1. Introduction

The case of LS and RS v Commissioners for Her Majesty's Revenue and Customs (HMRC) ([2017] UKUT 257 (AAC)) addresses critical issues surrounding the jurisdiction of tribunals in the context of tax credits appeals under the Tax Credits Act 2002. The appellants, LS and RS, challenged decisions made by HMRC regarding their entitlement to tax credits. Central to the case were the procedural intricacies involving appeals against decisions made under different sections of the Tax Credits Act and the implications of subsequent decisions on the validity of ongoing appeals.

2. Summary of the Judgment

The Upper Tribunal (Administrative Appeals Chamber) examined whether appeals against decisions made under section 16 of the Tax Credits Act should lapse when a new decision under section 18 is issued for the same tax year. The Tribunal concluded that once HMRC makes a decision under section 18, any pending appeals against a section 16 decision automatically lapse due to the cessation of jurisdiction over the original decision. Consequently, the First-tier Tribunal (FTT) must strike out such appeals, as it no longer possesses jurisdiction. The Tribunal emphasized that lapsing is a jurisdictional concept, not explicitly defined in the Tax Credits Act, but derived from established legal principles.

3. Analysis

3.1 Precedents Cited

The judgment extensively referenced several key cases to underpin its reasoning:

• Eggleton (R(IS) 23/95): Established that an appeal lapses when the original decision is entirely revised or replaced.
• Salem (R v Secretary of State for the Home Department, ex parte Salem [1999] 1 AC 450): Highlighted that courts may entertain academic appeals only under exceptional public interest circumstances.
• Vasile Anghel: Demonstrated that extradition appeals do not automatically lapse upon extradition, emphasizing the importance of the appeal's substance.
• CFJ v HMRC: Illustrated procedural duties of tribunals to strike out appeals lacking jurisdiction.

These precedents collectively influenced the Tribunal's stance that lapsing is a jurisdictional matter, not governed by statute but by common law principles ensuring tribunals do not exceed their authoritative bounds.

3.2 Legal Reasoning

The Tribunal's legal reasoning centered on the concept of jurisdiction and the nature of appeals:

• Jurisdictional Boundaries: Emphasized that tribunals must operate within their statutory limits, and any appeal lacking a valid decision under their purview cannot proceed.
• Lapsing as a Jurisdictional Concept: Clarified that lapsing occurs when a prior decision loses its operative effect, thereby withdrawing the tribunal's jurisdiction over the appeal.
• Duty to Strike Out: Reinforced the obligation under rule 8(2)(a) of the Tribunals, Courts and Enforcement Act 2007, mandating tribunals to strike out proceedings lacking jurisdiction without discretion.

The Tribunal rejected arguments for discretionary continuance of appeals, asserting that practical considerations do not override strict jurisdictional confines. By differentiating between the First-tier Tribunal and Upper Tribunal jurisdictions, the judgment underscored that once a section 18 decision is rendered, any section 16 appeals are devoid of substantive ground and thus must be dismissed.

3.3 Impact

This judgment has significant implications for tax credits appeals:

• Clarification of Appeal Procedures: Establishes a clear procedural pathway for handling appeals affected by subsequent decisions, ensuring tribunals adhere to jurisdictional mandates.
• Jurisdictional Enforcement: Reinforces the principle that tribunals cannot overstep their jurisdiction, fostering judicial accountability and consistency.
• Administrative Efficiency: By mandating the striking out of invalid appeals, the judgment promotes procedural efficiency, preventing unnecessary tribunal proceedings.

Future cases involving overlapping or successive decisions under the Tax Credits Act will reference this precedent to determine the viability of ongoing appeals, ensuring that tribunals operate within their defined legal frameworks.

4. Complex Concepts Simplified

4.1 Jurisdiction

Jurisdiction refers to the authority granted to a tribunal or court to hear and decide specific types of cases. In this context, the First-tier Tribunal has the jurisdiction to consider appeals against decisions made under section 16 of the Tax Credits Act. However, when HMRC issues a decision under section 18 for the same tax year, it effectively nullifies the previous decision, thus withdrawing the tribunal's jurisdiction over the pending appeal.

4.2 Lapsing Principle

The lapsing principle dictates that an appeal must cease if the decision it contests is no longer operative. This occurs when a subsequent decision replaces or entirely revises the original one, rendering the appeal moot since there is no longer a valid decision to contest.

4.3 Rule 8(2)(a) of the Tribunals, Courts and Enforcement Act 2007

This rule imposes an obligation on tribunals to "strike out all or part of the proceedings if the tribunal did not have jurisdiction in relation to them." Importantly, it leaves no room for discretion, meaning tribunals must comply mandate to dismiss proceedings lacking authority.

5. Conclusion

The LS and RS v HMRC judgment provides a vital clarification on the jurisdictional interplay between successive decisions under the Tax Credits Act 2002. By establishing that appeals lapse when undermined by later section 18 decisions, the Tribunal ensures strict adherence to jurisdictional boundaries, preventing tribunals from exceeding their authority. This decision not only streamlines the appeals process but also upholds the integrity of judicial proceedings by enforcing procedural rules without discretionary deviation. Consequently, this precedent fortifies the legal framework governing tax credits appeals, promoting fairness, efficiency, and consistency in administrative adjudication.