HMRC v LH
Tax credits - transition to universal credit – after claim for universal credit – where claim withdrawn
Summary
The claimant was entitled to child tax credit. She made a claim for universal credit (UC) – mistakenly, she later said, as she believed that in fact she was making a claim for personal independence payment. She withdrew the UC claim, but in the meantime her tax credits had been terminated. The claimant appealed to the First-tier Tribunal, which allowed her appeal.
Judge Jacobs held that the tribunal had erred in law, set the decision aside and substituted a new decision such that the decision to terminate the tax credits award following the claim for UC was correct. The transition from tax credits to UC was governed, in these circumstances, by regulation 8 of the Universal Credit (Transitional Provisions) Regulations 2014 (SI No.1230). That provides for termination where a claim for UC is made and ‘the Secretary of State is satisfied’ that the claimant meets the ‘basic conditions’ for UC in section 4(1)(a) – (d) of the Welfare Reform Act 2012.
In this case, the tribunal found that the DWP, following receipt of the UC claim, had notified HM Revenue and Customs (HMRC) of that by way of a ‘stop notice’ – ie, which caused HMRC to terminate the award of tax credits. Judge Jacobs agreed that it was a requirement for the Secretary of State (ie, the DWP) to be satisfied that the UC basic conditions were met. It was insufficient (for termination of the tax credits award) merely for the DWP to have issued the stop notice. Rather, the tribunal ‘needed some evidence to link the stop notice itself to the Secretary of State being satisfied about the basic conditions. All that was required was an explanation of the system that led to the notice being issued’ (paragraph 9). In fact, the First-tier Tribunal had not been provided with that, and should have given directions for that omission to be remedied. But having been supplied with an explanation of the system by the DWP himself, Judge Jacobs now felt able to hold that the termination of the tax credits was correct. The subsequent withdrawal of the UC claim after the issue of the stop notice ‘could not rewrite history by pretending that the claim was never submitted in the first place’.
Comment from CPAG
It is disappointing that this decision does not include what explanation the DWP offered of how the system ensures that the Secretary of State is satisfied about the basic conditions being met before the stop notice is issued. The judge did not decide on whether the claimant could have protected herself by withdrawing the claim before the stop notice was issued, as that did not arise on the facts. But the reasoning of the decision would appear to allow that possibility. For more, see the article ‘Defective claims revisited’ in Bulletin 267, p8.