Taylor v Inland Revenue

For disabled person’s tax credit, the requirement that a claimant be engaged and normally engaged in remunerative work involved separate inquiries. Regulation 6(1)(a) of the Disability Working Allowance (General) Regulations 1991 concerned the average hours actually worked in earlier weeks, not merely the hours promised by the employment contract. An alternative averaging period was permissible only where it enabled the weekly average to be determined more accurately. A shorter period selected solely to avoid bank-holiday reductions was artificial and distorted the average. Bank holidays were relevant to the current-work requirement, but the Regulations did not provide for their disregard when calculating the earlier average.

The appellant, who had learning disabilities, worked as an assistant gardener for 16 hours per week under an oral employment contract. He applied for disabled person’s tax credit under section 129 of the Social Security Contributions and Benefits Act 1992.

The Inland Revenue refused the claim because, applying Regulation 6 of the Disability Working Allowance (General) Regulations 1991, his hours actually worked in the relevant preceding period averaged less than 16 per week. The appeals tribunal dismissed his appeal. Mr Commissioner Henty dismissed his appeal on a point of law, holding that Regulation 6(1)(a) focused on hours actually worked and that no other reasonable period produced a decisively better result.

The issue before the Court of Appeal was whether the Commissioner should have required the Inland Revenue to use the three weeks in which the appellant averaged 16 hours, thereby avoiding the effect of two bank holidays.

1. Appeal dismissed. The appellant did not satisfy the requirement in Regulation 6(1)(a) of the Disability Working Allowance (General) Regulations 1991 that the work undertaken be for not less than 16 hours per week.
2. The statutory expression in section 129(1) of the Social Security Contributions and Benefits Act 1992 required the claimant to be both engaged and normally engaged in remunerative work. Regulation 6 addressed those requirements through related but distinct provisions. Regulation 6(1)(a) and paragraph 6(4) concerned the average hours actually worked in the relevant preceding period; they did not look only to the contractual hours.
3. Under Regulation 6(4)(c)(ii), an alternative period could be selected only if it enabled the previous weekly average to be determined more accurately. The three mid-May weeks were not a permissible alternative because selecting them merely to avoid the bank-holiday effect distorted, rather than accurately measured, the average. The Commissioner was entitled to reject the perversity argument.
4. There was an apparent anomaly because bank-holiday time was expressly relevant to the current-work requirement under Regulation 6(1)(c) and paragraph 6(5), while the Regulations made no equivalent provision for calculating the earlier average under Regulation 6(1)(a) and paragraph 6(4). It would have been preferable for the Regulations to address that issue, but the Court applied the words enacted.
5. The Court treated the reasoning in Linda Case v IRC (CTC/3593/2001) as confirming that Regulation 6(1)(a) focused on hours actually worked. Lord Justice Laws and Lord Justice Peter Gibson agreed with Lord Justice Longmore.

• Court of Appeal (Civil Division): dismissed the appeal: [2004] EWCA Civ 174.
• Social Security Commissioner: Mr Commissioner Henty dismissed the appeal on a point of law on 11 February 2003.
• Stockport North Appeals Tribunal: dismissed the appellant’s appeal on 15 November 2001.