CMH v HMRC

A person who completes an electronic tax-free-childcare application and submits its declaration has made a declaration of eligibility, even if they acted by mistake or did not subjectively intend to apply for that scheme. Under section 4(2)(a) of the Childcare Payments Act 2014, validity depends on whether HMRC was in fact satisfied that the person was eligible, not on whether it ought objectively to have been satisfied.

The childcare element of working tax credit is not “other relevant childcare support” under section 13 because tax credits are paid and managed by HMRC, which is not a national authority for that purpose. A saved tax-credit award also means that the repeal of the tax-credit regime has not fully come into force for section 30. A claim made part way through a tax year is not a claim “for the next tax year” under article 7(6) of the transitional Order.

The claimant and his wife held an award of tax credits. In March 2019 the claimant completed an online application intended, he said, to obtain 30 hours’ free childcare. The application also resulted in a successful tax-free-childcare application and the opening of a childcare account. HMRC consequently terminated the tax-credit award under section 30 of the Childcare Payments Act 2014.

The First-tier Tribunal upheld HMRC’s later final decision that the claimant had made a valid declaration of eligibility and had no entitlement to tax credits after 19 March 2019. It also upheld HMRC’s refusal to accept a fresh tax-credit claim made in August 2019. The claimant appealed, disputing the declaration, its validity, the operation of section 30, and the construction of article 7(6) of the Welfare Reform Act 2012 (Commencement No.23 and Transitional and Transitory Provisions) Order 2015.

1. Appeal dismissed. The First-tier Tribunal made an unchallenged finding that the claimant completed the online process, took the required positive steps, and submitted the declaration. That finding was determinative. Clicking “Accept and send” on the declaration page made a declaration of eligibility. A declaration made by mistake remains a declaration; subjective intention does not alter that result. Childcare Payments Act 2014, section 4(1), did not require HMRC to investigate whether an applicant truly meant to submit it.

2. The declaration was valid under section 4(2)(a). The statutory question was whether HMRC was, as a fact, satisfied that the claimant was eligible. It was so satisfied, as shown by its granting the application and opening the account. The Tribunal was not required to decide whether HMRC had been entitled to be satisfied. Section 30(11) reinforced that construction because a later determination of invalidity does not undo a termination already effected by section 30.

3. Although unnecessary to the result, the Judge held that the childcare element of working tax credit was not “other relevant childcare support” under section 13. Tax credits are paid and managed by HMRC. HMRC is not a Minister of the Crown or a national authority for this purpose, and the Treasury’s policy or regulation-making functions do not make it the provider of the relevant funds. The statutory scheme instead prevents double support by terminating tax credits once a valid tax-free-childcare declaration is made.

4. Section 30 had not ceased to have effect. The repeal of Part 1 of the Tax Credits Act 2002 had not fully come into force in relation to an award preserved by the savings in the commencement Order. The First-tier Tribunal’s error about the relevant period was immaterial.

5. The fresh August 2019 claim was barred. Following HMRC v RS (No.2) (TC) [2022] UKUT 246 (AAC), article 7(6) protects a claim for the next tax year as a whole, not a claim made during, and only for the remainder of, that year. The Judge agreed with that construction and would in any event have followed it under judicial comity.

• Upper Tribunal (Administrative Appeals Chamber): dismissed the claimant’s appeals and held that the First-tier Tribunal’s decision involved no error of law.
• First-tier Tribunal (Social Entitlement Chamber), Manchester: on 27 June 2023 upheld HMRC’s decision terminating tax credits after a valid tax-free-childcare declaration and its refusal to accept a fresh August 2019 tax-credit claim.