Decision No: C2/02-03(TC)

SOCIAL SECURITY ADMINISTRATION (NORTHERN IRELAND) ACT 1992

SOCIAL SECURITY (NORTHERN IRELAND) ORDER 1998

TAX CREDIT

Appeal to a Social Security Commissioner on a question of law from a Tribunal’s decision dated 9 January 2002

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1.	This is an appeal, leave having been granted by the legally qualified panel member (LQPM), by the claimant against a decision dated 9 January 2002 of an Appeal Tribunal sitting at Ballymena.  That Tribunal had disallowed the claimant’s appeal against a decision maker’s decision dated 8 January 2001 to the effect that the claimant’s Working Families Tax Credit (WFTC) award was ended on 8 January 2001 because her daughter S could no longer be treated as a member of her household from that date.  A sum of £1,509.43 had been overpaid and, was decided to be recoverable as having been made as a result of a failure to disclose the material fact that S had claimed Income Support.

2.	Before the Tribunal it was not disputed that S had claimed and had been awarded Income Support from and including 8 January 2001 and that the claimant was aware of the payment of the Income Support to S.  The claimant’s appeal to the Tribunal, at which she was represented by Mr McVeigh, who also represented her in the appeal to me, consisted in part of an argument that S remained a member of the claimant’s household and if S was such a member of the household it was not reasonable to expect the claimant to disclose S’s receipt of Income Support.  The claimant also stated in evidence that she had disclosed the matter to her local office.  The Tribunal concluded that S was no longer a member of the household after she was awarded Income Support and that the claimant had failed to disclose the material fact of the award of income support to S.

3.	For purposes of clarity I set out below the Tribunal’s reasoning in relation to the matter of membership of the claimant’s household: -  

“….The claimant’s representative has argued that [S] remained a member of the claimant’s household and the award of Working Families Tax Credit remained valid.

Regulation 49A of the Family Credit (General) Regulations (Northern Ireland) deals with young persons leaving full time education.  It states,

49A(1) Subject to para (3), where an award of Working Families Tax Credit is payable and the claimant … (is) responsible … for a young person and that young person –

(b) ceases, or has ceased to receive full time education, that cessation shall be a change of circumstances affecting the award, the award shall be superseded and the award shall cease with effect from the date specified in para (2).

(2)	The date specified for the purposes of para (1) shall be –

(b) the date upon which young person attains the age of 16 or ceases to receive full time education, whichever is the later.

(3)	para (1) shall not apply where a young person referred to in that paragraph is a member of the same household as one or more children or, as the case may be, young persons who are still receiving full time education.

In the claimant’s case regulation, 49(A) does not apply because of the two younger children.

Section 127(4) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 states 

“Regulations may provide that an award of Working Families Tax Credit shall terminate …(b) if income support … becomes payable in respect of a person who was a member of the family at the date of claim of Working Families Tax Credit.

The notes on this in Vol 11 of Social Security Legislation 2001 refer to regulation 50.  Regulation 50 of the Family Credit (General) Regulations (Northern Ireland) 1987 is aimed at the prevention of duplication of awards of Working Families Tax Credit and income support.  It provides,

Where a provision is made for the same child or young person in awards for overlapping periods, the first being an award of Working Families Tax Credit and the second an award of …. Income support, and at the start of the periods of overlap that child or young persons is no longer a member of the household of the claimant under the first award, the first award shall terminate, with effect from the period of overlap.

The claimant’s representative has focused on the meaning of ‘no longer a member of the household of the claimant’.  His argument is that the ordinary meaning must be given to ‘member of household’ and applying this to the facts, [S] remained a member of her mother’s household.  He refers to extracts from the CPAG p752, which deals with the criteria used in determining if a couple are living as members of the same household.  He also refers to the Inland Revenue’s Decision Maker’s guide.  It points out that ‘household’ is not defined in the regulations and must be given its ordinary meaning being a domestic establishment containing essentials of home life held together by a particular kind of tie.  The guide states that a young person is a member of an applicant’s household if the applicant is responsible for them unless certain circumstances outlined apply, such as the child being in custody which are not relevant to the present appeal.

For regulation 50 to operate to terminate an award of Working Families Tax Credit on the subsequent award of income support it is a precondition that at the point of overlap the young person included in both awards is no longer a member of the claimant’s household.  As has been said, household is not defined.

The Tribunal accepts that in practical terms the claimant’s household is going on much as it was at the start of the application for Working Families Tax Credit.  There are the natural bonds of family love and affection rather than any commercial arrangement controlling the occupation of the family home.  If the test applied to couples referred to in the CPAG handbook p752 was applied, the tribunal would find as a fact that the claimant and her daughter were living in the same household rather than maintaining separate households under one roof.

Considerable care must be exercised in seeking to explain an undefined phrase such as ‘household’ by reference to particular benefit situations as each carried their own conditions.  The test for a means tested benefit as to whether a man and woman are living together in the same household as a couple is not the same as a claim to include children or young persons.  The test applied in claiming for the latter requires consideration of whether the claimant is responsible for a child in the household.  For instance, different rules apply for claiming for young people aged over 16 who are no longer in relevant education.  In the view of the tribunal, [S’s] claim to income support had the effect of severing her from her mother’s household notwithstanding the practical realities.  The Inland Revenue guide DDMG11075 in considering membership of a household does refer to the applicant being responsible for the young person.  The view of the tribunal is that whilst in practical terms [S] remained a member of her mother’s household her own claim to income support meant her mother was no longer responsible for her.

The Tribunal is influenced by the enabling provision, article 127 of SSC and Benefits (NI) as 1992.  Article 127 sets out the condition of entitlement to Working Families Tax Credit and refers to claimant in remunerative employment responsible for a member of the same household who is a child or a person of a prescribed description (namely aged 16-18 still in full time secondary education).  The award of Working Families Tax Credit is made in respect of a family unit.  Reference in article 127 (4) is made to termination if income support becomes payable in respect of a person who was a member of the family.  In the view of the tribunal when regulation 50 is read with article 127, Working Families Tax Credit terminates when the claimant’s daughter was awarded Income Support as at that point the claimant was no longer responsible for her nor was she a member of the family for benefit purposes.  In practical terms she did remain part of the claimant’s household but for benefit purposes she became a separate independent unit. …”

4.	The grounds of appeal to me are simply that the Tribunal erred in law in its interpretation of the word “household” within regulation 50 of the Family Credit (General) Regulations (Northern Ireland) 1997.

5.	The appeal is opposed by the Board of Inland Revenue (which is now in charge of the administration of Working Families Tax Credit (WFTC).  In his helpful submission dated 10 February 2003, Mr Eland for the Board submitted that membership of the household had to be established by reference to the Regulations.  He submitted that Article 127(4)(b) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 provided the basic rule that an award of WFTC should terminate if a member of the family in that award became entitled to income support.  He submitted that the Regulations and in particular regulation 50 thereof provided the detail.  Mr Eland argued as follows:

“I submit that the tribunal was right.  I submit that this is a case where membership of the household can be established by reference to the regulations.  I submit that article 127(4)(b) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, provides the basic rule that an award of WFTC shall terminate if a member of the family in that award becomes entitled to IS.  The regulations then provide the detail.  Reg 50 provides:

50. Prevention of duplication of awards of family credit and income support
Where provision is made for the same child or young person in awards for overlapping periods, the first being an award of [WFTC] and the second an award of [….., income support], and at the start of the period of overlap that child or young person is no longer a member of the household of the claimant under the first award, the first award shall terminate with effect from the start of the period of overlap.

Had the claimant’s daughter ceased to be a member of the claimant’s household?  Membership of the household is dealt with in reg 8.  The rule is simply that if an adult is treated as responsible for a child or young person under reg 7, the child is a member of the adult’s household:

7.	Circumstances in which a person is to be treated as responsible or not responsible for another

(1)	[….], a person shall be treated as responsible for a child or young person who is normally living with him.

The claimant’s daughter lived with the claimant so for the purposes of the claim for WFTC, the claimant was treated as being responsible for her daughter.  Furthermore, at the date of claim her daughter was a young person as defined in reg 2(1).  The definition in 2(1) is simply that “Young person” has the same meaning as prescribed in reg 6:

6. Persons of a prescribed description
(1)	Subject to paragraph (2), a person of a prescribed description for the purposes of Article 21(5)(c) (entitlement) and Article 21(11) of the Order (definition of the family) as it applies to [WFTC] is a person aged 16 or over but under 19 who is receiving full-time education within [Article 138(1)(c) of the Conts and Ben (NI) Act] (meaning of child), and in these Regulations such a person is referred to as “a young person”;.

[(2) Paragraph (1) shall not apply to a person-

(a)	who is entitled to income support or would, but for Article 21(9) of the Order (provision against dual entitlement of members of family), be so entitled;…]

It follows that if a person is a person of a prescribed description, he is a young person for the purposes of the Gen Regs.  When the award of WFTC was made, the claimant’s daughter was a “Young person” as defined, she normally lived with the claimant and was therefore a member of her household.  However, it is my submission that when the claimant’s daughter claimed, and was awarded, IS, she ceased to be a young person who normally lived with the claimant (reg 7) and was not, therefore, a member of the claimant’s household (reg 8).  As membership of the household is what the second part of reg 50 turns on, it is my submission that the claimant’s daughter was excluded from the point she claimed and received IS, and the test in reg 50 was satisfied.  I submit that the claim was correctly terminated and the tribunal’s decision that the claimant was no longer responsible for her daughter once IS had been awarded was correct.”

6.	He submitted that the decision of the Tribunal was properly reasoned and based on the correct application of the legislation.

7.	Mr McVeigh was given an opportunity to comment further on the matter but did not do so.

8.	I am in agreement with Mr Eland that the Tribunal decision was correct.  The salient factor appears to me that the claimant’s daughter ceased to be a child or young person from the date when she was an Income Support recipient.  Regulation 7 did not therefore apply to her.  She was not a child or young person and her mother was not therefore treated as responsible for her.  She was, as Mr Eland has submitted, a young person when the reward of WFTC was made.  At that time she normally lived with the claimant and was therefore a member of the claimant’s household.  However, when she claimed and was awarded Income Support, she ceased to be a young person (regulation 6(2)(a)).  Regulation 7 therefore did not permit her mother to be treated as responsible for her, she not being a young person from then on.  Regulation 8 (which applied only to young persons) did not enable her to be treated as a member of her mother’s household.  

9.	Section 127(4) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 provides:

“Regulations may provide that an award of working families tax credit shall terminate –
(a)	…
(b)	if income support …. becomes payable in respect of a person who was a member of the family at the date of claim for working families tax credit.”

10.	These provisions are exceptions to the general rule set out in section 127(3) of that Act that Working Families Tax Credit shall be payable for a period of 26 weeks or such other period as may be prescribed and that the award and the rate at which it is payable are not to be affected by any change of circumstances during that period.  I must therefore consider whether Regulations have been made under the above provision.  It does appear to me that regulation 50 of the Family Credit (General) Regulations (Northern Ireland) 1987 was so made.  That regulation provides that where provision is made for the same child or young person in awards for overlapping periods, the first being an award of WFTC and the second an award of Income Support and at the start of overlap that child or young person is no longer a member of the household of the claimant under the first award, the first award shall terminate with effect from the start of the period of overlap.  There appears to be no doubt that S was included in the initial award of WFTC and then became included in an overlapping award of Income Support.  As soon as that award was made she ceased to be a young person.   However, it appears to me that, to read regulation 50 in any sensible manner, the phrase “child or young person” must refer to the same individual throughout.  That being so the only question that has to be answered is whether S remained a member of the claimant’s household.

11.	Regulation 8 provides that where a claimant is treated as responsible for a young person by virtue of regulation 7 that child or young person shall be treated as a member of the claimant’s household.  Regulation 7 provides that a person shall be treated as responsible for a child or young person who is normally living with him.  S ceased to be a young person as of the date she became entitled to Income Support.  The claimant could not therefore be treated as responsible for her from that date.  From that date also as she was not a child or young person and the claimant was not responsible for her she could not be treated as a member of the claimant’s household within regulation 8.  I consider the Tribunal was correct and that membership of the household was to be determined by responsibility within regulation 7.  That being so and the claimant not being responsible for S, she could not be a member of the claimant’s household for WFTC purposes.

12.	I am in agreement with the Tribunal’s reasoning that membership of the household for WFTC purposes must be determined by applying the concept of responsibility within the Regulations as well as by continued residence.  We are dealing here with a means-tested benefit computed by reference to those for whom the claimant is financially responsible.  That must influence those who are to be included as members of the household for WFTC purposes.  Once, as here, a member of that household received certain benefits in his or her own right, a claimant could no longer be considered responsible for him or her.  This is logical because the new benefit recipient becomes financially independent.  The Regulations, while providing no specific definition of “household” must determine who can be included as members of the household for WFTC purposes.  It appears to me that they clearly exclude a person who is no longer a young person because he or she is a recipient of Income Support in her own right.

13.	That being so in this case, the provisions of regulation 50 meant that the award of WFTC had to terminate with effect from the start of the period of overlap with the Income Support award.  The Tribunal was correct in that conclusion and in concluding that entitlement to WFTC did not remain after the start of the Income Support award.  

14.	I therefore dismiss the appeal.

M F BROWN
COMMISSIONER

26 JUNE 2003