Wendy Carrington v The Commissioners for HMRC

Under Regulation (EC) No 883/2004, Article 7 prevents an otherwise payable cash benefit from being reduced or withdrawn solely because the beneficiary resides in another Member State. It does not create an independent entitlement where a permanent move changes the applicable legislation under Article 11(3)(e). For an economically inactive person, the legislation of the new Member State of habitual residence ordinarily becomes applicable. Article 59 of the Implementing Regulation supports that construction for family benefits. The distinction between family benefits and sickness benefits means that authority concerning the export of disability living allowance cannot simply be applied to child benefit.

Mrs Carrington received UK child benefit for her son and moved permanently with her family from Great Britain to Spain in August 2011. HMRC later determined that her entitlement had ended and sought recovery of the resulting overpayment under domestic law.

The First-tier Tribunal dismissed her appeal. The Upper Tribunal allowed it, holding that Article 7 of Regulation (EC) No 883/2004 preserved her entitlement: [2019] UKUT 289 (AAC). HMRC appealed on the interpretation of Article 7 and, alternatively, on the priority and overlapping-benefit provisions in Articles 68 and 10. The central issue was whether Article 7 continued the UK benefit after the move changed the applicable legislation.

Sir Launcelot Henderson delivered the judgment of the court. Lord Justice Lewis and Lady Justice Carr agreed. HMRC’s appeal was allowed on ground 1 and the Upper Tribunal’s decision was set aside.

1. Under Regulation (EC) No 883/2004, the principle of single applicable legislation required the applicable law to be identified under Article 11. Since Mrs Carrington was economically inactive and had moved permanently to Spain, Article 11(3)(e) made Spanish legislation applicable. The concept of the competent Member State was a facet of that applicable-law analysis, rather than an independent preservation of the law applying when the benefit was first claimed (paras [58], [82], [97]-[99]).
2. Article 7 is a general provision which presupposes an entitlement to the relevant cash benefit. It prevents reduction, suspension or withdrawal on account of residence in another Member State where the applicable legislation remains the same. It does not preserve UK child benefit when the applicable legislation has changed. In that situation, cessation results from the change in applicable law and domestic residence conditions, not directly from the change of residence (paras [96]-[104]).
3. Article 59 of the Implementing Regulation supported this interpretation. The two Regulations were to be construed together, and Article 59 contemplated payment by the former State until the end of the month of change, followed by payment by the other State if claimed (para [102]).
4. The exportability reasoning in Tolley concerned sickness benefits and the specific Article 22 scheme under the predecessor Regulation. It did not determine the treatment of family benefits under Article 7. The different treatment of sickness and family benefits was therefore material (paras [72]-[79], [101]).
5. Grounds 2 and 3, concerning Articles 68 and 10, were not decided because ground 1 was sufficient. Any discussion would have been obiter, and the Article 68 argument also lacked evidence that Spain provided an equivalent benefit (paras [105]-[106]).

1. Court of Appeal (Civil Division): HMRC’s appeal allowed on ground 1; the Upper Tribunal decision was set aside.
2. Upper Tribunal (Administrative Appeals Chamber): Mrs Carrington’s appeal allowed and the First-tier Tribunal decision set aside: [2019] UKUT 289 (AAC).
3. First-tier Tribunal, Social Entitlement Chamber: appeal dismissed and HMRC’s decision confirmed.