Scepticism and scrutiny in HMRC appeals

Issue 261 (December 2017)

Ros White considers a recent judgment warning to First-tier Tribunals not to take HMRC submissions at face value.

The warning

In VO v HMRC (TC) [2017] UKUT 343 (AAC) (18 August 2017), Judge Wikeley begins by saying, ‘Well, here we go yet again’ and indicates ‘a sense of frustration, bordering on despair’. He says that the case is ‘yet another sorry tale of HMRC institutional incompetence and inefficiency which could well have led to injustice, were it not for the persistence of the Appellant’ (paragraphs 1–3). Further, he adds that although the HMRC submission to the Upper Tribunal was ‘a model of clarity and helpfulness’, the same standards are not always achieved in their submissions to First-tier Tribunals. The First-tier Tribunal must, says Judge Wikeley, ‘be alert to the need to interrogate HMRC written responses with a combination of studied scepticism and searching if not anxious scrutiny’ (paragraph 5).

HM Revenue and Customs’ submission to the First-tier Tribunal

The claimant had appealed against a decision that she was not entitled to tax credits for the 2012/2013 tax year. As described by Judge Wikeley:

‘The HMRC written response to the Appellant’s appeal made the case look very straightforward. In a nutshell, the Appellant had failed to reply to a request from HMRC to provide evidence of her entitlement to tax credits. She was therefore no longer entitled to tax credits for the relevant tax year and was liable for a substantial overpayment. So, according to HMRC, it was an open and shut case. End of story.’ (paragraph 6)

However, as Judge Wikeley comments, that was ‘not the end of the story’ and there were a number of warning signs which should have set the First-tier Tribunal’s alarm bells ringing at ‘eardrum piercing levels’. Among these were that:

  • in her August 2013 notice of appeal, the claimant said, ‘as I previously explained, I forwarded all the information required from me and to my surprise you never received the documents’. However there was no indication within the HMRC bundle that it had heard from the claimant prior to August 2013; and
  • HMRC provided details of an October 2013 decision that the claimant had worked an average of 14.94 hours per week, rather than the 16 required for working tax credit, but – despite the fact that the data needed to come to such a precise figure must have come from the claimant – none of that data was provided to the First-tier Tribunal.

Crucial evidence

The claimant’s appeal to the Upper Tribunal was supported by HMRC’s representative who conceded that: ‘Regrettably the background as set out by HMRC in the submission to the First-tier Tribunal is not an accurate reflection of what appears to have actually happened in this case.’ The representative revealed his discovery that, contrary to HMRC’s central submission, there was a record of a letter being received from the claimant at the end of May, although the content of the letter was unknown.

Judge Wikeley’s decision

In light of the above, Judge Wikeley concludes that that the claimant had responded to the May 2013 request for evidence and that the real reason for HMRC’s decision that she was not entitled to tax credits was its October 2013 decision that she had not been in remunerative work for the required 16 hours. However, having examined this decision, Judge Wikeley finds that it was wrongly made and, having set aside the decision of the tribunal, remakes it to the effect that the claimant was entitled to tax credits for the 2012/2013 tax year.


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