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	UK Social Security and Child Support Commissioners' Decisions
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[2002] UKSSCSC CTC_2979_2001 (18 March 2002)

 


DECISION OF THE SOCIAL SECURITY COMMISSIONER

Commissioner's Case no: CTC 2979 2001

1. I allow the appeal. But I do so on technical grounds that do not affect the operative decision made by the Inland Revenue in this case, and I substitute my own decision for that of the tribunal confirming the Inland Revenue decision.
2. The claimant is appealing, with permission of the chairman, against the decision of the Darlington appeal tribunal on 25 January 2001. The tribunal's decision was that the "decision of the Secretary of State issued on 18. 9. 2000 is confirmed." That is patently wrong, as no Secretary of State has any involvement in this appeal. For that reason and the reasons given below, that decision is erroneous in law. I substitute for it my own decision which is:

The Decision of the Inland Revenue made on 18 September 2000 and revised on

26 October 2000 is confirmed as revised.

Background to the appeal

3. It is not disputed that the appellant was entitled to working families tax credit ("tax credit"), nor was the period of entitlement disputed. The appeal is solely about the income to be taken into account when assessing entitlement to tax credit. The income in question was a series of "children's pensions". The tribunal took the view that the Secretary of State was right in taking the income into account. This raised difficult issues of law and the chairman very properly granted leave to appeal to the Commissioner.
4. The appellant's former husband died in November 1999. She was then looking after their three children, born in 1984, 1986, and 1988. Following his death, the appellant received monthly sums for each child from two separate pension funds. The sums are referred to as children's pensions. The funds were pension funds to which he belonged as an employee during his working life. None of the amounts received, nor any other items of income, are in dispute.
5. The Inland Revenue took the view that the children's pensions should be taken fully in to account when calculating the tax credit to which the appellant was entitled. This resulted in a significant reduction in the weekly tax credit payable. At first, the Revenue took the view that the income should be regarded as the appellant's income. It then took the view that the income should be set off against the child credits payable to the appellant. This resulted in a further major reduction of the appellant's weekly entitlement because it removed any entitlement to child credit. The appellant objected to this. In her view the pensions should be regarded as maintenance payments for the children from their father. Maintenance payments are not taken into account in calculating either her income or the income of the children, and therefore these sums should be left out entirely.

The appeal procedure

6. Because the tribunal got it wrong, I must first deal with procedural issues. The original Revenue decision was notified to the appellant by letter dated 18 September 2000. The appellant telephoned the Inland Revenue Helpline about this. She then wrote a reasoned objection to the decision. The appellant asked that the calculation be reexamined. It was agreed that this would be done. The Revenue then wrote asking for further information. Following that, it issued a further letter on 26 October 2000. This stated that the decision about the tax credit had been changed because of official error, and explained why. Under the revision the weekly amount was reduced by about £60 as compared with the original decision. The appellant appealed on a standard appeal form against the decision issued on 26 October.
7. On receiving the appeal notice, the Revenue reconsidered the decision a second time. On 6 November 2000 the Revenue wrote to the appellant stating that the Revenue had "not changed our original decision", and that the appeal was therefore referred to the tribunal. That has to be read as meaning the original decision as revised in October, but that is reasonably clear from the November letter read as a whole.

The tribunal decision

8. Aside from the minor point about the Revenue's final letter, there is confusion in the papers about what was being appealed. The submission to the tribunal said that it was against the decision made and notified on 18 September 2000. However, the decision set out on that submission is the decision made and notified in October, not the September decision. The tribunal appears not to have noticed this problem, or the changes made in October, as its decision starts:

"The appeal was against a decision made on 18 September 2000 which decision has been reconsidered on 26 October 2000. The original decision has been upheld on reconsideration. The decision was..."[and the October, not September, decision is then set out].

That is wrong. Further, the tribunal does not appear at any point in its lengthy statement of reasons to have referred to the effect of the revision at all, and that is also wrong. That, combined with the fact that the tribunal did not appear to have noticed who took the decisions, must mean that this decision has to be set aside.

What was being appealed?

9. Save for the submission to the tribunal, the Inland Revenue's paperwork in this appeal about both the original decision and the subsequent "reconsiderations" is, if I may say so, exemplary compared with many files I have seen. Confusion has entered, I strongly suspect, because of loose use of the term "reconsideration", a term that the Revenue have adopted from the Department of Social Security (which used to be responsible for tax credits in their former guise as family credit). As other Commissioners have commented, "reconsideration" is not a term that can be found anywhere in the Social Security Act 1998 or the Regulations about appeals that apply to the Inland Revenue, or the Department for Work and Pensions as it now is. This is another case that suggests that the term is best ignored by appeal tribunals. The proper terms in the legislation should be identified for the actions taken.
10. The true legal nature of the request by the appellant in challenging the decision of the Revenue made in September 2000 was that she was asking for a revision of that decision. She was entitled to do this on any ground within one month of the decision being notified to her: section 9 of the Social Security Act 1998 and regulation 3(1) of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 ("the Decisions and Appeals Regulations"). Further, as she could ask for a revision she could not ask for a supersession: regulation 6(3) of those Regulations. The only action the Inland Revenue could take was to consider a revision.

The revision

11. The response of the Revenue to the request was to revise the decision, although not to the advantage of the appellant. The revision was on the basis of official error, and was made under section 9 of the Act and regulation 3(5) of the Decisions and Appeals Regulations. A revision of a decision can be made at any time on that ground. Section 9(3) provides that, subject to exceptions that do not apply here, the revision takes effect as from the date of the original decision except for the purposes of an appeal. Section 9(5) provides that, for the purposes of any rule about the time allowed to appeal, the decision is regarded as made when it is revised. The result is that the October decision to revise changed the September decision from the date when the September decision was made, but was nonetheless appealable from the date of notification of the revision in October.
12. This is confirmed in detail in the Decisions and Appeals Regulations. As the revision was not to the advantage of the appellant, the decision against which the appellant appealed was the September decision as revised in October: regulation 30(3). The period during which the appellant could appeal was extended by regulation 31(2). Notice of the decision revising the original decision is required under regulation 28 of the Regulations, and was properly given. The one month period for appeal against the original decision begins again when notification of the revision is made. The appellant's appeal was made within that period.

The refusal to revise

13. On receiving the formal appeal, the Inland Revenue then "reconsidered" the decision again. On this occasion the appellant did not expressly ask for a revision. She asked to appeal. But there is power under regulation 3(1) of the Decisions and Appeals Regulations 1999 to revise a decision under section 9 if the "action leading to the revision" starts within one month of the notification of the decision without an application from a claimant. The second "reconsideration" is properly to be regarded as "action leading to revision". As with the first consideration of revision in this case, there is power to revise on any ground so the power to supersede does not arise: regulation 6(3). Again, the Inland Revenue therefore had no other power to act as it did as the reconsideration is not part of the appeal process. On this second occasion, the Revenue decided not to revise the previous decision (the September decision as revised in October). It notified this to the appellant in November.
14. Regulation 30 of the Decisions and Appeals Regulations applies where there has been a decision to revise, but not a refusal to revise. Nonetheless, in my view none of the reasoning of the recent decisions of the Tribunal of Commissioners (CI 3700 2000 and CDLA 3912 2001) about refusals to supersede applies to revisions or to refusals to revise. The procedures are entirely different and the power to appeal after a refusals to revise is clear. Save for one problem discussed below, there is express provision in the 1998 Act and in the Decisions and Appeals Regulations about appeals when there has been a refusal to revise. A refusal to revise is appealed by reference to the original decision (so raising the question of whether there should have been a revision).
15. Regulation 31(2) of the Regulations requires notification of a refusal to revise a decision following a request to do so by a claimant, so that there can be an effective appeal. This presents a possible problem to an appeal in cases like this. If the paragraph is read strictly and in isolation, the Inland Revenue was not obliged to notify the appellant that it was not revising the decision on the second occasion. This is because the second decision on revision, unlike the first decision on revision, was not made on the express application of the appellant. Read narrowly, the reference to the issue of a notification of non-revision does not apply as the revision was not "following an application for a revision under regulation 3(1) or (3)". Such a reading both ignores and would make a nonsense of the requirements of the appeal provisions in regulations 28, 30 and 31 read together. Nor does it make sense of the way in which the Inland Revenue very properly proceeded in this case. There was an internal request for a reconsideration, a decision on that request, and notification of the decision. Further, a narrow reading of regulation 31(2) in isolation would, in my judgment, not stand the test of examination against the requirements of article 6 of the European Convention on Human Rights and the Human Rights Act 1998. It should go without saying that there cannot be a fair hearing if the individual has not been notified that a decision has been taken. And in the context of the Decisions and Appeals Regulations that means a notification under regulation 28.
16. The only readings of regulation 31(2) consistent with those requirements are interpretations requiring the Revenue to issue (as it did in this case) notification of the refusal of all considerations of revision, not some of them. This can in my view be justified regardless of whom started the "action leading to revision". Alternatively, the application for the second revision should be considered as made on behalf of the appellant, possibly by implying it from the appeal notice. On either view, notification under regulation 28 is required by regulation 31(2) following any refusal to revise. Either approach will achieve the necessary result that there is adequate notification to trigger appeal rights.
17. Finally, regulation 30 makes provision that an appeal shall not lapse if a decision is revised before the appeal is determined and the revision is not more advantageous to the appellant. That must also apply to a failure to revise, as that is in effect a case (and, as this appeal illustrates, not the most extreme case) of a disadvantageous revision.
18. The decision by the Inland Revenue not to make a second revision had the practical effect of further extending the period in which the appellant could appeal against the original decision. The appeal is against the September decision, as revised in October, and as not revised in November. Strictly, therefore, the tribunal should have made clear that it was considering the September decision as revised in October and as not revised in November. In my view, the failure to mention the November refusal to revise is not significant in this case. Revision could have been made on any ground, so there were no threshold criteria to be considered. There was no change in outcome to be considered. The appeal was within time, so there was no question about the notice period. But the tribunal did fail to consider the October revision of the September decision. That was made on a specific ground, and that did require consideration. The tribunal was in error of law because of this failure.

The children's pensions

19. As I must set aside the tribunal decision, I must consider if the September decision, as revised in October but as not revised in November, was right in law and in fact. To do that I must also consider, given the nature of the appeal in this case, whether the Revenue was right to make the October revision. That raises two questions of law: should the income payable for the children be taken into account at all in assessing the tax credit? If it is to be taken into account, is it to be treated as the income of the appellant or of the children?
20. The appellant's case, which she puts eloquently both in the appeal papers and in the various letters to the Minister copied in the papers, is that the children's money was only being paid to them in their minority and while in full time education, and so should be treated as if it were 'normal' maintenance money and disregarded. The money was not a pension in the usual sense - a payment after retirement. Further, the money was paid to the children because the appellant had been divorced from her husband before his death. She was not entitled to a widow's pension either from the state or from the pension funds. That is why the pension was paid to the children. That is also why she regarded it as maintenance paid by her former husband. That is what it would have been had he not died.
21. Before I considered the appeal in detail, I directed that the appellant provide me with details about both the pension schemes, so that I had the full picture about the children's pensions. I also directed a detailed submission from the Inland Revenue based on those schemes. I am grateful to both for their full responses to that direction.
22. There are two pension funds involved. The A scheme appears to be governed by English law, while the S fund is governed by foreign law. As nothing turns on the particular terms of the A fund I shall, without elaboration, treat the contents of both sets of rules as issues of fact, not law, for present purposes. I term them the A and S pensions funds from the initial letters of the companies that established the funds. The A fund was the one alleged originally to be making discretionary payments, but which it is now clear gave the pensions to the children as of right as they were paid to children of a marriage entered into by their father. Paragraph 12 of the pension rules excludes any claim by the appellant in her own name, and paragraph 12(c)(cc) awards most of the pension any widow would have received "to or for the benefit of" each of the children. A pension payable to or for a child is payable in such manner as the trustees shall decide (paragraph 12(d)(2)). Correspondence shows that the payments were made "to each child" with nothing payable to the appellant in her own right. Turning to the S pension scheme, correspondence shows that the payments were made for each child but to the appellant. The entitlement provisions of this fund are similar to those under the A fund. The children are entitled to pensions. The appellant was not. The details are in paragraphs 33 and following of the "1975 Regulations" of the fund.
23. On that basis, I accept that the pensions were the children's pensions and not those of the appellant. If the pensions were properly to be included in the assessment for tax credits, then the approach taken in October 2000 was clearly right and that taken in September was wrong, unless those pensions were also "maintenance".

Are the pensions maintenance?

24. Regulation 46(5) of the Family Credit (General) Regulations 1987 provides that "where the income of a child..., other than income consisting of payments of maintenance, whether under a court order or not ... exceeds the amount specified for that child ... the credit in respect of that child ... shall be nil." Regulation 27(2) provides that the excess income is not to be treated as income of the parent. Regulation 16(2) treats "payments made by a person, whether under a court order or not, for the maintenance" of any member of the claimant's family as income of the claimant. Paragraph 47 of Schedule 2 to those regulations then excludes from calculation any payment of maintenance, whether under a court order or not, which is made or due to be made by the claimant's former partner, or partner's former partner, or the parent of a child of the claimant's family who is not the claimant's partner. This language is a little confusing. In part, the confusion is caused by the double-stage exclusion of maintenance. This is explained because of changes in the legislation after it was first drafted. Originally, the scheme was that maintenance should be regarded as income of the parent, not the child, and that the parent should be regarded as receiving the maintenance subject to a disregard of the first £15 a week. Only later did the full amount of maintenance come to be disregarded.
25. "Maintenance" is not defined in those regulations, the only relevant definition being that of child support maintenance under the Child Support Act 1991. The contention on behalf of the Inland Revenue is that this means maintenance after the termination of a marriage such as would fall to be considered under sections 22 and 23 of the Matrimonial Causes Act 1973. The submission supported this by pointing out that the payments in the regulations are those made by "a person", and that the pensions funds were not in that sense "a person". By contrast, the appellant points to the purpose of the payments to her children, and in particular to the fact that they only receive those payments while they are, in effect, dependants. In her view, the term "maintenance" is appropriate for these payments, and the term "pension" is not.
26. Both parties have supported their arguments by appeals to wider issues. In essence, they are appeals to fairness (in the sense of treating like cases alike). The Inland Revenue states that the aim of the family credit scheme is alleviating poverty, but also that maintenance (which clearly has the same aim) is outwith the tax credit scheme. The appellant points to the unfairness of including her children's pensions while similar payments made from the father while he was still alive would have been excluded. She also points to the difference in treatment she received because she was divorced from the children's father when he died, as against the position had there not been a divorce. She is treated neither as generously as a widow (who could claim widowed mother's allowance) is nor as generously as a divorced former wife of a living former husband (who could keep the maintenance while claiming the tax credit in full). The papers also contain the views of a responsible cabinet Minister and another senior member of Parliament. I mention the last two views only in order to exclude them. I am concerned with the policy of the legislation as reflected in the words of the legislation, not the policy of the government or opposition. While I should strive to interpret the legislation fairly, in the sense of treating like cases alike, it is not for me to turn what is considered by someone to be unfair legislation into fair legislation if the language of the law states otherwise.
27. The appellant's argument is, of course, based on the fact that the language is not clear. The only comment in Social Security: Legislation 2000 is that ""Maintenance" is not defined, and it seems that it is not restricted to payments from liable relatives as defined in section 78(6) of the Administration Act 1992." That does not assist here either as that section is about recovering social fund payments, save that it assumes the context of a payment from one former - but living - partner to another.
28. While I have sympathy with the appellant's argument, I conclude that to interpret "maintenance" as including survivor's pensions payable as a matter of right to children from pension funds to which their late father was a contributor is to stretch the meaning of "maintenance" too far, despite the inherent ambiguity and lack of clear meaning of the word. The pensions, as I read the rules, go to the children as a matter of entitlement whether or not they were living with their mother and whether or not they, or those looking after them, needed the money for maintenance. That is a proper and traditional use of the term "pension", namely an income payment made to a widow or dependent after and because of someone's death. "Maintenance" implies that the payment (direct or indirect) is between living individuals and that it is payable for the specific purpose implied by the term. Pensions such as those paid in this case are payable even if not used for maintenance.
29. On that analysis, the pension income of each child is higher than the weekly tax credit for that child. This prevents child credit being paid. But the excess over that amount does not count as the appellant's income. She may claim tax credit as if she had no children (save for the purposes of being able to make the claim) and no income from them. That is the effect of the October revision decision. I must dismiss the appellant's appeal.

David Williams

Commissioner

18 March 2002

[Signed on the original on the date shown]