Hello

My client received WTC for two years. He worked 30h per week as self-employed but his business did not make much profits. Now HMRC says that he has never been in ‘remunerative work’ and that he has been overpaid since the beginning of his business. He has appealed.

Questions:

Whose is the burden of proof? The client's (that he was in remunerative work) or HMRC's (that he was not)?

Is there any judgement on this issue?

Also, has any of you had any similar case, and what happened?




Any help please.

Although the concept of burden of proof has less of a role in inquisitorial proceedings than in adverserial ones it is, generally, up to the person who makes an allegation to prove the truth of that allegation.

So when a person makes a claim for benefit he must show that he can bring himself within the terms of entitlement. If he can successfully do that then to remove the benefit it then falls to the relevant authority to show either that the conditions of entitlement no longer apply or that they never lawfully applied in the first place.

To do that then the authority must be able to point to some fact or provide evidence to support its assertion. It then falls to the claimant to refute the assertion by pointing to some contrary fact or to provide rebuttal evidence.

The regulation repeats that used in income support cases and says that the work must be done for payment or in expectation of payment. There is a lot of caselaw from income support cases. The lead case is said to be R(IS) 22/95 and the Court of Appeal's decision annexed thereto. It relates to a case where on the facts there was no realistic prospect of payment because the business was making a loss. It was being kept open purely in order to be able to sell it as a going concern.

I didn't check before going onto this answer whether the case is on Rightsnet.

It isn't on Rightsnet but if you go into Toolkit, and find the link to reported decisions on the DWP website it's right there.

Thank you very much

here's link to R(IS)22/95

cheers ros

Nevip

I have just found the first decision on Tax Credits on this issue, dated 24 April 2009 (CTC/244/2008).

In this decision judge Rowland quotes the tribunal saying that 'the burden of proof is on the claimant'. Mr Rowland seems to accept this, because he complains that the claimant 'has not produced a shred of evidence that he was engaged in remunerative work'.

However, what you say seems correct, and eventually Mr Rowland had to somehow 'prove' that the claimant was not in remunerative work on the basis that, for example, his business 'had no assets capable of producing an income'.

My question is to what extent my client needs to produce evidence that he worked 30h per week. The issue here is that my client made some earnings from his business - not much, but one cannot say that his business is totally unable to make profits like that in CTC/244/2008. One thing is to show the spreadsheet to a tribunal, the other is to account for practical things (such as publicity, research, etc.) he was supposed of have done during the lat two years, which do not show in his accounting books.

If the burden of proof is on HMRC this may be a relief for my client. But can I still claim this after CTC/244/2008?

Giuseppina

Hi Giuseppina

I don’t know enough details of your client’s case but in the CD you cite HMRC had information before any final decisions were made on the tax credit claims that led them to believe that the claimant wasn’t in remunerative work. That is he did not receive an income. In my view that was a sufficient (but not necessary) condition for them to reach that conclusion. It was then up to the claimant to demonstrate that he was in remunerative work because it is a condition of entitlement under reg 4 of the WTC Entitlement Regs that the work is done for payment or expectation of payment. The claimant in that case was then given every opportunity to prove this but failed miserably.

When I say that the information held by HMRC was a sufficient but not a necessary condition for them to reach the conclusion they did was that work can be done for expectation of payment. In the case cited the claimant had waited over 3 years, had still not been paid and his explanation did not impress the tribunal or the commissioner.

regards
Paul

Wed 26-May-10 02:47 PM by shawn

(Edited to short link)

imho, i think that the reason welfs get so aggravated by HMRC is that although tax credits have replaced social security provision for children, the entire approach to tax credits by HMRC is a tax approach, from the drafting of the legislation, the attitude of administration, the blank incomprehension of expectations of accountabality...

the concept of entitlement as a legal right, with an associated tribunal system, does not sit well with revenues departments, who are armed with the most iron-clad legislation possible to enforce _their_ rights to claim tax payments. their bottom line is basically 'it's up to you to prove that you don't owe us any sum that we say you owe us.'

although tax credits are important in tackling child poverty, the transfer of child dependents payments from social security benefits has radically undermined individual entitlement and access to justice rights, which were significantly recognized in the 1948 Acts, and the 1980 Supplementary Benefits Act, which continued the integrated approach to benefits along contributory benefit lines...

it seems to me that much has been undermined and lost in the act of transferring functions to HMRC, and in the unsatisfactorily confused status of tax credit payments, and individual claimants have been left with inadequate legal protections and rights in relation to engaging with this monster.

in the enclosed Hansard link, it's interesting, and quite telling, that Stephen Timms claims that "HMRC's powers to recover taxes are statutory" in the context of tax credit overpayments.

Hansard link

iirc, the jurisdiction of the old Social Security Commissioners over tax credit appeals is temporary and there is an intention to transfer it to Tax Commissioners.

poor people cannot afford to engage tax lawyers, and that is what they will need at this rate...