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Defective UC claim but Tax Credits stopped anyway - no appealable decision: advice needed!

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Jon (CANY)
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EKS_COTTON - 10 December 2019 11:00 AM

...
I also argued (b) that there is no explanation of how the system of stop notices work in LH, nor provided in the present case. Basically this info has to be provided by DWP and wasn’t in HMRCs appeal bundle.  the judge found that ‘stop notice referred to [in this case] are of no effect because neither the respondent [HMRC] or partner agencies have provided sufficient evidence to show that the basic condition in relation to the application for UC made by Mrs X were satisfied.’

EKS, thank you very much for your posts here.

We have a similar-ish case at the moment, except our client is alleging fraud or error, and denies every trying to make the UC claim herself. HMRC have said in their appeal response that the alleged claimant does or would meet the basic conditions (a) - (d)  [this not in dispute], and so conclude that the outcome of the SoS’s assessment of the basic conditions, which was “likely done by the universal credit computer system itself (as authorised by section 2(1)(a) and (2)(k) of the SSAA 1988), is therefore not in doubt”.

They also say: “The arrangements in question are comprised, in essence, of an electronic notification or signal (known as a “Stop Notice”) which is sent from the universal credit computer system to the tax credit computer system in any Tax Credit case where the condition in regulation 8(1) is met”

HMRC’s other justification for there being “little doubt” that our client made the UC claim is simply because this has been confirmed by the DWP, which as far as I can see says no more than that the Stop Notice exists. There is no recognition of the possibilities of official error or fraud, they just state “Accordingly, where HMRC receive a Stop Notice, the case must be a case where the Tax Credits claimant has applied for UC.”

Has anyone any views on whether the above meets what is said in LH? I.e.,

“The tribunal needed some evidence to link the stop notice itself to the Secretary of State being satisfied about the basic conditions. All that was required was an explanation of the system that led to the notice being issued”.

Elliot Kent
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Reg 8 TP Regs reads:

8.—(1) This regulation applies where–
(a) a claim for universal credit (other than a claim which is treated, in accordance with regulation 9(8) of the Claims and Payments Regulations, as having been made) is made; and
(b) the Secretary of State is satisfied that the claimant meets the basic conditions specified in section 4(1)(a) to (d) of the Act (other than any of those conditions which the claimant is not required to meet by virtue of regulations under section 4(2) of the Act).

Your argument is that 8(1)(a) isn’t satisfied - because no actual claim has been made. Whatever “claim” exists was the product of fraud or error and isn’t a claim at all. HMRC are responding to an argument that 8(1)(b) isn’t met - but that doesn’t address your argument. It’s irrelevant whether the basic conditions would have been satisfied if there was never a claim.

Jon (CANY)
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Thanks Elliot. We certainly plan to argue that, but I should have said that DWP don’t seem inclined to support the argument that the claim was from another person. For the purposes of challenging the tax credit decision, if the SoS’s position is that (a) and (b) are both met, then I’d like to have arguments on both points if possible.

roecab
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See also

https://www.bailii.org/uk/cases/UKUT/AAC/2020/108.pdf

Does not look like good news

EKS_COTTON
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The link doesn’t work.

Do you mean this link? https://assets.publishing.service.gov.uk/media/5e987a92d3bf7f4128b01efa/CUC_0968_2019.pdf

CUC/968/2019

Elliot Kent
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Its that one - the claimant’s name was on it by mistake and they have re-uploaded the anonymised version.

Did you ever get a statement in your case Emma?

EKS_COTTON
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I did - HMRC applied for reasons.  Not clear whether they are going to appeal further.  Haven’t had time to read the response or CUC/968/2019 yet.

I could upload the statement (anonymised).

Bear with me…

EKS_COTTON
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OK I have read CUC/968/2019.  At the same time I have today learned that HMRC have applied to the FTT for permission to appeal to the UT in my client’s case.  I haven’t seen their submission yet. 

CUC/968/2019 is complex and I need more time to process but on a first reading, it seems to be a very technical appeal about when a UC should be considered accepted as made given principles established in legacy benefit case law.  I read it as establishing the principle that the day the UC submit button is pressed, is the day the claim starts. I am unclear on whether how this could have a bearing on defective claim cases, but I could be wrong. There wasn’t any reference to the case of LH I don’t think?

So at this point I THINK the issue remains:

- There must be some evidence to link the stop notice to the SofS being satisfied that the basic conditions a-d were met

- In the case of LH, Judge Jacobs didn’t explain what this evidence was.

- In my clients’ case, the judge specifically cites this issue - that he had not been supplied with evidence by either HMRC or DWP to show that the conditions were satisfied before the stop notice was issued, and without seeing this, he could not agree that the stop notice had any effect in my clients case.

-Without correct identification before the stop notice is released, the risk of fraudulent claims continues - as recently discussed above by Jon and Elliot.

I attach a copy of the decision and the statement of reasons (redacted) with client permission.

What I am concerned about:-

- Appeals to the UT are meant to be on a point of law; so am I right in thinking HMRC/DWP cannot now come in with extra factual evidence to show that the SofS was satisfied that a-d were met before issuing the stop notice?

- My clients have gone a long time without benefit.  I have encouraged them to claim UC at each stage of this ordeal.  They remain very anti doing so.  So we carry on.  I wonder how far it is going to go and will keep Rightsnet updated.

Please do let me know thoughts.

[ Edited: 21 Apr 2020 at 03:14 pm by EKS_COTTON ]

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Elliot Kent
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I think it would be unwise to comment at the moment. Let’s see why HMRC say it is wrong.

Ken Butler
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Hi,

Does anyone know if the DWP have a ‘stop notice reverse’ procedure to inform HMRC that the notice is withdrawn?

For example, after the DWP find that a UC claim was not made fraudulently and not by the client.

In this case, the DWP has told the client that it accepts she did not make a UC claim and that the claim was fraudulent.

However, HMRC are refusing to reinstate the client’s tax credits on the grounds that the UC claim stated the client’s correct bank account details.

Can the client dispute this with HMRC via a MR and appeal?

CHAC Adviser
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Ken Butler - 23 June 2020 04:23 PM

However, HMRC are refusing to reinstate the client’s tax credits on the grounds that the UC claim stated the client’s correct bank account details.

Can the client dispute this with HMRC via a MR and appeal?

When I had this I submitted a formal written complaint to HMRC citing that the DWP had reinstated the benefits and that the then Secretary of State and Neil Couling had both in evidence to the Select Committee confirmed that legacy benefits could be reinstated no ifs or buts. It took about a month or so and a bit more prodding via telephone but that got them to reinstate.

EKS_COTTON
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Hi everyone,

Nothing has been posted here since 2020 so hoping this gets picked up.

We have now had a series of recent UT judgements which I think make clear that it is curtains for HMRC appeals of this nature (‘quick - let’s close the floodgates…’).

UA-2020-000563-TC - 18 Jan 2023 (3 judge)
https://www.rightsnet.org.uk/welfare-rights/caselaw/item/tribunal-hearing-appeal-against-hmrc-decision-to-terminate-tax-credits-following-universal-credit-claim-is-limited-to-deciding-whether-sswp-is-in-fact-satisfied-that-claimant-met-basic-con

UA-2021-001437-TC and UA-2021-001302-TC - 1 Feb 2023
https://www.rightsnet.org.uk/welfare-rights/caselaw/item/tribunal-hearing-appeal-against-hmrc-decision-to-terminate-tax-credits-following-claim-for-universal-credit-did-not-have-jurisdiction-to-consider-whether-dwp-was-entitled-to-be-satisfied-that-basic-u

It occurs to be that it is quite a brutal outcome for those involved.

There is an unfairness in that the claimants could not challenge the DWP about their verification process at the time because they had no UC claim and many still do not. 

I wonder whether an investigation into the processes set up between DWP and HMRC to terminate TC claims is warranted. Was the process put in place good enough?  Particularly given the how worse off some TC claimants will be on UC? 

The NI ombudsman gave a TC claimant financial redress following a claim to UC where he was worse off (hadn’t been advised to check whether better off first) - https://www.rightsnet.org.uk/welfare-rights/news/item/ombudsman-orders-department-for-communities-to-pay-claimant-amount-of-tax-credits-he-lost-after-being-advised-to-make-a-claim-for-universal-credit-which-was-unsuccessful

It seems like there is nowhere to go - JR is off the table, how/who to make a complaint to + would it even work?

Thoughts greatly appreciated and it would be good to get the group of claimants affected to take something forward.

EKS