The Court of Appeal (Henderson, Lewis and Carr LJJ) has today handed down judgment in Her Majesty’s Revenue & Customs v Carrington [2021] EWCA Civ 1724. The appeal raised the question of whether the Respondent is entitled, under EU Regulation 883/2004 on the coordination of social security systems, to continue to receive an award of child benefit paid in relation to her son when she moved to Spain on retirement. At the time the application was made, the UK remained part of the EU and so the relevant provisions of EU law had effect pursuant to the European Communities Act 1972.
Regulation 883 seeks to promote freedom of movement within the EU by setting out rules for the coordination of social security entitlements and makes provision, inter alia, for the treatment of domestic rules which base entitlement on residence in the member state concerned. A central feature of Regulation 883 are a series of rules identifying the ‘competent state’ and applicable legislation according to which entitlement is determined.
The central issue in the claim was whether Article 7 of Regulation 883, which provides for waiving of residence rules, applied so as to waive the domestic requirement that both the recipient and relevant child reside in the UK in order to receive child benefit. Upper Tribunal Judge Jacobs had found that Article 7 did have this effect and that, accordingly, the award of child benefit was ‘exported’ to Spain. Judge Jacobs noted that no application had been made by Ms Carrington for child benefit in Spain, and therefore the conflict provisions in Regulation 883 did not operate in relation to her.
HMRC appealed on the basis that it was Spanish legislation that should apply to Ms Carrington, irrespective of whether or not she had made an application. The respondent, seeking to uphold the decision of Judge Jacobs, argued that:
- Article 7 replicated Article 10(1) of Regulation 883’s predecessor regulation, Regulation 1408/71, with the difference that it removed the restrictions on types of benefits to which it applied so as to include family benefits (such as child benefit) and sickness benefits (such as disability living allowance (DLA));
- In Tolley v Secretary of State for Work and Pensions [2017] 1 WLR 1261, the CJEU held that a different, more narrowly worded provision in Regulation 1408/71 had the effect of allowing for the export of the care component of DLA; and, further, held that the correct interpretation of the coordination scheme was that one identifies the competent state as at the time of application for benefit, so that an applicant could, in principle and subject to mechanisms for dealing with overlapping entitlements, be entitled to benefits under more than one EU member state’s laws.
- The Secretary of State for Work and Pensions, who appeared as an interested party in the appeal, had conceded in other litigation that Article 7 of Regulation 883 provided for the export of sickness benefits, and there was no reason to interpret Article 7 differently in relation to sickness benefits.
The Court of Appeal allowed HMRC’s appeal, concluding that:
- The concept of the competent member state did not carry special significance but that the concepts of competent member state and applicable legislation were “two sides of the same coin”;
- Article 7 presupposes an entitlement to a benefit under the applicable legislation;
- Had it been intended to allow for the ‘export’ of family benefits, this would have been signalled more clearly in the travaux perparatoires and the recitals to Regulation 883;
- Regulation 987/2009, which sets out implementing provisions for Regulation 883, supported HMRC’s interpretation of Article 7.
The Court of Appeal noted that its interpretation led to a position where Article 7 allowed for the retention of a right to sickness benefits such as DLA when a person moved to another EU member state, but did not allow for such a right in relation to a family benefit such as child benefit.
Julia Smyth acted for HMRC and the Secretary of State for Work and Pensions, instructed by the Solicitor for HMRC and the Government Legal Department.
Admas Habteslasie acted for the respondent, Ms Carrington, instructed by Tom Smith and Andrew Eaton of Hogan Lovells International LLP.
