UC migration and legacy benefits – the claim is all

Both natural and managed migration to universal credit (UC) involve rules terminating legacy benefits where a claim for UC is made. Is anything other than a claim required here? The basic answer is no, as explained by Simon Osborne.

In both natural and managed migration, rules provide for termination of legacy benefits (including tax credits) on the making of a ‘claim’ for UC. For income-related employment and support allowance (ESA) and income-based jobseeker’s allowance (JSA), the relevant rules are in the Welfare Reform Act 2012 Commencement Orders.1The original provision, adopted and modified in subsequent Commencement Orders, is at Article 4 of the ‘No.9’ Order, SI 2013 No.983 For the other legacy benefits, the relevant rule is at regulation 8 of the Universal Credit (Transitional Provisions) Regulations 2014 (‘the UC TP Regulations’).2SI 2014 No.1230

But what if the claimant turns out not to be entitled to UC? And what if they withdraw the claim for UC? In the light of some legislative change and some caselaw authority from the Upper Tribunal, we now know that termination will still be lawful, and was in the past. (These developments mean that the potential arguments about these questions, originally set out in articles in Bulletin 262 and then revisited in Bulletin 267, will not apply.)

Because in all the rules the reference is to a ‘claim’ for UC having been made, the default has always been that legacy benefit will terminate following a claim for UC, even if UC itself is (in a later decision) refused.

For termination of legacy benefits other than income-related ESA or income-based JSA (ie, income support (IS), housing benefit (HB) and tax credits), a question arose about a provision which also required the Secretary of State to have been ‘satisfied’ that the ‘basic’ (but not financial) conditions for UC, with the exception of the one requiring acceptance of the claimant commitment, were met. The provision was at regulation 8(1)(b) of the UC TP Regulations. The basic conditions that were referred to there are those about minimum and maximum age, not ‘receiving education’, and being ‘in’ Great Britain (with the habitual residence and right to reside tests being relevant under rules supplementary to that in the termination rule).

Since 25 July 2022, the Secretary of State no longer needs to be ‘satisfied’ about the UC basic conditions in order for legacy benefits to be terminated. That is due to the removal, from that date, of subparagraph (1)(b) of regulation 8 of the UC TP Regulations.3The Universal Credit (Transitional Provisions) Amendment Regulations 2022 No.752 The only requirement is for a ‘claim’ for UC to have been made. The official explanation for the change was to remove the difference with the separate rules regarding termination of income-related ESA and income-based JSA, which had never imposed a requirement for the Secretary of State to have been satisfied about any aspect of UC entitlement for termination to occur.

What about regarding claims made before 25 July 2022? Could claimants subsequently found not to be entitled to UC, because for example they failed the right to reside test, successfully argue that termination under regulation 8(1)(b) had not been lawful as it was later decided that in fact they did not meet the basic conditions, so the Secretary of State could not have been properly ‘satisfied’ that they did?

Decisions of the Upper Tribunal have rejected that argument. In particular, the situation has been settled by the decision of the three-judge panel in HMRC v SSWP and SA (TC) [2022] UKUT 350 (AAC) (20 December 2022). That holds that it was simply a question of fact whether the Secretary of State was ‘satisfied’, for the purposes of regulation 8(1)(b), that the claimant met the basic conditions, and there was no test in this context of whether the Secretary of State was properly satisfied. In effect, the making of the claim and the Secretary of State being satisfied occurred simultaneously. The stop notice sent by the UC computer to HM Revenue and Customs (HMRC) in tax credit cases was evidence that that had occurred. That was the position correctly adopted by Judge Jacobs in his earlier decision in SK v Revenue and Customs Commissioner and another [2022] UKUT 10 (AAC), reported as [2022] PTSR 818 (see Bulletin 287, p12).

If a claim for UC is made but then withdrawn, is that capable of preventing termination of the legacy benefit? No, and it does not matter how quickly the claim is withdrawn.

Since 25 July 2022, this has been explicit. From then, regulation 8(1)(a) of the UT TP Regulations provides that termination can occur where a claim for UC is made, ‘whether or not subsequently withdrawn’.4SI 2022 No.752 (see note 3)

What about before 25 July 2022? Caselaw authority has established that, in effect, the same applied. In HMRC v SSWP and GS (TC) [2023] UKUT 9 (AAC), the claimant and his partner were entitled to working tax credit (WTC) but claimed UC on 7 July 2020. The UC claim was withdrawn on the same day, three days before the issue of the electronic ‘stop notice’ to HMRC to terminate tax credits from 7 July. The claimant argued that because he had withdrawn the UC claim on the same day it was made, and before the issue of the stop notice, that precluded the Secretary of State from being satisfied that the basic conditions for UC were met.

Rejecting that in the Upper Tribunal, Judge West followed the earlier decision of Judge Jacobs in JL v Calderdale MBC and SSWP [2022] UKUT 9 (AAC) (Bulletin 287, p12), which was also a case in which the claimant had purported to withdraw the claim for UC just hours after it had been made. Judge Jacobs held there that that did not matter, either because formally it was not possible to withdraw a claim in this situation, or even if it was, the withdrawal did not ‘rewrite history’ so as to mean that no claim for UC had been made. The earlier decision of Judge Mitchell in HMRC v AB [2021] UKUT 209 (AAC) (Bulletin 286, p12), in which it had been suggested that withdrawal of the claim before issue of the ‘stop notice’ could prevent termination, was not followed. Judge West explicitly followed JL in this regard too. Citing authority that where decisions of equal authority were in conflict the more recent should be followed in the absence of cogent reasons to the contrary, the judge also said that in any event he found JL compelling and that HMRC v AB had been decided ‘on different arguments and a different explanation of how the online universal credit system worked’.

A claim for UC made by a claimant on legacy benefits will lead to the termination of the legacy benefit. The termination is not dependent on the claimant actually being entitled to UC. That was the case even for claims made before 25 July 2022, despite a provision (no longer in force) regarding IS, HB and tax credits which required the Secretary of State to have been ‘satisfied’ that the UC basic conditions were met.

Once a claim for UC is made, termination of legacy benefits cannot be prevented or reversed by an attempt to withdraw the claim, no matter how speedy that is. Even if it is formally possible to withdraw the claim, that cannot be retrospective in effect, so the fact that a claim was made will still pertain.

Claimants on legacy benefits, therefore, need to be very aware of the consequences of submitting a claim for UC. In essence, such a claim will lead to termination of the legacy benefit award, irrespective of the decision on UC entitlement and any attempt to withdraw the claim.