Tax credits, appeals and ‘SLANs’

 

Mark Willis reviews recent caselaw about attempted appeals against tax credit ‘notices’ referred to by HMRC as ‘Statements Like an Award Notice’ or SLANs.

HMRC says that a SLAN (reference TC602(J)) may be issued during the annual review period to adjust a provisional award before an initial decision is made on the new tax year or a final decision has been made on the previous year.1

Judge Wright finds that there is no right of appeal against a SLAN. This case concerned the main responsibility test for a child. The father had received a SLAN dated 12 April 2012, apparently informing him that he did not have main responsibility for the child in question and adjusting his ongoing payments for his other child (although no copy of the SLAN was ever produced). The father had appealed against the SLAN on 27 April 2012. The final decision for 2011/12, which removed entitlement for the child in question, was not made until 7 February 2013. HMRC’s solicitor suggested that the case before the Upper Tribunal could be treated as an appeal against this decision.

Judge Wright finds difficulty with this suggestion, as the appeal submitted on 27 April 2012 could not have been an appeal against a decision some nine months off being made. However, the situation had resolved itself by the time of the decision, with HMRC making an ex gratia payment and writing off the alleged overpayment. Given this, Judge Wright did not need to address whether a subsequent letter from the claimant dated 13 February 2013 ought to have been, or could still be, treated as an appeal against the final decision.

Judge Wright criticises HMRC’s ‘defective procedures’, finding it ‘frankly disgraceful’ that it took until proceedings reached the Upper Tribunal to identify the issue. He claimed that HMRC’s inability to produce a copy of the decision said to be under appeal is ‘unjustifiable’. Judge Wright highlights that, although in this case there was no substantive injustice, other claimants might not be so fortunate and could find thatby time the true state of affairs is revealed, it might be too late to appeal against the actual decision.

Judge Wikeley finds thata SLAN is to be treated as a decision, so there is a right of appeal. This case concerned a Hungarian single claimant in receipt of working tax credit. At some point, HMRC appears to have formed the view that he was living with a partner (the judge comments that ‘the basis for this hunch/view/decision is still even today wholly unclear’).

On 13 September 2013, HMRC sent the claimant a letter (reference TC607 ‘Statement of Account’), which stated his tax credits would stop and that he had been overpaid £189.71 in the current (2013/14) tax year. On 23 October 2013, he received a letter (reference TC610, ‘Notice to Pay’). TCM0316020 for codes used on types of award notice

The claimant applied for permission to appeal to the Upper Tribunal. Judge Wikeley ultimately finds that in this case, ‘whatever the terminology, it is important to focus here in substance over form, and the SLAN notice was reasonably understood to be a notification of a decision and the claimant appealed in time against that decision.’ He goes on to allow the appeal and decides that the claimant was entitled to tax credits as a single person at all material times.

While both decisions referred to Kafka, advisers may find themselves having to use Orwellian doublethink to reconcile the apparent findings of the Upper Tribunal that the answer to the question ‘Is there a right of appeal against a SLAN?’ is simultaneously both yes and no. On closer analysis, it seems the answer is: ‘it depends on the circumstances of the case’.

In DG, the SLAN was followed by a final decision, and there was another party to the appeal (a competing claimant) who would have had an interest in arguing whether the appeal was correctly made, but the matter had been resolved by the time of the Upper Tribunal decision.

In TM, there was no trace of a final decision, the SLAN was reasonably understood to be a decision, and this was the only way the tribunal could address the claimant’s grievance, who was facing an unfounded overpayment of thousands of pounds.

To add a final touch of red tape, both these cases began before mandatory reconsideration was introduced for tax credits (decisions made on or after 6 April 2014). s21A Tax Credits Act 2002 If HMRC rejects a mandatory reconsideration because it has been made against a SLAN, the first course of action is to establish if and when a formal decision has been made, and request a mandatory reconsideration of that decision. If this is not possible, TM provides some scope to make the appeal, and bring this decision to the attention of the First-tier Tribunal. Pending further clarification, it is important for advisers to be extra careful when dealing with HMRC correspondence.

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