Backdating of Tax Credits Claims for Asylum Seekers: Analysis of MK v. Revenue and Customs (TC) [2018] UKUT 238 (AAC)

Introduction

The case of MK v. Revenue and Customs (TC) [2018] UKUT 238 (AAC) addresses a critical issue concerning the backdating of tax credits claims for individuals who have sought asylum in the United Kingdom. The appellant, MK, sought to have his tax credits claim backdated to the date he applied for asylum (24 July 2014), arguing that he should be entitled to tax credits from that point. Conversely, Her Majesty’s Revenue & Customs (HMRC) contended that MK’s entitlement should commence from 9 January 2017, the date one month prior to his submitted claim form. The core dispute centers on the correct date from which tax credits should be awarded, which significantly affects the financial entitlements involved.

The parties involved include MK (the appellant) and HMRC (the respondent). The First-tier Tribunal (FTT) initially dismissed MK’s appeal, a decision upheld by the Upper Tribunal (Tax and Chancery Chamber) in this judgment.

Summary of the Judgment

The Upper Tribunal dismissed MK's appeal against HMRC's decision to limit the tax credits award commencement date to 9 January 2017. The FTT had previously ruled in favor of HMRC, determining that MK's claim should not be backdated beyond this date, despite MK’s contention that his entitlement should start from his asylum application date in 2014. The Upper Tribunal found no material error in the FTT's application of the law, particularly in interpreting the Tax Credits (Immigration) Regulations 2003 and the Tax Credits (Claims and Notifications) Regulations 2002. The Tribunal concluded that the telephone call made by MK on 1 December 2016 did not constitute a valid claim for tax credits under the relevant regulations.

Analysis

Precedents Cited

Two significant cases were cited in the judgment:

CTC/31/2006: This case established that decisions made by HMRC under regulation 5(2)(b) of the Tax Credits (Claims and Notifications) Regulations 2002 are not subject to appeal by the First-tier Tribunal (FTT). Instead, such decisions can only be challenged through judicial review. The Upper Tribunal upheld this stance, emphasizing that the FTT lacks jurisdiction over HMRC’s discretionary decisions in this context.
ZM v Her Majesty’s Revenue and Customs (TC) [2013] UKUT 547 (AAC); [2014] AACR 17: This case reinforced the principle that certain determinations made by HMRC under regulation 5 are matters of discretion and not appealable to the FTT. The Upper Tribunal referenced this case to substantiate the non-appealable nature of HMRC’s decisions under regulation 5(2)(b).

Legal Reasoning

The judgment delved into the interpretation of the Tax Credits (Immigration) Regulations 2003 and the Tax Credits (Claims and Notifications) Regulations 2002. Under the 2003 Regulations, specifically regulation 3(5)(b), MK was required to claim tax credits within one month of being notified as a refugee. HMRC contended that MK’s telephone call on 1 December 2016 did not constitute a formal claim under regulation 5(2)(b), as it was merely a request for a claim form rather than a definitive claim. The Upper Tribunal agreed, stating that the call did not meet the statutory definition of a claim, which typically requires more formalization than an oral request.

Additionally, the Tribunal emphasized that the FTT does not possess the authority to reinterpret or extend the discretionary powers of HMRC regarding the acceptance of claims made under regulation 5(2)(b). The strict adherence to the one-month backdating rule, as amended in 2012, left no room for further backdating based on circumstances outside the statutory framework.

Impact

This judgment reinforces the strict procedural requirements for claiming tax credits, especially for asylum seekers and refugees. The decision clarifies that oral claims, such as telephone calls, are insufficient to trigger the backdating of tax credits claims under the specific regulations. Future claimants in similar situations must ensure that their claims are made in writing using the approved forms or meet the conditions outlined under regulation 5(2)(b) to be eligible for backdating. Additionally, HMRC’s discretionary powers in accepting claims under certain regulations remain largely unchecked by tribunals, underscoring the importance of adhering to formal claim procedures.

Complex Concepts Simplified

Backdating of Claims

Backdating a claim refers to setting the effective date of a benefit to a date prior to the actual date of the claim submission. In this case, MK sought to have his tax credits recognized from the date he applied for asylum, thereby increasing his eligible period for receiving benefits.

Regulation 5(2)(b) of the Tax Credits (Claims and Notifications) Regulations 2002

This regulation allows for claims to be made in manners other than the standard written forms prescribed by HMRC, provided that HMRC decides to accept such alternative methods based on the circumstances. However, such acceptance is at HMRC’s discretion and does not automatically qualify every alternative method as valid.

Judicial Review vs. Tribunal Appeal

A judicial review is a procedure where courts examine the lawfulness of decisions or actions made by public bodies. In contrast, a tribunal appeal involves re-examining the facts and application of the law by a tribunal panel. In this case, the Upper Tribunal clarified that certain HMRC decisions are only subject to judicial review and not tribunal appeals.

Conclusion

The Upper Tribunal’s decision in MK v. Revenue and Customs (TC) [2018] UKUT 238 (AAC) underscores the rigidity of procedural requirements in claiming tax credits for asylum seekers. By dismissing MK’s appeal, the Tribunal reaffirmed that claims must strictly adhere to the prescribed methods and timelines set out in the relevant regulations. This judgment serves as a pivotal reference for both claimants and practitioners, highlighting the necessity of formal claim procedures and the limited scope of tribunal appeals in challenging HMRC’s discretionary decisions. The clarity provided by this case aids in setting expectations for future applicants and ensures a consistent application of tax credit regulations across similar cases.