[2025] UKUT 166 (AAC)

Appeal SC946/21/00244

The appellant appeals against a decision of the respondent dated 9 [December] 2020. This was a decision under s.18 of the Tax Credits Act 2002, that the appellant’s entitlement to tax credits had ended on 19 March 2019 because the appellant had made a valid declaration of entitlement for Tax Free Childcare (TFC).

The appeal was heard on 27 June 2023 by way of a face to face hearing, with the presenting officer attending remotely. The appellant attended and gave some oral evidence. His representative Mr Ellinson also attended and made submissions, as did the presenting officer for the respondent, Mr Gander.

Background

[The appellant] and his wife have three children. Their past income and the previous awards of tax credits, prior to the award in question, are not in dispute between the parties.

In March 2019, [the appellant] states that he went onto the online system (which is the same for both 30 hours free childcare (“30 hours”) and TFC intending to claim 30 hours only. However, it was determined by HMRC that he had made a valid declaration of eligibility to TFC, which had the effect of terminating his entitlement to tax credits, pursuant to s.30 Childcare Payments Act 2014.

[The appellant] was notified of the termination of the entitlement to tax credits by letter on 25 March 2019. This was a s.16 Tax Credits Act 2002 decision and has previously been the subject of an appeal under reference SC946/19/03400. Ultimately, although that appeal was allowed by the F-tT, it was subsequently struck out by the Upper Tribunal, because on 9 December 2020, just before the F-TT’s decision, the respondent issued the s.18 decision which had the effect of superseding the s.16 decision, thus lapsing the appeal.

This was therefore an appeal against the s.18 decision dated 9 December 2020.

Findings

The Tribunal made the following findings.

The appellant did not intend to apply for TFC; he intended to apply for 30 hours but in error applied for both on the online joint application form.

The appellant was successful in his application for TFC in that an account was opened, but not in respect of 30 hours as the appellant’s daughter was too young to be eligible.

The appellant (and his wife) had not used the TFC account and on 18 June 2019 their entitlement stopped because they had not reconfirmed their details, as is required every 3 months.

The appellant was an eligible person because there was no other relevant childcare support payable in respect of any relevant period, by reason of the operation of s.30 of the Childcare Payments Act 2014

HMRC was satisfied that the appellant was an eligible person for the entitlement period. There is no evidence that there was any other person who holds an active childcare account for the child.

...

Was there a declaration of eligibility?

The appellant’s case was that he had not intended to claim tax free childcare and had done so inadvertently while attempting to claim 30 hours. The respondent had not provided a copy of the appellant’s completed online form and the presenting officer said that his was not available to him. Nevertheless, the Tribunal considered that the appellant had made his declaration of eligibility when he completed the online claims process for TFC and 30 hours. Using its knowledge and expertise, the Tribunal considered that as part of this process he would have had to take positive action by completing the various fields and confirming, for example, that he and his wife were working and that they met the requirements for earnings. The Tribunal considered that this amounted to a declaration, which is defined by the legislation as a statement made by a person for an entitlement period which states that the person is an eligible person for the entitlement period.

The presenting officer for the respondent contended in his submissions that there would have been a warning on the website that applying for TFC would affect any award of tax credits. This appeared to have been accepted by the appellant’s representative, but he also contended that this warning appears for both TFC and 30 hours claims.

The Tribunal was satisfied that a claim had been made as a tax-free childcare account was opened and evidence was before the Tribunal confirming that the eligibility period began on 20 March 2019.

The Tribunal had sympathy with the appellant’s predicament. However, it did not consider that the legislation allowed it to find that there had not been a declaration of eligibility.

For these reasons the Tribunal considered that there had been a valid declaration of eligibility.

Was the declaration of eligibility valid?

The Tribunal noted that s.4(2) CPA 2014 provides that a declaration of eligibility made by a person is “valid” for the purposes of the act if HMRC are satisfied that the person is an eligible person for the entitlement period. It does not appear to have been in issue between the parties that there was no other person holding an active childcare account in respect of the relevant child(ren).

It appeared from the fact of the evidence that HMRC has been satisfied that the appellant was an eligible person, given the outcome of the application and the fact that the tax-free childcare account had been open[ed].

In this regard, the Tribunal considered that there were some parallels between this and the Upper Tribunal’s decisions in relation to tax credits and claims for universal credit, in particular HMRC v GS (TC) [2023] UKUT 9 (AAC). In that appeal it was held that the relevant issue for the Tribunal was whether the Secretary of State was (as a matter of fact) satisfied that the basic conditions had been met, and not whether he was entitled to be satisfied that they were. The Tribunal considered that the same principle applied to this appeal, given the parallels between the language used in the legislation. In particular, it noted that s.4(2) states that declaration is valid if HMRC are (my emphasis) satisfied that a person was eligible, not properly satisfied or the declaration was properly made.

The Tribunal considered that from the evidence it would conclude that HMRC was satisfied that the appellant was an eligible person and so it would follow that the declaration of eligibility was valid pursuant to s.4(2).

Was the appellant an eligible person?

Nevertheless, given that the question had been raised, the Tribunal also went on to consider whether the appellant was an eligible person.

It had been raised by the appellant’s representative that the appellant could not be an eligible person, because when he is said to have made the declaration, he was in receipt of payment for childcare through the tax credits regime, which could qualify as “other relevant childcare support” within the meaning of s.13 as outlined above.

The Tribunal considered this. However, the Tribunal decided that no tax credits were payable to the appellant in respect of the relevant period, which would be the three months beginning on 20 May 2019. This is because, by virtue of the operation of s.30, the appellant’s tax credit award terminated on 19 May 2019. The Tribunal considered that the effect of s.30, in terminating the award, meant that it could not be said that tax credits were payable at the time of the declaration. For these reasons the Tribunal considered that the appellant was not in receipt of other relevant childcare support and would be an eligible person.

For these reasons the appeal against the decision dated 9 December 2020 was refused.

Appeal 946/19/0240

In his submissions at the outset of the hearing, the appellant’s representative accepted that the decision in RS (No.2) (TC) [2022] UKUT 246 (AAC) was on all fours with this decision in this appeal.

The Tribunal agreed with this and could not see anything on the facts which would distinguish this appeal from the appeal in RS (No.2).

In this appeal, the appellant was also seeking to rely on Article 7(6) of the Welfare Reform Act 2012 (Commencement No.[23] and [Transitional and Transitory] Provisions) Order 201[5].

Applying the analysis of Judge Wikeley in the decision in RS (No.2), and given that the appellant was seeking to apply in August 2019 for an award of tax credits for the tax year 2019/20, the Tribunal considered that the appeal could not succeed.

For these reasons the appeal against the decision refusing the claim for tax credits was refused.”