Article by Robin Williamson published in the May 2002 issue of Tax Adviser. Robin Williamson is a senior technical editor with CCH Information and the news editor of the TaxAid website: TaxAid
Revenue powers to make extra-statutory concessions are wider than the Revenue thought.Key points
- A widower whose wife died in 1999 has failed to persuade the High Court that the Revenue should grant him an extra-statutory payment equivalent to the former widow's bereavement allowance
- Unless overruled on appeal, this case will offer cold comfort to other widowers in a similar situation who will still be compelled to seek justice in Strasbourg, notwithstanding the Human Rights Act 1998
- However, the judge declared ICTA 1988, s.262, the legislation that granted a tax allowance to widows but not to widowers, incompatible with the European Convention on Human Rights in the UK affecting tax legislation
- The judgment also contains some interesting material on the real extent of Revenue powers to make extra-statutory concessions. They are wider than the Revenue thought.
A 50-year old widower from Essex has won the right to take the Revenue to the Court of Appeal over their refusal to grant him the same tax allowance as if he had been a widow. The High Court in R (on the application of Wilkinson v IR Commrs  BTC 97 has ruled that the legislation that granted a tax allowance to widows, but not to widowers in the same situation, was incompatible with the European Convention on Human Rights (ECHR) because it was discriminatory in nature. However, the Revenue were under no duty to make an extra-statutory payment to widowers (although they did have power to do so). The case was heard just before a social security case in which certain widowers claimed that they should be given the same bereavement benefits as they would have received if they had been widows.
The discrimination is real, not merely academic. These days, widowers can face the same financial difficulties as widows in bringing up their family bereft of the support of their spouse, regardless of what happened in times when the man tended to be the sole breadwinner.
Until recently, the only course open to a widower denied a tax allowance or social security benefit on those grounds was to accept the injustice, or to take the government to the European Court of Human Rights (ECtHR) in Strasbourg. If he did the latter, the government would pay him the full amount claimed, and costs, on a ‘friendly settlement’ basis, but no payment would be made to other widowers.
The charity TaxAid has been running a campaign to encourage widowers whose bereavement fell within the previous six years, but before 6 April 2000 to write to the Inland Revenue claiming a widower’s bereavement payment (see TaxAid).
This case was essentially about the interaction of provisions of the taxes acts with human rights law.
Under Income and Corporation Taxes Act 1988 (ICTA 1988), s. 262, a tax allowance was available to a widow in the tax year in which her husband died, and the following tax year. The legislation made no equivalent provision for widowers. Section 262 was repealed by Finance Act 1999 (FA 1999) for deaths occurring after 5 April 2000, so that the widow’s bereavement allowance (as it was called) was no longer available after the end of 2000–2001. The Welfare Reform and Pensions Act 1999 has now put in place social security bereavement benefits which are available equally to widows and widowers.
The main human rights issue was whether granting a tax allowance to widows, but not to widowers in the same situation, was incompatible with Art. 14 of the ECHR, read with Art. 1 of the First Protocol.
Article 14 of the Convention provides that:
‘The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex ... ’
But article 14 cannot be relied upon in isolation: it must be shown that one of the ‘rights and freedoms set forth in [the] Convention’ (or ‘Convention rights’) has been effectively denied because of discrimination on the grounds set out in Art. 14. Among the Convention rights is that in Art. 1 of the First Protocol, ‘Protection of Property’:
‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.’
That right is subject (among other things) to the right of a state to secure the payment of taxes, contributions and penalties.
The Human Rights Act 1998 (HRA 1988) incorporated the terms of the Convention into United Kingdom (UK) domestic law with effect from 2 October 2000. Section 3 of that act requires that, so far as it is possible to do so, legislation must be read and given effect in a way that is compatible with the Convention rights. Section 4 enables a court in the UK to declare that a provision of UK primary (or secondary) legislation is incompatible with a Convention right, while s. 6(1) makes it unlawful for a public authority to act in a way which is incompatible with a Convention right. Section 6(2), however, lays down circumstances in which it is not unlawful for a public authority to act incompatibly with the Convention, as follows:
‘Subsection (1) does not apply to an act if –
(a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or
(b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention rights, the authority was acting so as to give effect to or enforce those provisions.’
It was on the construction of s. 6(2), and the extent of the Revenue’s powers of ‘care and management’ under Taxes Management Act 1970 (TMA 1970), s. 1 (the provision generally cited by the Revenue as giving them authority to make extra-statutory concessions), that the arguments mainly turned.
The claimant was Mr Adrian Wilkinson, whose wife died in June 1999. In November 2000, he claimed from the Revenue a sum equivalent to the widow’s bereavement allowance (WBA), a ‘widower’s bereavement payment’. He was prompted to do so because shortly beforehand, the government had settled with another widower, Mr Crossland, who had brought a complaint before the ECtHR in Strasbourg on the same issue. Mr Crossland’s claim was declared admissible (the government had not contested that) and the government paid him, by way of ‘friendly settlement’, a sum representing the full amount he would have received had the WBA been payable to widowers, and his costs in addition.
The Revenue rejected Mr Wilkinson’s claim. They said that their care and management powers did not allow them to contradict unambiguous primary legislation, such as the provisions that governed entitlement to the widow’s bereavement allowance. They added that the HRA 1988 made it unlawful for a public authority to act in a way that was incompatible with a Convention right unless it was required to do so by primary legislation.
Mr Wilkinson applied to the High Court for judicial review of the Revenue’s decision, on the grounds that they had acted unlawfully in refusing his claim. He was supported by Liberty, formerly the National Council for Civil Liberties.
The question was: could the Revenue use their powers of care and management to make Mr Wilkinson an extra-statutory widower’s bereavement payment? Or could HRA 1988, s. 3 apply to enable ICTA 1988 s. 262 of to be read and given effect in a way which was compatible with the Convention?
The Revenue offered no justification for the fact that ICTA 1988, s. 262 was discriminatory in giving a tax allowance to widows, but not to widowers.
As shown above, s. 6(2)(a) excuses a public authority from acting in a way that is incompatible with a Convention right if, because of a provision of primary legislation, it could not have acted differently. The question here was, could the Revenue have acted differently? If so, could the legislative provisions be read so as to impose on the Revenue a duty to make the extra-statutory payment to Mr Wilkinson?
A further question was whether the Revenue had acted unfairly or abused its power in granting a payment to Mr Crossland, but not to Mr Wilkinson.
The judge (Moses J) decided, no argument having been proffered to the contrary, that s. 262 was incompatible with Article 14 read with Article 1 of the First Protocol. He made a declaration of incompatibility under s. 4 of the HRA 1988, although the Revenue tried to argue that to do so would be pointless.
Secondly, he decided that the Revenue did indeed have a power to make an extra-statutory payment to Mr Wilkinson. He rejected the Revenue’s view that they could not exercise their powers of care and management so as to contradict primary legislation, because they had done precisely that in various extra-statutory concessions (ESC) which the court considered. In particular ESC A82, which extended the right to repayment supplement to residents in a member state of the European Union (EU), was an example of the exercise of the power to remove a breach of Community law. The judge saw no reason why the power could not also be used to rectify a breach of Convention law. Therefore, the Revenue could not rely on section 6(2)(a).
Could they, though, rely on section 6(2)(b)? The judge said that ICTA 1988, s. 262 ofcontained no prohibition on the Revenue’s exercise of the power to make a payment to widowers. Indeed, when read with TMA 1970, s. 1 it gave the Revenue power to do just that. But section 262 could not be read in a way that was compatible with the Convention, because to do so would be to construe it as imposing a duty to make such a payment, and that was impossible. A statutory provision containing a power could not be ‘read down’ in such a way as to extinguish the power and replace it with a duty. Accordingly the Revenue could rely on s. 6(2)(b) because in refusing the widower’s payment, they were simply giving effect to a provision of primary legislation that could not be read or given effect in a way that was compatible with the Convention rights.
Finally, there was the question whether the Revenue were obliged under common law to treat Mr Wilkinson in the same way as Mr Crossland. On this the judge said there was a difference between bringing proceedings in Strasbourg and seeking an extra-statutory allowance in the UK. In this respect the Revenue did not act with unfairness or abuse its power by failing to treat Mr Wilkinson in the same way as Mr Crossland.
Whither the widower’s bereavement payment?
So what options are now open to Mr Wilkinson and other widowers like him?
First, Liberty has won leave to appeal. One issue that the Court of Appeal might consider is this: can the Revenue really escape the duty not to act in a manner incompatible with the Convention, if the Court has already found that they have power to give extra-statutory relief? Put another way, once it is established that the Revenue have power to grant an extra-statutory concession, do they not have the duty to act in a way that is compatible with the Convention when deciding whether or not, or how, to exercise it?
Secondly, the Strasbourg route is still open. It is disappointing that, if this judgment stands, we seem to be no further forward than we were before the enactment of HRA 1998, when widowers like Mr Crossland could go to Strasbourg and be paid out of court by the UK Government. But perhaps herein lies the significance of the declaration of incompatibility made in Wilkinson. If the legislation in question has been declared incompatible by a UK court, how can the government feel so sure-footed about denying to other widowers what it is prepared to grant, by way of ‘friendly settlement’, to widowers with the wherewithal and pluck to pursue them to Strasbourg?
If the High Court decision in Wilkinson is upheld, HRA 1998 will, to this extent, be shown up as something of a white elephant. Someone who complains that UK law is in breach of Convention rights will be able to go to a UK court to get a declaration to that effect, but will not be able to enforce their rights in the UK. The only way in which they could do so is if Parliament were to change the law. As things stand, the individual complainant must still go to Strasbourg to get justice. And the government will pay the individual the amount of their claim, but need do nothing further.
Steve Webb, the Liberal Democrat Social Security Spokesman, has tabled an early day motion in the House of Commons, in the following terms:
‘This House notes the longstanding injustice whereby widowers have been denied benefits and tax allowances that are available to widows; notes that the Government chose to settle out of court in a recent [social security] case in order to avoid creating a precedent for other widowers; calls on the Government to recognise that the families affected have already suffered enough and to actively identify and compensate widowers who may have missed out on benefits and tax allowances that would have been available to widows in the same circumstances’.
TaxAid is encouraging supporters of its campaign to write to their Members of Parliament (MPs) asking them to sign this motion. Steve Webb has told the charity that that the more MPs sign, the more the government will see how people feel about the issue. If enough MPs do sign, is it too much to hope that Parliament will retrospectively amend the law so that it is compatible with the Human Rights Convention?
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