UK Social Security and Child Support Commissioners' Decisions

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[2008] UKSSCSC CF_1968_2007 (12 February 2008)

CF 1968 and 2102 2007

DECISION OF THE SOCIAL SECURITY COMMISSIONER

I allow the appeals. For the reasons below, the decisions of the tribunal are wrong in law. I therefore set them aside.

The claimant and appellant ("C") is appealing against two decisions about his entitlement to child benefit. The tribunal heard the appeals at the same time and I have considered both appeals together in this decision

DIRECTIONS FOR A NEW HEARING

A The appeals are to be reheard, unless otherwise directed, at a paper hearing. I do not direct an oral hearing. The claimant has made it clear on several occasions that he is unable, by reason of where he lives, to attend. The case is not to be listed for hearing until both parties have had time to make the further submissions directed below.

B The new tribunal shall not involve any member who has previously been a member of a tribunal involved in this appeal.

C The claimant is reminded that the tribunal can only deal with the appeals as at the dates of the original decisions under appeal.

D If the claimant wishes to put further written submissions or evidence before the tribunal, this is to be sent to the tribunal within one month of the issue of this decision. Any new evidence and submissions is to be copied by the tribunal to the Respondents on receipt.

E If the Respondents wish to make a further submission to the tribunal in the light of this decision and the further submissions and evidence, if any, from the Appellant then that submission is to be sent to the tribunal within one month of receiving the further submission and evidence from the Appellant.

These directions are subject to any later direction by a district chairman.

REASONS FOR THE DECISION

The appeals

C claimed child benefit for his son. On 22 05 2006 a caseworker writing on behalf of the Child Benefit Office of Her Majesty's Revenue and Customs ("HMRC") informed him that he was not entitled to benefit because "you cannot be regarded as residing in the United Kingdom". The point was also made that C's son was not in Great Britain at the time of claim.

C and his wife had a second son later in 2006. He applied for child benefit for his second son also. This claim was also refused. The reason given that that he was not ordinarily resident in Great Britain.

C appealed against both decisions on the grounds of appeal that he was ordinarily resident in Britain at the time. He also argued that at both times he was a Crown servant working abroad and so entitled to be regarded as ordinarily resident.

The tribunal considered the information available to it about C's residence and the work he did on behalf of Her Majesty's government. It concluded that both decisions of the Child Benefit Office of HMRC were correct.

The facts

C retired from Her Majesty's Forces in 2000 and took up residence in a foreign state ("State S"). He lived and lives in State S with his wife. His sons were born there in 2004 and 2006. Both are British citizens as is he. C pays United Kingdom income tax on his military pension. He pays voluntary National Insurance contributions. He has given some details of other links with Great Britain.

At the time of the first claim for child benefit C was working for the British Embassy in State S as a consular correspondent. He was later appointed Honorary British Consul to a city in State S. He was recruited in State S to undertake the duties of consular correspondent.

The law

State S is not a member state of the European Union. No issue of European law arises in this case.

Section 146(2) of the Social Security Contributions and Benefits Act 1992 provides that no person is entitled to child benefit for a child for whom the person is responsible for a week unless he or she is in Great Britain in that week. Subsection (1) provides that the child must also be in Great Britain in that week. Subsection (3) provides that exceptions may be prescribed to these rules.

The first of the two decisions under appeal was made on 22 05 2006. This was shortly after the Child Benefit (General) Regulations 2006 ("the 2006 Regulations") replaced previous rules about the residence rules and exceptions to those rules. The rules that apply to both C's appeals are those in the 2006 Regulations. A previous rule referred to payment of tax in the United Kingdom as part of the test for entitlement to child benefit. That ceased to have effect when the 2006 Regulations came into effect on 5 04 2006.

The primary rule applying section 146 of the 1992 Act is in regulation 23 of the 2006 Regulations. This provides:

"(1) A person shall be treated as not being in Great Britain for the purposes of section 146(2) of the Social Security Contributions and Benefits Act 1992 if he is not ordinarily resident in the United Kingdom.

(2) Paragraph (1) does not apply to a Crown servant posted overseas or his partner.

…"

Crown servants posted overseas

Regulation 30 of the 2006 Regulations provides further detail identifying entitlement of crown servants posted overseas. It provides:

"(1) For the purposes of section 146(1) of Social Security Contributions and Benefits Act 1992 a Crown servant posted overseas shall be treated as being in Great Britain.

(2) A Crown servant posted overseas is a person performing overseas … the duties of any office or employment under the Crown in right of the United Kingdom

(a) who is, or was, immediately prior to his posting or his first of consecutive postings, ordinarily resident in the United Kingdom; or

(b) who, immediately prior to his posting or his first of consecutive postings, was in the United Kingdom in connection with that posting."

The papers contain a number of details of C's work in consular capacities. These include a letter from the British Embassy in State S and from the Minister in the Foreign and Commonwealth Office responsible for the area of the world in which State S is located.

The picture that emerges from the papers is that C was approached while living in State S with a view to becoming a consular officer of Her Majesty's Embassy in that state.

At the time of both his claims for child benefit, C acted on a voluntary basis as a consular correspondent. That was in part while C attended courses and was considered for formal appointment as an Honorary Consul. The formal letter offering him appointment as Honorary Consul was written by the British Ambassador to State S after the second claim.

C argued that he was a Crown servant because (a) all military pensioners are Crown servants, and (b) he acted as a consular correspondent at the time of the claims. The answer to the first point is that a military pensioner is not a Crown servant for the purposes of child benefit entitlement because of the definition in regulation 30(2). He is not, as a pensioner, performing the duties of any office or employment under the Crown.

The position of a consular correspondent is less clear. I take as the starting point the status of a British Consul. That is clearly an office under the Crown. But in my view a consular correspondent is also the holder of an office and, if appointed to act for the United Kingdom, must hold that office under the Crown. I take that view because of the terms of the relevant law about the status of consular officers, to which so far no attention has been paid in these appeals.

A consular officer is someone put forward by the state authorities of one state to another state as responsible for performing consular functions for the first state in the second state. The terms of consular office are recognised universally in the Vienna Convention on Consular Relations and in the United Kingdom by the Consular Relations Act 1968. The United Kingdom government ratified the Vienna Convention. Schedule 1 to the 1968 Act gives the force of law directly to many articles of that Convention. These include the definitions of "consular officer" and "consular functions".

Under that law, a consular officer is for both international and United Kingdom purposes "any person, including the head of a consular post, entrusted in that capacity with the exercise of consular functions". See Article 1, paragraph 1 of the Convention. Article 5 of the Convention lists consular functions. It is a lengthy list. It includes the functions that, according to the papers, were performed by C as a consular correspondent.

The Vienna Convention expressly applies to honorary consular officers as well as career consular officers. Article 1, paragraph 2 of the Convention, makes this clear. It also emphasises that there is a difference between officers entrusted with consular functions and consular employees. Consular employees are those employed in the administrative or technical service of a consular post. C was clearly not a consular employee.

In my view the details in the papers, including the official correspondence from the Foreign Office and British Embassy, show that C was for these purposes a consular officer both when acting as a consular correspondent and when acting as an honorary British consul. The fact that he was acting in an honorary capacity is irrelevant to that view. He was entrusted in those capacities with the exercise of consular functions. Those functions, or duties, could only be undertaken on behalf of the Crown. He was therefore " a person performing overseas … the duties of any office … under the Crown in right of the United Kingdom". He is therefore entitled, if he meets any other conditions, to the benefits of regulation 30 of the 2006 Regulations from the time he became a consular correspondent.

I therefore agree that C is right as a matter of law on that point, and that HMRC and the tribunal are wrong.

It follows that C was a Crown servant when he made both claims. The decisions of the tribunal to the contrary must therefore be set aside. Was he a "crown servant posted overseas" at the time of both claims?

For C to be entitled to child benefit in the case of both claims, he must meet one of the tests (a) and (b) in regulation 30(2) of the 2006 Regulations at the time of claim, or at any rate the decision on the claim.

I do not regard the phrase "posted overseas" in regulation 30(1) as adding a third test to those in regulation 30(2). It is part of the description "Crown servant posted overseas" that serves to clarify that the rule only applies to Crown servants whose offices or posts are outside the United Kingdom. In other words, "posted overseas" is not a description of the process of posting but an identification of the location of the posting.

To claim child benefit with the benefit of regulation 30 C must show either that he was ordinarily resident here immediately before his appointment as a consular correspondent took effect ("test (a)") or that he was present in the United Kingdom in connection with that appointment immediately before it was made ("test (b)"). Test (a) (in regulation 30(2)(a)) shows that the individual does not have to be in the United Kingdom at the time of appointment. It is therefore irrelevant to these claims that C was recruited in State S rather than the United Kingdom. The tribunal also erred on that point.

Ordinarily resident in Great Britain

Ordinary residence is a question of fact, not law. The writer of the submission from the Child Benefit Office to the tribunal stated:

"While some Departments of Inland Revenue may accept that Mr C is resident in the UK for their purposes, this has no bearing for child benefit."

That is also wrong in law. Whether or not someone is ordinarily resident in the United Kingdom is essentially a question of fact. It does not have different meanings for different purposes. If C is considered as a matter of fact to be ordinarily resident in the United Kingdom for some purposes by what is now HMRC at a particular time, then he should be considered to be ordinarily resident for any other purpose by HMRC for the same time period. He cannot fairly be regarded as ordinarily resident for income tax purposes but not at the same time for benefit purposes. The analysis presented to the tribunal also ignores the fact that someone can be ordinarily resident in two places at the same time. See my decision R(P) 1/01.

The leading recent case on ordinary residence is the House of Lords decision in Shah v Barnet London Borough Council [1983] 2AC 309, where previous leading authorities were considered. In that case Lord Scarman opined that:

"'ordinarily resident' refers to a man's abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of sort or of long duration."

C raised a number of factors that indicate that there may be an argument that he was at the relevant times ordinarily resident in the United Kingdom. As already noted, that finding can be made notwithstanding that he was at that time also ordinarily resident in State S if both were settled parts of his life. It depends on his pattern of life. Did he have a home that he owned, or an "abode" that was available to him at any time in the United Kingdom? How often was he here? What other personal, economic and social links did he have? Why was he taxed in the United Kingdom on his service pension? None of those questions have so far been considered in these appeals.

I do not consider that the question of C's ordinary residence has been considered adequately to date. I have indicated that the attitude of the decision maker was wrong. The tribunal gave no detailed consideration to this aspect of the appeals. I must therefore set aside the tribunal decisions so that the question of ordinary resident can be considered properly.

Residence of the children

Section 146 imposes a residence test on the children as well as the claimant responsible for the children. As far as I can see from these papers, the status of the children has also not been considered at any length, although the point is mentioned in the submissions and in connection with one of the decisions. The matter will need to be decided in C's favour if he is to succeed in his claims.

The test of presence of a child is imposed by section 146(1) of the 1992 Act. The details are in regulation 21 of the 2006 Regulations. Essentially, this deals with children who are temporarily absent from Great Britain. There is an exception to the rule for the children of Crown servants posted overseas. That is in regulation 32. The key part of this regulation provides:

"a child who normally lives with a Crown servant posted overseas shall be treated as

being in Great Britain when he is either-

(a) in the country where the Crown servant is posted, or

(b) absent from that country in accordance with regulation 21 …"

If C was a Crown servant within the scope of regulation 30 at the time of his claims then his children will be within the scope of regulation 32. That has not so far been considered in respect of these claims, and I have no information about the relevant factual issues. They remain to be determined.

Conclusion

I cannot decide the outstanding questions on the information before me. The proper course of action is therefore for me to allow these appeals and remit them for rehearing. I do not consider that these need be oral hearings. They give C a chance to deal directly with the question of his own ordinary residence at the times in question and also with the status, presence or residence of his children at those times.

I direct the tribunal that it is to consider C to have been a Crown servant posted overseas within the definition of that term in regulation 30 of the 2006 Regulations from appointment as a consular correspondent and therefore at the time of both decisions. It must therefore establish whether C as at the dates of decision "is, or was, immediately prior to his posting …, ordinarily resident in the United Kingdom. If he is, or was, not, then it is to consider if he was "immediately prior to his posting … in the United Kingdom in connection with that posting". If he satisfies the tribunal about any of those tests, it may wish to decide on the facts if the children for whom he claimed are within the benefit of regulation 32 of those Regulations.

If C wishes to take the rehearing forward, he should make a full submission to the new tribunal setting out why he considers himself to be ordinarily resident in Great Britain at the relevant times. He may find the discussion of this in the official leaflet published by HMRC as IR 20, Residents and non-residents: liability to tax in the United Kingdom of some help. It can be found on the Web at http://www.hmrc.gov.uk/pdfs/ir20.htm. His submission should contain evidence of, for example, any home or other accommodation available to him and his children in Great Britain and any time spent here by him and by the members of his family. It should include documentary evidence or specific details of any other links with Great Britain such as those he has submitted in the papers. It should also include details about whether he contends that his children are also within the benefit of the provisions about Crown servants posted overseas.

David Williams

Commissioner

12 02 2008

[Signed on the original on the date stated]