CPAG – Recent Upper Tribunal case for HMRC


This section summarises recent decisions of the Upper Tribunal; these set a binding precedent on HMRC decision-makers and First–tier Tribunals in similar cases.

HMRC must show reasonable grounds for changing decision

This is another case highlighting HMRC’s poor practice in failing to set out the legal and factual basis for its decisions, and its appalling treatment of lone parents it has accused of living with a partner. In this case, the claimant was originally awarded child tax credit and working tax credit as a single claimant. Nearly a year later, HMRC declared that it had ‘reason to believe’ she was living with an undeclared partner and ended her claim because she ‘failed to provide sufficient evidence to support the validity of her single claim’. The Judge describes HMRC’s flawed logic in basing such a decision on the claimant’s inability to prove a negative, i.e. the failure to provide certain evidence that she is not living with a partner. ‘Astonishingly’, the claimant did send a reply and documentary evidence, which HMRC failed to include with the appeal papers. HMRC went on to take the ‘bold step’ of asking for the appeal to be struck out because the claimant had not provided evidence requested, despite not offering any itself. The Judge makes it clear that:

  • the onus of proof is on HMRC in these cases;
  • it must set out its evidence for reasonable grounds to change its original decision under section 16 of the Tax Credits Act;
  • it cannot rely on an adverse inference from the claimant’s failure to provide evidence.

The outcome of this case was that due to these failures, HMRC’s decision was cancelled, thereby reinstating the claimant’s entitlement. 

Read the decision in full: SB v HMRC [2014] UKUT 0543 (AAC)

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