AG v HM Revenue and Customs (TC)

A person receiving maternity allowance is treated as engaged in qualifying remunerative work only if the separate conditions in regulation 5 are met. The requirement in regulation 5(3) that the person must previously have been engaged in qualifying remunerative work requires actual engagement immediately before the relevant period; being treated as engaged under the four-week run-on does not satisfy it.

Although regulation 5(2) is subject to regulation 7D, that relationship preserves a claimant’s ability to obtain the four-week run-on where it otherwise applies. It does not enlarge regulation 7D so as to displace the condition imposed by regulation 5(3) of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002.

The claimant was a lone parent who had worked 16 hours weekly in two jobs. Her five-hour job ended on 31 March 2013. She stopped her remaining 11-hour job immediately before beginning maternity allowance on 26 April 2013. HMRC stopped her working tax credit from 29 April 2013.

The First-tier Tribunal dismissed her appeal on 9 June 2014 under reference SC045/14/00564. On a further appeal, the Upper Tribunal considered whether the four-week run-on in regulation 7D could mean that the claimant had been engaged in qualifying remunerative work immediately before her maternity-allowance period for the purposes of regulation 5(3) of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002.

1. Appeal dismissed in result. The First-tier Tribunal had erred in law because aspects of its reasoning were opaque or inexact. Its decision was set aside, but the Upper Tribunal remade it to materially the same effect and dismissed the claimant’s appeal against HMRC’s decision.

2. Regulation 5(2) treats a person receiving maternity allowance as engaged in qualifying remunerative work, but it is expressly subject to regulation 5(3). The wording of regulation 5(3), requiring that the person must have been engaged immediately before the relevant period, distinguishes actual engagement from provisions which merely treat a person as engaged. On its ordinary reading, it requires actual qualifying remunerative work immediately before the maternity-allowance period.

3. Regulation 7D(2) generally makes the four-week run-on effective by treating a person as engaged in qualifying remunerative work for the conditions of entitlement in Part II. The fact that regulation 5(2) is subject to regulation 7D preserves the availability of that additional period where a claimant otherwise qualifies for it. It does not permit regulation 7D to override the distinct precondition in regulation 5(3).

4. The legislative history and explanatory material supported that construction. The amendments making regulation 5 subject to regulation 7D were intended to ensure that the terms of special provisions did not prevent reliance on an otherwise available run-on. They were not intended to allow a deemed engagement under regulation 7D to satisfy the actual-engagement condition for maternity allowance.

5. The claimant had not been engaged in qualifying remunerative work immediately before the beginning of her maternity-allowance period. She was therefore precluded from an award of working tax credit while receiving maternity allowance.

• Upper Tribunal (Administrative Appeals Chamber): The appeal failed in result. The tribunal set aside the First-tier Tribunal’s decision for error of law and remade it by dismissing the claimant’s appeal.
• First-tier Tribunal: On 9 June 2014, under reference SC045/14/00564, it dismissed the claimant’s appeal against HMRC’s working-tax-credit decision.