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Tax Credits

Volume 455: debated on Wednesday 24 January 2007

The European Court of Human Rights (ECtHR) made a ruling in Strasbourg on 14 November on the case of Tsfayo v. The United Kingdom (Application number 60860/00)

Ms Tsfayo's case concerned a dispute regarding her entitlement to housing benefit and whether she was afforded a fair hearing of her appeal by an independent and impartial tribunal as set out in article 6 § 1 of ECHR. The ECtHR held that the lack of an independent and impartial first instance tribunal could not, in that particular case, be remedied by judicial review.

In contrast, the Tax Credits Act 2002 provides for a right of appeal against a decision on entitlement, and therefore an opportunity to challenge the amount of any overpayment that has arisen, or the determination of a penalty or a decision that interest should be charged on an overpayment of tax credit. These appeals are to the Unified Appeals tribunals, which are independent and impartial to HMRC and therefore the provisions of article 6 § 1 ECHR are satisfied.

Unlike a decision regarding entitlement to tax credits, HMRC's decision to recover an overpayment under s28 Tax Credits Act is not a determination of civil rights and obligations within article 6 § 1 ECHR. Even if it were however, in seeking to recover an overpayment, HMRC is exercising a discretionary power and an appeal against such a decision by way of judicial review would fully satisfy the provisions of article 6 § 1 ECHR.

A claimant does have the right to dispute the recovery of an overpayment by way of an internal review by the Tax Credit Office. In addition, they can ask either the Adjudicator or, through their Member of Parliament, the Parliamentary Ombudsman to consider the handling of their case.

The ECtHR ruling has no adverse implications for tax credits.