Upper Tribunal (Administrative Appeals Chamber)

Decision of the Upper Tribunal
(Administrative Appeals Chamber)

As the decision of the First-tier Tribunal (made on 11 April 2014 at East London under reference SC143/14/00179) involved the making of an error in point of law, it is SET ASIDE under section 12(2)(a) and (b)(i) of the Tribunals, Courts and Enforcement Act 2007 and the case is REMITTED to the tribunal for rehearing by a differently constituted panel.

DIRECTIONS:

A.        The tribunal must undertake a complete reconsideration of the issues that are raised by the appeal and, subject to the tribunal’s discretion under section 12(8)(a) of the Social Security Act 1998, any other issues that merit consideration.

B.        In particular, the tribunal must investigate and decide in accordance with paragraphs 21 to 24 of my reasons below whether the claimant was entitled to child benefit in respect of her son. It must then decide the relevance of its findings for the purposes of Ms M’s entitlement to child benefit in respect of her son and her liability, if any, for any overpayment that has arisen.

C.        The First-tier Tribunal may wish to consider directing the Commissioners to make a new submission on the law and its application to this case.

Reasons for Decision

A.        What this case decides

1.         This case is about the personal scope of Regulation (EC) 883/2004. The submission provided on behalf of the Commissioners for the First-tier Tribunal and the claimant (Ms M) took an approach that was the same as that appropriate under the previous Regulation (EEC) 1408/71. The Commissioners now accept that that was wrong.

2.         This is not a case of a mistake in an isolated case. There are a number of appeals before the Upper Tribunal in which the same submission was made to the First-tier Tribunal. Clearly, this has been an error of understanding.

B.        The oral hearing

3.         As the interpretation of Regulation 883/2004 appeared to me to be in error and the mistake appeared to be a common one, I directed an oral hearing of the appeal. It was listed for 3 September 2015. Galina Ward of counsel represented the Commissioners. She provided a skeleton argument in advance of the hearing in which she conceded that the tribunal’s decision had to be set aside, provided an analysis of how Regulation 883/2004 should apply, and invited me to remit the case to the First-tier Tribunal to find the facts. Hannah Wright of the Free Representation Unit represented the claimant. She provided a skeleton argument in advance of the hearing in which she argued that the tribunal’s decision had to be set aside and invited me to re-make the decision. In view of the extent of the agreement, I vacated the hearing and allowed the representatives two weeks in which to make written submissions on whether I should remit the case or re-make the decision. Neither party made a submission.

4.         I am grateful to both Ms Ward and Ms Wright for their arguments.

C.        History and background

5.         This case concerns Ms M’s entitlement to child benefit in respect of her son. She is Polish and lives in the United Kingdom. He was born on 19 February 1997 and lives in Poland. Ms M was awarded child benefit in respect of her son from 21 June 2010. In 2013, the Secretary of State decided that Ms S had not been entitled to child benefit for specified periods and was liable to repay the overpayment that had arisen. The decision was made on 27 September 2013 and revised on 5 November 2013.

6.         As put to me by Ms Ward, Ms M’s activities relevant to this case can be divided into four periods:

·                From 23 July 2007 to 20 April 2012, Ms M was employed.

·                From 20 April 2012 to 27 May 2012, she was (habitually) resident in the United Kingdom.

·                From 28 May 2012 to 28 November 2012, she received contribution-based jobseeker's allowance.

·                From 29 November 2012, she received income-based jobseeker's allowance and then, from 25 March 2013, income support.

7.         In Poland, Ms M may be entitled to a family benefit in respect of her son. Ms Ward referred me to this web page as the source of information about family benefits in Poland:

http://ec.europa.eu/social/main.jsp?catId=1124&langId=en&intPageId=2771

(Accessed on 22 September 2015)

8.         The First-tier Tribunal dismissed Ms M’s appeal and I gave permission to appeal to the Upper Tribunal.

D.       Regulation 883/2004

9.         Article 2 provides for the personal scope of the Regulation:

Article 2

Persons covered

1. This Regulation shall apply to nationals of a Member State, stateless persons and refugees residing in a Member State who are or have been subject to the legislation of one or more Member States, as well as to the members of their families and to their survivors.

2. It shall also apply to the survivors of persons who have been subject to the legislation of one or more Member States, irrespective of the nationality of such persons, where their survivors are nationals of a Member State or stateless persons or refugees residing in one of the Member States.

10.      Article 3 provides for the material scope of the Regulation:

Article 3

Matters covered

1. This Regulations shall apply to all legislation concerning the following branches of social security:

…

(j) family benefits.

11.      Article 1(z) defines ‘family benefit’:

Article 1

Definitions

For the purposes of this Regulation:

…

(z) ‘family benefit’ means all benefits in kind or in cash intended to meet family expenses, excluding advances of maintenance payments and special childbirth and adoption allowances mentioned in Annex I.

12.      Article 11 provides for the legislation that is applicable:

Article 11

General rules

1. Persons to whom this Regulation applies shall be subject to the legislation of a single Member State only. Such legislation shall be determined in accordance with this Title.

2. For the purposes of this Title, persons receiving cash benefits because or as a consequence of their activity as an employed or self-employed person shall be considered to be pursuing the said activity. This shall not apply to invalidity, old-age or survivors’ pensions or to pensions in respect of accidents at work or occupational diseases or to sickness benefits in cash covering treatment for an unlimited period.

3. Subject to Articles 12 to 16:

(a) a person pursuing an activity as an employed or self-employed person in a Member State shall be subject to the legislation of that Member State;

…

(e) any other person to whom subparagraphs (a) to (d) do not apply shall be subject to the legislation of the Member State of residence, without prejudice to other provisions of this Regulation guaranteeing him benefits under the legislation of one or more other Member States.

13.      Article 67 provides for the possibility that a family member is residing in a different member State from the claimant:

Article 67

Members of the family residing in another Member State

A person shall be entitled to family benefits in accordance with the legislation of the competent Member State, including for his family members residing in another Member State, as if they were residing in the former Member State. However, a pensioner shall be entitled to family benefits in accordance with the legislation of the Member State competent for his pension.

14.      Article 68 provides for the priority when a claimant is entitled under the legislation of more than one Member State:

Article 68

Priority rules in the event of overlapping

1. Where, during the same period and for the same family members, benefits are provided for under the legislation of more than one Member State the following priority rules shall apply:

(a) in the case of benefits payable by more than one Member State on different bases, the order of priority shall be as follows: firstly, rights available on the basis of an activity as an employed or self-employed person, secondly, rights available on the basis of receipt of a pension and finally, rights obtained on the basis of residence;

(b) in the case of benefits payable by more than one Member State on the same basis, the order of priority shall be established by referring to the following subsidiary criteria:

(i) in the case of rights available on the basis of an activity as an employed or self-employed person: the place of residence of the children, provided that there is such activity, and additionally, where appropriate, the highest amount of the benefits provided for by the conflicting legislations. In the latter case, the cost of benefits shall be shared in accordance with criteria laid down in the Implementing Regulation;

(ii) in the case of rights available on the basis of receipt of pensions: the place of residence of the children, provided that a pension is payable under its legislation, and additionally, where appropriate, the longest period of insurance or residence under the conflicting legislations;

(iii) in the case of rights available on the basis of residence: the place of residence of the children.

2. In the case of overlapping entitlements, family benefits shall be provided in accordance with the legislation designated as having priority in accordance with paragraph 1. Entitlements to family benefits by virtue of other conflicting legislation or legislations shall be suspended up to the amount provided for by the first legislation and a differential supplement shall be provided, if necessary, for the sum which exceeds this amount. However, such a differential supplement does not need to be provided for children residing in another Member State when entitlement to the benefit in question is based on residence only.

E.        Regulation 1408/71

15.      Article 2 provides for the personal scope of the Regulation:

Article 2

Persons covered

1. This Regulation shall apply to employed or self-employed persons and to students who are or have been subject to the legislation of one or more Member States and who are nationals of one of the Member States or who are stateless persons or refugees residing within the territory of one of the Member States, as well as to the members of their families and their survivors.

2. This Regulation shall apply to the survivors of employed or self-employed persons and of students who have been subject to the legislation of one or more Member States, irrespective of the nationality of such persons, where their survivors are nationals of one of the Member States, or stateless persons or refugees residing within the territory of one of the Member States.

16.      Family benefits are dealt with in Articles 73 and 74:

Article 73

Employed or self-employed persons the members of whose families reside in a Member State other than the competent State

An employed or self-employed person subject to the legislation of a Member State shall be entitled, in respect of the members of his family who are residing in another Member State, to the family benefits provided for by the legislation of the former State, as if they were residing in that State, subject to the provisions of Annex VI.

Article 74

Unemployed persons the members of whose families reside in a Member State other than the competent State

An unemployed person who was formerly employed or self-employed and who draws unemployment benefits under the legislation of a Member State shall be entitled, in respect of the members of his family residing in another Member State, to the family benefits provided for by the legislation of the former State, as if they were residing in that State, subject to the provisions of Annex VI.

F.        The First-tier Tribunal’s reasons

17.      The tribunal dismissed the claimant’s appeal saying:

In order to come within this framework within the UK, the Claimant must be an employed or self-employed person paying either class 1 or class 2 national insurance contributions or be claiming unemployment benefit. For the purposes of UK domestic law, unemployment benefit includes contribution based Job Seeker’s Allowance, but not income based Job Seeker’s Allowance …

Mrs M was not entitled to Child Benefit for her son … from 7^th May 2012 to 3^rd June 2012 because she was no longer an employed person to whom Regulation (EEC) 883/2004 applied. Likewise, Mrs M was not entitled to Child Benefit from and including 3^rd December 2012 because she was no longer receiving contribution based Job Seeker’s Allowance and [her son] could not be treated as a child residing in the UK …

I do not need to set out the submission to the First-tier Tribunal. It is adequately summarised in the first paragraph above.

G.       The error of law in the tribunal’s decision

18.      The tribunal was in error by accepting the Commissioners’ statement of the relevant law and, thereby, applying by mistake the approach appropriate to Regulation 1408/71 rather than that appropriate to Regulation 883/2004. Ms Ward conceded on behalf of the Commissioners that they had misled the tribunal. As she wrote in her skeleton argument:

HMRC accept that the Response to the FtT was wrong in asserting that, in order to come within the personal scope of Regulation 883/2004, a person must have been employed or self-employed and subject to the legislation of a Member State, and was equally wrong to assert that only people who are employed or self-employed and subject to UK legislation at the relevant time and whose families reside in a Member State other than the UK can be assisted under Article 67.

19.      I accept that submission. The terms of the two Regulations are self-evidently different. It is not possible, as Ms Ward conceded, to limit the personal scope of Regulation 883/2004 in the same way as Regulation 1408/71. The First-tier Tribunal’s decision was wrong and it must be set aside.

H.       How the Regulation applies to Ms M

20.      I am grateful for Ms Ward’s structured analysis on this. It is necessary to consider both the position under Regulation 883/2004 and any entitlement Ms M may have to family benefits in Poland. Those benefits are based on residence.

21.      For the period from 23 July 2007 to 20 April 2012, Ms M was employed. Article 11(3)(a) applies. Article 68(1)(a) provides that rights based on employment have priority over rights based on residence. The United Kingdom is the competent State.

22.      For the period from 20 April 2012 to 27 May 2012, Ms M was (habitually) resident in the United Kingdom. Article 11(3)(e) applies. As entitlement in both the United Kingdom and Poland is based on residence, Article 68(1)(b)(iii) provides that the place of the child’s residence has priority. It is necessary to identify whether the claimant has any entitlement in Poland in order to decide whether or not the United Kingdom is the competent State.

23.      For the period from 28 May 2012 to 28 November 2012, Ms M was receiving contribution-based jobseeker's allowance. Article 11(2) applies and, therefore, Article 11(3)(a). Article 68(1)(a) provides that rights based on employment have priority over rights based on residence. The United Kingdom is the competent State.

24.      For the period from 29 November 2012, Ms M was receiving first income-based jobseeker's allowance and then, from 25 March 2013, income support. Article 11(2) does not apply, because these benefits are paid as a consequence of Ms M’s lack of resources, not her employment. Article 11(3)(e) applies. It is necessary to identify whether Ms M has any entitlement in Poland in order to decide whether or not the United Kingdom is the competent State.

I.         Disposal

25.      I have to decide whether to remit the case for rehearing by the First-tier Tribunal on the outstanding issues or to re-make the decision. I have decided on the former. The important aspect of this case, from the point of view of the Upper Tribunal, is to establish that the Commissioners’ submissions to the First-tier Tribunal on the personal scope of Regulation 883/2004 have, at least in child benefit cases, been wrong. The sooner a decision to that effect is issued, the better. The First-tier Tribunal will be just as well placed as the Upper Tribunal to make a decision on the outstanding issues.