JY v HMRC

A final tax-credit decision under section 18 of the Tax Credits Act 2002 wholly replaces an earlier section 16 decision for the same period. The earlier decision has no operative part left and an appeal concerning it is ordinarily academic.

That consequence does not automatically end the appeal. A tribunal retains a narrowly confined discretion to hear an appeal concerning a lapsed decision, ordinarily only where there is good reason in the public interest. Speculative future advantage to the claimant will rarely suffice. Where no such reason exists, the tribunal has no jurisdiction to determine or remit the lapsed appeal.

HMRC amended the claimant’s 2013–14 tax-credit award by a decision under section 16(1) of the Tax Credits Act 2002. Following a hearing on 26 August 2015, the First-tier Tribunal dismissed her appeal, finding that she was not in genuine remunerative employment.

The claimant appealed on the ground that the tribunal had drawn an adverse credibility inference without material documents which HMRC should have supplied. HMRC accepted that this was an error of law. Before the Upper Tribunal appeal was determined, however, HMRC made a final decision under section 18 for the same period.

The central issue was whether that later decision caused the section 16 decision and the pending appeal to lapse, and whether any discretion remained to determine the appeal.

1. The appeal had lapsed. A section 18 decision entirely replaces the section 16 decision concerning entitlement for the same period. There was consequently no operative part of the section 16 decision left to determine. Applying Chief Adjudication Officer v Eggleton, R(IS) 23/95, the earlier decision fell within the category in which nothing remains capable of appeal.

2. The absence of an express statutory lapsing provision did not displace that general principle. It bound tribunals as well as courts hearing tribunal appeals. However, the Tribunal rejected the view that the appeal itself lapsed automatically whenever a section 18 decision was made. It agreed with the approach in CTC/1343/2015 that a residual discretion remained.

3. That discretion was very narrow. Following R v Secretary of State for the Home Department, ex p Salem, [1999] 1 AC 450, it should ordinarily be exercised only for a good reason in the public interest. An alleged future practical benefit to the claimant, including use of findings in later proceedings, did not make the section 16 appeal non-academic and would rarely satisfy the overriding objective.

4. There was no public-interest reason to continue this appeal. The Upper Tribunal therefore had no jurisdiction to decide it or remit it, following Dorset Healthcare NHS Trust v MH, [2009] UKUT 4 (AAC). Although the First-tier Tribunal had erred by failing to obtain, or account for the absence of, significant documents before making an adverse credibility finding, that error could not be determined in the lapsed appeal. HMRC and any future tribunal were not to rely on those adverse findings. Any appeal concerning the section 18 decision was to be heard by a differently constituted First-tier Tribunal panel.

• Upper Tribunal (Administrative Appeals Chamber): The claimant’s appeal from the First-tier Tribunal lapsed after HMRC made a final section 18 decision under the Tax Credits Act 2002. The Tribunal made no decision on the merits and did not remit the case.
• First-tier Tribunal: After a hearing on 26 August 2015, it dismissed the claimant’s appeal against HMRC’s section 16 decision. Its decision was given on 24 September 2015.