Secretary of State for Work and Pensions v VB & Anor

Preparatory steps can establish a right of residence based on freedom of establishment before a business begins trading. The steps must be directed towards a projected business that is genuine and effective, and there must be reasonable proximity in time between the preparation and implementation of that business. Subsequent evidence may illuminate the circumstances existing when the decision was made.

A previously self-sufficient person does not automatically lose a right of residence by claiming social assistance. The authorities must assess, proportionately, whether the benefit would create an unreasonable burden on the social assistance system as a whole. Retained worker status requires compliance with the Directive’s registration formalities; a lengthy and insufficiently justified delay may be undue.

VB, a Norwegian national, and AD, a British citizen, made a joint claim for universal credit. The Secretary of State treated VB as lacking a qualifying right to reside, so the couple received the single-person rate plus an amount for their child.

The First-tier Tribunal allowed VB’s appeal, relying on Fratila and Tanase v Secretary of State for Work and Pensions. That decision was subsequently reversed. It was common ground that the First-tier Tribunal had erred in law.

On remaking the decision, the Upper Tribunal considered whether VB had a right to reside as a self-employed person, a self-sufficient person, or a person retaining worker status.

1. Disposition. The Secretary of State’s appeal was allowed on a point of law. The First-tier Tribunal’s decision was set aside under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007. The decision was remade in favour of the claimants.
2. Self-employment. Following R(IS) 6/00, a person may acquire a right of residence while taking concrete preparatory steps towards establishing a business. A mere intention is insufficient. Applying Jany v Staatssecretaris van Justitie, the projected business must be genuine and effective, rather than marginal and ancillary. The steps must be appropriate to the proposed business and reasonably proximate in time to its implementation.
3. VB’s planning, purchase of materials and later development of a lingerie business demonstrated that, by 8 April 2020, she had moved beyond an idea or intention. The business was genuine and effective. She therefore had a right to reside under article 49 TFEU.
4. Self-sufficiency. Alternatively, the claim would have succeeded under the proportionality approach in Pensionsversicherungsanstalt v Brey. Claiming social assistance does not automatically end self-sufficient status. The assessment must consider the individual circumstances, the likely duration of reliance and the collective impact on the social assistance system. VB’s difficulties were essentially temporary and the potential burden was limited.
5. Retained worker status. The requirements to register as a jobseeker remain substantive formalities, notwithstanding KH v Bury MBC and SSWP’s removal of the incompatible genuine-chance requirement. Under SSWP v MK, the question is whether delay was undue. VB’s delay of 11 to 13 weeks before the possible Saint Prix period, and 14 months before registration, was undue. She therefore did not retain worker status.
6. The claimants’ appeal was allowed. VB had a qualifying right to reside for the joint universal credit claim made on 20 March 2020, which was payable at the couple rate plus the amount for their child.

• Upper Tribunal (Administrative Appeals Chamber): the appeal was allowed on a point of law, the First-tier Tribunal decision was set aside, and the decision was remade in favour of the claimants.
• First-tier Tribunal (Social Entitlement Chamber): appeal allowed on the basis of Fratila and Tanase v Secretary of State for Work and Pensions; that decision was found to contain an error of law.