IN THE UPPER TRIBUNAL Case No  CG/540/2010

ADMINISTRATIVE APPEALS CHAMBER

 

Before UPPER TRIBUNAL JUDGE WARD

 

Decision: The appeal is dismissed. The decision of the First-tier Tribunal sitting at Cheltenham on 25 November 2009 under reference 200/09/01196 did not involve the making of an error of law and is upheld.

 

I direct that a copy of this decision be sent to Mr Philip Bound, International Caseworker Technical Adviser, National Insurance Contributions Office, BP1301, Benton Park View, Longbenton, Newcastle upon Tyne NE98 1ZZ

 

REASONS FOR DECISION

 

1. The claimant had worked in Great Britain between September 1996 when she graduated and 2 January 2008. Until 30 September 2007 she had been employed at Brunel University and then until 2 January 2008 self-employed. Between 2 January 2008 and 5 September 2008, she was employed in Canada.  Her employer there was a limited company (F Limited) running a college. F Limited is a subsidiary of N Limited, an Australian company.  N Limited had two other subsidiaries which, unlike F Limited, did have a place of business in the UK.  On 16 October 2008 the claimant claimed jobseeker's allowance and was then employed in the UK at the University of Plymouth from 8 December 2008 to 6 March 2009.  She was pregnant and the expected week of confinement was 16 April 2009.

 

2. As is now known, in respect of the tax year 2007/8 she paid Class 1 contributions totalling £1470.86, representing an earnings factor of £17424.00.  This was in respect of her employment at Brunel University. She additionally on 15 January 2009 paid 14 weeks of Class 2 contributions, recorded by HM Revenue and Customs (“HMRC”) as being in respect of her period of self employment in the United Kingdom. There is no suggestion in the records of HMRC that she had paid Class 2 contributions in respect of her period of employment in Canada in the tax year 2007-2008 (or indeed in the following tax year).  It is not clear what purpose was served by paying the Class 2 contributions as recorded by HMRC.

 

3. In respect of the tax year 2008/9 the claimant paid Class 1 contributions of £369.95, equating to an earnings factor of £4722.00. This appears to have been in respect of her employment at the University of Plymouth.  She was also awarded credits in respect of the time she was claiming jobseeker's allowance. 

 

4. She applied for maternity allowance on 24 March 2009 but was refused by a decision dated 2 July 2009 on the ground that she did not satisfy the “employment condition” (i.e. that in section 35(1)(b) of the Social Security Contributions and Benefits Act 1992 (“the 1992 Act”), as to which, see [8] below.)

 

5. The Secretary of State's position was upheld by a tribunal conducted on the papers on 25 November 2009.  Permission to appeal was given by the First-tier Tribunal judge.

 

6. Unfortunately, the claimant appears to have been given significant amounts of misleading information.  In trying to get to the bottom of the position, I have secured significantly more evidence than was available to the tribunal.  Given that I am upholding the tribunal’s decision, it is convenient, in an attempt to dispel the confusion which has surrounded the issue, to explain my decision by reference to the facts as now known.

 

7. Entitlement to maternity allowance is set out in section 35 of the 1992 Act:

 

“(1) A woman shall be entitled to a maternity allowance, at the appropriate weekly rate determined under section 35A below, if—

(a) she has become pregnant and has reached, or been confined before reaching, the commencement of the 11th week before the expected week of confinement; and

(b) she has been engaged in employment as an employed or self- employed earner for any part of the week in the case of at least 26 of   the 66 weeks immediately preceding the expected week of confinement…”

 

There are further conditions in (c) and (d), but I need not be concerned with these, nor with the remainder of the section.

 

8. Section 2 (1) of the 1992 Act gives further definitions needed for the purposes of section 35(1)(b):

 

“(1) In this Part of this Act and Parts II to V below—

(a) “employed earner” means a person who is gainfully employed in Great Britain either under a contract of service, or in an office (including elective office) with general earnings; and

(b) “self-employed earner” means a person who is gainfully employed in Great Britain otherwise than in employed earner's employment (whether or not he is also employed in such employment).

 

(2) Regulations may provide—

(a) for employment of any prescribed description to be disregarded in relation to liability for contributions otherwise arising from employment of that description;

(b) for a person in employment of any prescribed description to be   treated, for the purposes of this Act, as falling within one or other of the categories of earner defined in subsection (1) above, notwithstanding that he would not fall within that category apart from the regulations.”

 

9. Despite the territorial connection made by the definition in section 2(1) above, provision is also made for the payment of National Insurance Contributions in limited circumstances, even when a person is employed outside the United Kingdom.  Regulation 146 of the Social Security (Contributions) Regulations 2001 SI 2001/1004 (“the 2001 Regulations”), provides that:

 

“(1) Where an earner is gainfully employed outside the United Kingdom, and that employment, if it had been in Great Britain or Northern Ireland, would have been employed earner's employment, that employment outside the United Kingdom shall be treated as employed earner's employment for the period for which under   paragraph (2)(a) contributions are payable in respect of the earnings paid to the earner in respect of that employment provided that—

(a) the employer has a place of business in Great Britain or Northern Ireland (as the case may be);

(b) the earner is ordinarily resident in Great Britain or Northern Ireland (as the case may be); and

(c) immediately before the commencement of the employment the earner was resident in Great Britain or Northern Ireland (as the case may be).

 

(2) Where, under paragraph (1), the employment outside the United Kingdom is treated as an employed earner's employment, the following provisions shall apply in respect of the payment of contributions—

(a) primary and secondary Class 1 contributions shall be payable in respect of any payment of earnings for the employment outside the United Kingdom during the period of 52 contribution weeks from the beginning of the contribution week in which that employment begins to the same extent as that to which such contributions would have been payable if the employment has been in Great Britain or Northern Ireland (as the case may be);

(b) subject to regulations 148 and 148A, any earner by or in respect of whom contributions are or have been payable under sub-paragraph (a) shall be entitled to pay Class 3 contributions in respect of any year   during which the earner is outside the United Kingdom from and including that in which the employment outside the United Kingdom begins until that in which he next returns to Great Britain or Northern Ireland (as the case may be);

(c) Class 1A contributions and Class 1B contributions shall be payable in respect of the period specified in sub-paragraph (a).”

 

 

10. The current reciprocal agreement between the United Kingdom and Canada is appended to SI 1995/2699.  It contains no provisions material for present purposes.

 

11. Specific provision as to the maternity allowance position of women who have been absent from Great Britain, have returned to Great Britain and who throughout the period of absence have been ordinarily resident in Great Britain is made by regulation 2 of the Social Security (Maternity Allowance) (Work Abroad) Regulations 1987 SI 1987/417 (“the 1987 Regulations”).  Paragraph (2) of that regulation does not assist, as – even if other conditions were met - it requires the employment abroad to have continued for a period of 52 weeks, which the claimant's work in Canada did not.  However, the position in relation to paragraphs (3) and (4) is different, for by paragraph (6):

 

“(6) Where a woman satisfies the requirements of paragraph (3)(a) or (4)(a) but the employment did not continue for 52 weeks, she shall be treated in respect of those weeks in which her employment did continue as having been engaged in employment as an employed earner and as having received an amount of specified payments for the purposes of section 35A(4) of the Social Security Contributions and Benefits Act 1992 equal to the lower earnings limit in force on the last   day of each of those weeks.”

 

12. Paragraphs (3) and (4) state that:

 

“(3) Where–

(a) a woman would have been liable to pay Class 1 contributions under regulation 120 of the Contributions Regulations but for the provisions of an Order in Council made under section 143 of the Act;

(b) in relation to her case the Order does not provide for periods of insurance, employment or residence in the other country to which the Order relates to be taken into account in determining entitlement to   benefit; and

(c) the employment by reference to which she would have been liable under that regulation continued throughout the first 52 weeks,

she shall be treated for any week during her absence in which she was in fact engaged in gainful employment as having been engaged in employment as an employment earner and for each week of her absence as having received an amount of specified payments for the purposes of section 35A(4) of the Social Security Contributions and Benefits Act 1992 equal to the lower earnings limit in force on the last day of that week.

 

(4) Where–

(a) a woman would have been liable to pay Class 1 contributions under regulation 120 of the Contributions Regulations but for the provisions of either an Order in Council made under section 143 or Council Regulation No. 1408/71/EEC;

(b) the employment by reference to which she would have been liable under regulation 120 continued throughout the first 52 weeks from the time the liability would have commenced; and

(c) the Order or the Council Regulation, as the case may be, provides for aggregation of periods of insurance, employment or residence only   if an insurance period has been completed since her return to Great   Britain, and an insurance period has not been so completed,

any period of insurance or employment in the other country to which that Order or Council Regulation, as the case may be, relates which falls in the 66 weeks immediately preceding  the expected week of   confinement shall be treated as a period in respect of which she was engaged in employment as an employed earner and in each week of which she received an amount of specified payments for the purposes of section 35A(4) of the Social Security Contributions and Benefits Act 1992 equal to the lower earnings limit in force on the last day of that   week.”

 

13. This takes us to regulation 120 of the Social Security (Contributions) Regulations 1979 (now replaced by regulation 146 of the 2001 Regulations, quoted above.)  I can find no evidence that any national insurance contributions have been paid in respect of the claimant's employment with F Limited and the material which I have tends to suggest that, not itself having a place of business in Great Britain or Northern Ireland, F Limited was not liable to make such contributions.  Nor is there any indication that F Limited was only not so liable by virtue of the matters in regulation 2(3)(a) or (4)(a) of the 1987 Regulations, thus it is impossible  to place any reliance on any of the provisions of regulation 2 to allow the claimant's work for F Limited in Canada to be taken into account.

 

14. The 66 week period which section 35 of the 1992 Act requires one to consider in the claimant's case ran from 6 January 2008 to 11 April 2009. As it is limited to work as a self-employed person or as an employed earner in Great Britain (see section 2 of the 1992 Act) and the 1987 Regulations do not help, all that could count was her period of work for the University of Plymouth, totalling some 13 weeks.

 

15. The tribunal's decision was accordingly entirely correct.

 

16. It may nonetheless be helpful if I address some of the material in the present case, which may have misled the claimant as to her position and suggested that she has an entitlement which in law she does not have.

 

17. It appears that the claimant had written to the relevant section of HMRC about her maternity allowance claim and received a reply dated 3 November 2009 saying (amongst other things) that:

 

“Your National Insurance account shows that the 2006-2007, 2007-  2008 and 2008-2009 tax years are, by the amounts of Class 1 contributions you paid in these tax years, each a qualifying year and count for State Pension and/or State Benefit claims purposes.

 

You do not need to pay any voluntary contributions for any of these tax years.”

 

This reply may have been strictly accurate, but to give it in the context of an enquiry about maternity allowance, which has not been a contributory benefit since 2000, was liable to create a misleading impression so far as the claimant was concerned.

 

18. The claimant had also written to the then Secretary of State on 28 July 2009 querying her failure to satisfy the qualifying conditions.  In a reply dated 18 August 2009 from an official of the DWP, the “employment condition” was paraphrased and reference made to  the provision made by various rules such as those under EU law, reciprocal agreements or (indirectly) regulation 146 of the 2001 Regulations) to assist women who have worked abroad.

 

The letter continued: 

 

“When a person leaves the UK to live or work in another country and intends to return to the UK it may be possible for them to chose to pay voluntary National Insurance contributions to protect their benefit entitlements for when they return to the UK.  Generally speaking a person gainfully employed abroad would have the option to pay voluntary Class 2 (self-employed) contributions and these would help a person qualify for Employment and Support Allowance, M[aternity] A[llowance], as well as State Pension and Bereavement Benefits.”

 

19. This letter appears to have been wrong as regards maternity allowance, in that while regulation 147(1)(a) of the 2001 Regulations may permit a person to pay contributions as a self-employed earner in respect of certain periods when she is abroad, this does not of itself transform a week in which such contributions are made into a week which meets the requirements of the “employment condition”, which as noted above requires (via section 2 of the 1992 Act) the person concerned to have been in Great Britain.  There is no provision applying to the self-employed or to those who pay Class 2 contributions which is equivalent to the 1987 Regulations, which apply only to those who are employed and to payment of Class 1 contributions.

 

20. The claimant had also obtained leaflet NI38 (“Social Security Abroad”), published by HMRC. This states at page 9 that:

 

“You may choose to pay Class 2 NICs to help you qualify for contribution-based... Maternity Allowance when you get back to the UK...”

 

 A similar reference is to be found at page 11 in the context of a section about whether to pay voluntary contributions:

 

“Class 2 contributions can help you satisfy the conditions to qualify for contribution-based Employment and Support Allowance, Incapacity   Benefit or Maternity Allowance when you return to the UK.”

 

At page 19 it indicates that “Maternity Allowance (MA) is principally based on your employment and earnings...but payment of Class 1 or Class 2 NICs abroad can help you qualify for MA on your return to the UK.”  A similar provision appears at page 26.

 

21. I can find no basis on which the advice given in particular at pages 9 and 11 can be considered accurate and the Secretary of State's representative in the appeal to the Upper Tribunal accepts that it is not on this point.  It may be that the leaflet (and indeed the material on which the DWP's letter of 18 August 2009 was based) are a throwback to the days when maternity allowance was a contributory benefit and have not been revised since the change. I understand that the HMRC leaflet may now be being revised.

 

22. I have no jurisdiction in respect of those who may have been misled by such apparently inaccurate material into paying voluntary contributions which would not secure them the advertised benefit.  If the claimant was so misled, it is a matter for her whether to seek a refund of the contributions paid, but it does not affect the conclusion that the tribunal was not in error of law.

 

23. A further source of confusion (and the stated ground of appeal to the Upper Tribunal) was the content of a submission on behalf of the Secretary of State to the First-tier Tribunal.  In trying to explain that the payment of voluntary class 2 contributions was not relevant, the submission indicated that:

 

“Gainful employment outside of Great Britain can be taken into account in certain limited circumstances [including that] she has paid class 1 contributions to the full extent of her liability”.

 

This was also wrong.  The claimant had paid class 1 contributions to the full extent of her liability, because she was not liable to pay them while she was working in Canada, but that did not enable the “employment condition” to be met.  The intention may have been to refer to the situation under regulation 146 where the employment abroad could be treated as “employed earner’s” employment and Class 1 contributions would be payable but, as has already been seen, that was inapplicable to the claimant here. She cannot rely on a condition which she was never in a position to satisfy to get her home.

 

24. While I have considerable sympathy for the claimant, who has been presented with a lot of trails which she has followed up assiduously only to discover that they were false, she is only entitled to benefit where the law so provides, which for the reasons given here it does not.

 

25. I trust that the Secretary of State's representative will take the necessary steps to cause any inaccurate material within the DWP which may have led to the present difficulties to be reviewed.  Likewise I trust that the relevant official at HMRC  to whom I have directed that a copy of this decision is to be sent will so far as he is in a position to do so cause similar steps to be taken in relation to inaccurate material held or published by HMRC.

 

 

 

CG Ward

Judge of the Upper Tribunal

30 November 2010