Her Majesty's Revenue and Customs v LD (TC): [2018] UKUT 306 (AAC), Judge Jacobs, 18 September 2018
In Her Majesty's Revenue and Customs v LD (TC): [2018] UKUT 306 (AAC), Judge Jacobs, 18 September 2018, the Upper Tribunal considered the rules governing the transition from tax credits to universal credit (UC) in a case where the claimant made a claim for UC by mistake.
The transition from tax credits to UC is governed by regulation 8(1) of the Universal Credit (Transitional Provisions) Regulations 2014 (SI No 1230). This provides that two conditions need to be satisfied for the rule to apply. First, a claim for UC has been made. Secondly, the Secretary of State is satisfied that the claimant met the ‘basic conditions’ for UC at s.4(1)(a)-(d) of the Welfare Reform Act 2012. These provide:
“(a) is at least 18 years old,
(b) has not reached the qualifying age for state pension credit,
(c) is in Great Britain,
(d) is not receiving education”.
The claimant and her husband had been in receipt of tax credits. On 11 January 2017, she made a claim for UC by mistake, thinking it was a way of claiming a personal independence payment. When she realised her mistake, she made a request to withdraw the UC claim. On 6 February 2017 the DWP issued a decision closing the UC claim.
In the meantime, however, the DWP had issued a ‘stop notice’ to HM Revenue and Customs and this lead to a decision to terminate the award; any entitlement to tax credits ending on 10 January 2017.
The Judge held that both conditions in regulation 8(1) were satisfied on the facts of the case. A claim for UC had been made. The stop notice showed that the second condition had been met. However, the Judge commented that HMRC should have provided some explanation of the system that led to the notice being issued in its response to the appeal. Regulation 8 could apply whether or not the Secretary of State made an award of UC.
“In this case, a claim was made and the Secretary of State was satisfied while that claim existed. That is sufficient. The subsequent withdrawal of the claimant cannot rewrite history by pretending that the claim was never submitted in the first place” (at [11]).
The decision described the nature of the transitional provision in regulation 8 in the following terms:
“The purpose of transitional provisions is to manage change. In this case, the change was from tax credits to universal credit. The change from one benefit to another can take different forms. Regulation 8 takes the form that is sometimes known as sudden death: the occurrence of an event triggers the transfer of the claimant from one benefit to another. That is how Parliament has chosen to move claimants into the universal credit regime. The trigger event is the making of a claim. That is what happened and what happened thereafter did not rewrite history” (at [13]).
The Judge left open the question of whether the claimant could have protected herself by withdrawing her claim before the notice was issued.
The Upper Tribunal decision is available here: Her Majesty's Revenue and Customs v LD (TC): [2018] UKUT 306 (AAC).
Comment
A similar interpretation to the natural migration rules can be found in A7/2018 (revised) Universal Credit full service areas: Guidance for local authorities, where at paragraph 8 it states:
“It should be noted that once a claim to UC has been made the gateway to legacy benefits is closed. In practice, the UC claim triggers the termination notice (known as an HB Stop Notice). Even if a claimant withdraws or ends their UC claim (regardless of whether they have received payment), they cannot choose to claim, re-claim or seek re-instatement of a legacy benefit. This continues to apply irrespective of whether the legacy benefit termination has been actioned ‘on time’.”
