LV v Revenue And Customs

Factual and Procedural Background

The Plaintiff is a woman born in 1967 who, together with her partner, has a son included in a child tax credit award for the period 6th April 2007 to 5th April 2008. Prior to this period, their son was diagnosed with ADHD and possibly other conditions. On 14th February 2007, the Plaintiff telephoned an office of the Department for Work and Pensions (DWP) to notify that her son had become or was diagnosed as disabled and that she wished to claim Disability Living Allowance (DLA) on his behalf. This telephone call was treated as the date of claim for a subsequent written claim. The Secretary of State initially refused the claim on 1st May 2007, but the Plaintiff successfully appealed to the First-tier Tribunal, which awarded a middle rate care component of DLA from 14th February 2007 for two years. The Plaintiff informed HM Revenue and Customs (HMRC) of this decision by telephone on 3rd December 2007.

HMRC increased the child tax credit amount on 5th December 2007 to reflect the disability element, but only from 3rd September 2007, three months prior to the notification to HMRC. The Plaintiff contended that the increase should apply from 14th February 2007, the date the DLA was awarded. The First-tier Tribunal confirmed HMRC's decision on 3rd September 2009. The Plaintiff's application for permission to appeal to the Upper Tribunal was refused by a Regional Tribunal Judge on 22nd January 2010. The Plaintiff then obtained permission to appeal from the Upper Tribunal Judge on 11th May 2010. An oral hearing was directed on 2nd August 2010. HMRC opposed the appeal and supported the First-tier Tribunal's decision.

Legal Issues Presented

1. Whether the telephone notification made by the Plaintiff to the Department for Work and Pensions on 14th February 2007 constituted effective notification for the purposes of regulation 26A(3)(a) of the Tax Credits (Claims and Notifications) Regulations 2002.
2. Whether the disability element of child tax credit should be payable from the date of the initial DLA claim notification (14th February 2007) or from three months prior to the notification to HMRC (3rd September 2007).

Arguments of the Parties

Appellant's Arguments

• The telephone call on 14th February 2007 to an office of the Department for Work and Pensions constituted adequate notification under regulation 26A(3)(a).
• Regulation 22(3) allows notification to be given orally, and the definitions in regulation 2 do not restrict notification to HMRC offices alone.
• A literal reading of the regulations supports that notification to DWP is effective and that restricting notification to HMRC would negate the role of the Secretary of State as a relevant authority.
• The Plaintiff argued that it is unfair for her to suffer financial loss due to the Secretary of State's initial incorrect decision on the DLA claim.

Respondent's Arguments

• Notification would be effective only if given to HMRC, not the Department for Work and Pensions.
• HMRC applied the general rule that the increase in child tax credit can only be backdated to three months before notification to HMRC.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed the relevant statutory framework, particularly the Tax Credits (Claims and Notifications) Regulations 2002 as they existed at the relevant time. It identified that the general rule under regulation 25 limits backdating to three months before notification to HMRC. However, regulation 26A provides an exception for child tax credit in circumstances involving claims for the disability element linked to DLA.

The court focused on whether the Plaintiff's telephone call to the Department for Work and Pensions on 14th February 2007 constituted effective notification under regulation 26A(3)(a). The court noted that notification may be oral and that the definitions of "appropriate office" and "relevant authority" include both HMRC and the Department for Work and Pensions. The court rejected the Respondent's argument that notification must be to HMRC only, reasoning that such a restrictive interpretation would render the inclusion of the Secretary of State in the regulations meaningless.

The court also took into account the unfairness of the Plaintiff suffering financial loss due to the Secretary of State's initial incorrect decision on the DLA claim. Based on these considerations, the court concluded that the telephone call to the Department for Work and Pensions was effective notification under regulation 26A(3)(a), thus entitling the Plaintiff to the disability element of child tax credit from the earlier date.

Holding and Implications

The court's final decision was to allow the appeal by the Plaintiff. The decision of the First-tier Tribunal was set aside and substituted with the ruling that effective notification of the claim for DLA was given on 14th February 2007.

The direct consequence is that the Plaintiff is entitled to receive the disability element of child tax credit from 14th February 2007, rather than from three months prior to the notification to HMRC. No broader precedent beyond the facts of this case was established.