CPAG in Scotland: Tax Credits Project: Tax Credits and Judicial Review

CPAG in Scotland Tax Credits Project: Factsheet 10

Tax Credits and Judicial Review

Judicial review
What is judicial review?
When can JR proceedings be brought?
On what grounds can decisions be subject to JR?
How to bring JR proceedings
What can the court do?
What are the advantages?
What are the disadvantages?
When might JR be useful in tax credit cases?
Further information and advice

Tax Credits and Judicial Review is one of a series of Child Poverty Action Group in Scotland leaflets giving guidance to advisers and those working with families in Scotland about aspects of the tax credit system of particular concern. Child Poverty Action Group promotes action for the prevention of poverty among children and families with children.

Judicial review

Judicial review (JR) is a legal remedy which is sometimes appropriate in tax credit cases. This leaflet explains when JR proceedings can be brought and when they might apply to decisions made by the Revenue in tax credit cases. The terms used in this leaflet, and the process described, are relevant to JR in Scotland. In England and Wales the terminology and process are slightly different.

What is judicial review?

JR is the process by which the Court of Session reviews the legality of a decision made (or the failure to make a decision) by a ‘public body’. The Revenue counts as a ‘public body’. In some types of cases, JR is heard by the Upper Tribunal.

When can JR proceedings be brought?

JR is only available when there is no alternative remedy, for example the right of appeal to the First-tier Tribunal (Social Entitlement Chamber) or to the Upper Tribunal on a point of law. You will usually also be expected to have exhausted the available complaints procedure which, in tax credit cases, includes the internal complaints procedure, the Adjudicator’s Office and the Parliamentary Ombudsman (see CPAG in Scotland’s leaflet Tax Credits and Complaints).

In Scotland there is no specific time limit for bringing JR proceedings, but they must be brought as quickly as possible.

On what grounds can decisions be subject to JR?

Illegality

Irrationality

Procedural impropriety

Where the law has been applied wrongly

Where regulations go beyond what an enabling Act of Parliament allows (they are ultra vires)

Where no reasonable authority (‘public body’), properly instructed as to the law, could possibly have come to the decision

Where discretion has been wrongly exercised,

eg. irrelevant considerations have been taken into account or relevant considerations have been ignored
a blanket policy has been applied so as the merits of individual cases are not considered

Where the public body fails to exercise its powers in accordance with procedure laid down by law

How to bring JR proceedings

You should write a letter to the Revenue setting out every point which you believe supports your case and requesting that it reconsiders its decision (this is not essential, but is useful as part of the process of exhausting all available avenues for challenging the decision in question).
If the Revenue doesn’t put things right, you can raise a petition to the Court of Session for judicial review and obtain a court order for service of this petition on the Revenue.
This court order is usually granted without opposition unless some form of interim remedy is requested at the same time.
If some form of interim remedy is requested the Revenue will usually have the chance to oppose this.
If the court orders the service of the petition for judicial review on the Revenue it will also specify a date for hearing the case.

Legal help: JR is a complex legal procedure and you should seek advice from a solicitor. Depending on your income you might be entitled to Legal Aid.

What can the court do?

If it is an application that challenges a procedural decision or ruling of the First-tier Tribunal (where there is no right of appeal directly to the Upper Tribunal), then the Court of Session will transfer the case to be heard by the Upper Tribunal. If it is another type of case, the Court has discretion whether to hear the case itself or transfer it. A case can only be transferred to the Upper Tribunal if the application only concerns the Court’s supervisory function.

If the case is transferred to the Upper Tribunal, it must notify each party and give directions as to the conduct of proceedings. The Upper Tribunal has the same powers as the Court of Session.

There are four main orders that the Court of Session or Upper Tribunal can make in JR cases.

Reduction	Specific performance	Interdict	Declarator
This nullifies the decision.	This orders the decision-making authority to carry out its legal duties.	This orders the authority not to do something.	This makes a statement of the parties’ legal rights.

Damages are rarely awarded in JR cases. The Court or Upper Tribunal has powers to make an order for expenses if it considers that a party or representative has acted unreasonably in bringing, defending or conducting JR proceedings.

What are the advantages?

JR can be very fast and effective and public bodies like the Revenue have to comply with orders made by the Court or Upper Tribunal. The letter prior to JR action can be very effective in settling cases quickly without having to go through the whole JR procedure.

What are the disadvantages?

JR is a complex and expensive procedure which you cannot realistically attempt without the assistance of a solicitor. If you are not eligible for Legal Aid the costs can be prohibitive.

When might JR be useful in tax credit cases?

JR is most likely to be useful where there is no right of appeal against a particular tax credit decision, or where you are disadvantaged by the Revenue failing to follow procedure laid down by law.

Example

Susan has claimed tax credits as a single parent with 3 young children, working 16 hours a week since April 2003. She has an overpayment of around £9000 because in 2008-09 she accidentally put £53,330 on her annual declaration form when her actual income was £5,330. The Revenue reassessed her award for that year based on this higher income and decided that nearly all of her award for that year was an overpayment. The Revenue has been pursuing the overpayment ever since. It took a long time to explain how the overpayment occurred and the Revenue say it is now too late to go back and revise the final decision for 2008-09. She has submitted proof of her correct earnings figure but the Revenue say the overpayment still stands and will be recovered from her ongoing award. Under the Revenue’s code of practice on recovering overpayments, (COP26), it was her mistake and the Revenue states it acted correctly based on the information she provided.

Susan cannot appeal the final decision on entitlement for 2008-09 because she is outside the 13-month time limit. She has exhausted the internal dispute procedure. The circumstances are urgent as deductions are about to start so the complaints procedure may not offer an effective remedy. She could have grounds for JR on the basis that the Revenue has acted irrationally in applying a blanket policy.

A letter could be written to the Revenue setting out all the reasons why it is believed that the Revenue's decision is the wrong one and that it should be changed. At any hearing of the case the Court or Upper Tribunal will listen to legal arguments for Susan and the Revenue and decide what should be done. If it decides to reduce the Revenue's decision then the Revenue will have to make a fresh decision on Susan's request not to recover the overpayment.

Further information and advice

CPAG in Scotland Tax Credits Project summary webpages

Child Poverty Action Group in Scotland
0141 552 0552 advice line for advisers on benefits and tax credits,
Monday to Friday 10am to 12pm

Email: advice@cpagscotland.org.uk
email advice for advisers on benefits and tax credits

Website: www.cpag.org.uk/scotland/taxcredits/
for more tax credit leaflets from CPAG in Scotland

CPAG publishes the Welfare Benefits and Tax Credits Handbook, a comprehensive guide to benefits and tax credits for claimants and advisers.

CPAG in Scotland’s advice line is only for advisers. If you are having problems with your own tax credit or benefit claim and are in need of advice you should contact your citizens advice bureau or other local welfare rights service.

HM Revenue and Customs
Tax Credit Helpline 0845 300 3900
(textphone 0845 300 3909)

This fact sheet was last updated April 2011

Child Poverty Action Group is a charity registered in England and Wales (registration number 294841) and in Scotland (registration number SC039339). Company limited by guarantee registered in England (registration number 1993854). Registered office: 94 White Lion Street, London N1 9PF

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