Humphreys v HMRC: Supreme Court hearing

Today was the first day of the Supreme Court’s hearing in the case of Humphreys v HMRC, about sex discrimination in the child tax credit system.

Mr Humphreys is complaining about the fact that HMRC refused him child tax credit in 2004-5. His children were staying with him 3 days a week – and 4 days a week with their mother. He was therefore what you might call the “substantial minority carer” in a shared childcare situation.

The problem is that the child tax credits legislation only provides for CTC to be paid to one carer. Section 8 of the Tax Credits Act 2002 says

8.–(1) Entitlement of the person or persons by whom a claim for child tax credit has been made is dependent on him, or either or both of them, being responsible for one or more children or qualifying young persons.

(2) Regulations may make provision for the purposes of child tax credit as to the circumstances in which a person is or is not responsible for a child or qualifying young person.

The regulations made under section 8(2) are the Child Tax Credit Regulations 2002, regulation 3(1) of which lays down among other rules a rule to be applied in a case where a child normally lives with more than one person, where they don’t agree which should get CTC:

2.2 The child or qualifying young person shall be treated as the responsibility of –

(a) only one of those persons making such claims, and

(b) whichever of them has (comparing between them) the main responsibility for him (the ‘main responsibility test’)

It’s this “main responsibility test” that Mr Humphreys failed, since he was the minority carer.

His argument is that this test discriminates indirectly against men, since statistically they’re more likely to be substantial minority carers. HMRC doesn’t dispute that plank of his argument. But he also says that discrimination can’t be objectively justified by HMRC (as it must be in order to comply with human rights, specifically the article 14 Convention right not to be discriminated against in the enjoyment of his rights to property), particularly because of the effect losing that money had on him as a parent on benefits. HMRC argues that adopting a rough and ready (or “bright lines”) policy of giving money only to one parent can be justified because of the difficulty in designing the system so as to deliver finely calculated benefits for all. The fact that the system has apparently harsh effects in some cases doesn’t mean it can’t be justified in general terms.

Mr Humphreys initially won his discrimination claim at an appeal tribunal, but HMRC succeeded on appeal to the Administrative Appeals Chamber of the Upper Tribunal, whose decision was upheld by the Court of Appeal. On this final appeal to the Supreme Court (of course if he loses he’ll be able to apply to the European Court of Human Rights; but that’s not strictly an appeal) the issue is solely and squarely whether HMRC’s policy is justified in law.

Today’s hearing focused mainly on two legal questions: first, what test the court should apply when deciding whether HMRC’s policy is justified, and secondly what kind of legal remedy it can offer if it rules the policy unjustified.

On justification, Richard Drabble QC for Mr Humphreys argued that in spite of what appeared to emerge from various cases the correct test is not whether the policy “manifestly has no reasonable foundation”, but something more demanding – he seemed to be arguing at one point that when he used that phrase in Axa v Lord Advocate (para. 31) Lord Hope was merely deciding whether the policy in question in that case had a legitimate policy aim at all – not whether it was justified by that aim.

Jason Coppel’s response later in the day was to cite a battery of cases (Carson & Reynolds v Work & Pensions Secretary, Hooper, RJM and Stec v UK) in support of his contention that, at least in a social welfare policy context such as this, the “manifestly without reasonable foundation” test was indeed the right one – so that he only needed to establish that HMRC’s policy has a reasonable foundation, in order to justify it in law. I used to advise DWP in this area of law, and indeed worked on the Reynolds case and others like it many years ago, so you may think I’m biased, but Jason Coppel’s submission on this point were clearly the more focused and compelling. I think HMRC must win this point; Coppel must though tomorrow set out what his “reasonable foundation” is.

On remedies, I thought Richard Drabble’s approach confused: when pressed by the Justices he said he was arguing that rule 2.2 – the “main responsibility test” I outlined above – should be “disapplied” in Mr Humphrey’s case. That sounds all right on a superficial level, but I thought as I heard it that it smelled a little too like an EU law approach to remedying the position – and indeed Drabble placed throughout his submissions a great deal of emphasis on the case of Hockenjos v Social Security Secretary which is quite analogous to this case – except that it was an EU law, not a human rights, case. I wonder whether that’s somehow blurred Richard Drabble’s thinking on remedies.

Lord Walker seemed to feel the same unease and suggested Richard Drabble ought to be considering section 6 of the Human Rights Act as his answer – implying (he didn’t say so) that the remedy might be to strike down the rule 2.2 main responsibility test entirely as having been made unlawfully. That led to the – I thought extraordinary – statement by Richard Drabble that a remedy under the Human Rights Act was his “fallback”. I can’t understand how it can be other than his first and last preference, in a Human Rights Act case. On this point, Jason Coppel will reply tomorrow.

For what it’s worth, I think the proper approach to remedies (assuming for the sake or the argument that the discrimination can’t be justified) must be first to consider whether rule 2.2 can be read or given effect in a way which is compatible with the article 14 Convention right, under section 3 of the Human Rights Act. I’d have thought Mr Humphreys’ best argument would be that it can’t (it’s difficult to see how it can; and I’m not sure simply selective disapplication is a legitimate method) and that it must therefore be struck down as in breach of section 6.

Be that as it may, at roughly half time I’d say HMRC is comfortably ahead.