HMRC & Anor v SC

A joint election determining priority for child benefit must comply with the prescribed method. Agreement between potentially entitled persons is insufficient unless expressed in the required form and notified to HMRC. Documents must clearly record a joint election by both parties; a unilateral solicitor’s letter and a Family Court order containing only an undertaking to apply for benefits do not do so. Where there is no valid joint election, HMRC may exercise its discretion to determine entitlement. That exercise is itself a change of circumstances capable of justifying supersession of an earlier child benefit award.

The First-tier Tribunal allowed the respondent mother’s appeal against HMRC’s decision awarding child benefit for one child to the second appellant father from 23 January 2023. It found that the parents had agreed that the mother would receive the relevant benefits, and that the agreement was evidenced by a solicitor’s letter and a Family Court consent order. It treated those documents as a joint election under paragraph 5 of Schedule 10 to the Social Security Contributions and Benefits Act 1992.

HMRC and the father appealed. The Upper Tribunal considered whether the agreement and documents constituted a valid joint election, whether HMRC’s discretionary decision supplied grounds to supersede the earlier award, and whether the First-tier Tribunal had erred by not addressing the mother’s allegations concerning the father’s motives and the fairness of HMRC’s decision.

1. The appeal was allowed. The First-tier Tribunal had erred on points of law. Its decision was set aside and re-made under section 12(2) of the Tribunals, Courts and Enforcement Act 2007.
2. Both parents were potentially entitled to child benefit, but only one could be entitled under section 144(3) of the Social Security Contributions and Benefits Act 1992. Paragraph 5 of Schedule 10 provided for entitlement according to a joint election or, in default, according to the Secretary of State’s discretion. Paragraph 6(1), read with regulation 14(1) of the Child Benefit (General) Regulations 2006, required the election to be made in the prescribed manner, including in writing and notified to HMRC, or by telephone.
3. The parents’ agreement was not itself a valid joint election. The solicitor’s letter was unilateral and the Family Court order did not clearly state that both parents had elected for the mother to receive child benefit. Even if the documents had been sent to HMRC, they did not, separately or together, satisfy the statutory requirements.
4. Following Judge Hemingway’s reasoning in CF/2853/2017, HMRC’s exercise of discretion under paragraph 5, in default of a joint election, was itself a change of circumstances sufficient to justify supersession of the previous award. The First-tier Tribunal therefore erred in finding no grounds for supersession.
5. The First-tier Tribunal was not required to decide the father’s motivation or the fairness of HMRC’s discretionary outcome. There was no right of appeal to the First-tier Tribunal against the exercise of that discretion under paragraph 4 of Schedule 2 to the Social Security Act 1998. The decision was re-made awarding child benefit to the father from 23 January 2023.

• Upper Tribunal (Administrative Appeals Chamber): the First-tier Tribunal decision was set aside and re-made, awarding child benefit to the father from 23 January 2023.
• First-tier Tribunal (Social Entitlement Chamber): on 21 May 2024, allowed the mother’s appeal against HMRC’s award of child benefit to the father.