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HMRC internal manual

Tax Credits Technical Manual

Decision Making: Revised decisions, considering evidence and recording of decisions: Arriving at a decision

When arriving at a conclusion the decision maker must consider all the evidence and apply the legislation, including any relevant case law, to the facts of each case. Where the legislation specifies or implies discretion, the DM’s judgment must be reasonable and made with unbiased discretion.

Reasonable is not defined in law however there is a widely accepted reference that is often used, ‘Man on the Clapham Omnibus’ which is widely believed to have first been used in a libel case in 1903.

The ‘Man on the Clapham Omnibus’ is a description of a reasonably educated and intelligent but non-specialist person (a more modern term of similar meaning would be ‘Joe Bloggs’ or ‘the man in the street’, however this does not make the distinction of a non-specialist person). The use of this description originated in the development of Common Law and is often used to decide on things such as negligence or taking due care.

This is usually applied to whether the action taken by someone could be described as reasonable in the circumstances. There are obvious exceptions to this, for example a tax accountant who made an incorrect declaration on his own SA return for three years running would not be able to argue that he was unaware that extra profit from his three rented properties was not taxable. This is because he is a ‘specialist’ in that particular area.

The reasoning behind any decision made where there is an element of discretion should always be recorded.

The Tax Credits computer system captures information supplied by the claimant and makes a decision only if there is enough information to do so. If there are gaps in information or doubts over an aspect of the information provided, a decision should then be made by a decision maker using their discretion as necessary to arrive at a decision in line with the above decision making principles. All of the above means that when making a decision HMRC must only make decisions:

  • when the legislation allows it. This includes not amending a decision when the time limits have expired, for example revising a conclusive decision after 1SD without opening an s19 enquiry or making a new decision under s20 (discovery) or s21 (official error)
  • by fully considering all of the evidence available and applying weight and worth to each, and 
  • where there is discretion the decision must be justifiable and without prejudice