HM’s HM Revenue and Customs v Ruas
| Jurisdiction | England & Wales |
| Judge | Lord Justice Etherton,LORD JUSTICE MOORE-BICK,LORD JUSTICE CARNWATH |
| Judgment Date | 23 March 2010 |
| Neutral Citation | [2010] EWCA Civ 291 |
| Docket Number | Case No: C1/2009/1288 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 March 2010 |
[2010] EWCA Civ 291
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
Judge Mesher
Before: Lord Justice Carnwath
Lord Justice Moore-bick
and
Lord Justice Etherton
Case No: C1/2009/1288
CF/2266/2007
Jason Coppel (instructed by HMRC Solicitors Office) for the Appellants
Richard Drabble QC and Tim Buley (instructed by Pierce Glynn) for the Respondent
Hearing dates: 26 th January 2010
Lord Justice Etherton:
Introduction
The issue on this appeal is whether a person with Portuguese nationality is entitled to claim United Kingdom child benefit for his children resident in Portugal in circumstances where he has worked in the United Kingdom and currently lives here but he ceased to work on the ground of incapacity some time before he claimed the benefit. In the light of the way the appeal has been argued, the same issues of principle would arise in the case of a claim for similar benefit by the national of any other member state of the European Union (“EU”) living in the United Kingdom. The issue is, therefore, one of general significance.
It is important to emphasise at the outset that there is no question of entitlement to child benefit in both countries. The only question is whether the benefit is payable in the United Kingdom rather than Portugal or other EU member state.
The appeal is brought by the Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) from the decision of Judge Mesher on 28 th January 2009, sitting in the Administrative Appeals Chamber of the Upper Tribunal. He allowed the appeal of Jose Antonio Lopes Ruas from the Boston Appeal Tribunal, which had itself disallowed Mr Ruas’ appeal from the Commissioners’ refusal in November 2006 to pay child benefit for Mr Ruas’ children in Portugal.
The Judge held that Mr Ruas was in principle entitled to United Kingdom child benefit by virtue of Article 73 of EC Council Regulation 1408/71 of 14 June 1971 (“the Regulation”), which is directly effective in the United Kingdom. The Commissioners appeal on the ground that the Judge misinterpreted the Regulation and wrongly held that it disapplied the provisions of section 146(1) of the Social Security, Contributions and Benefits Act 1992 (“the 1992 Act”), which restrict child benefit to children resident in Great Britain.
Mr Ruas has served a Respondent's notice in which he seeks to uphold the decision of the Judge on two further grounds. They are that disentitlement to child benefit for his children living in Portugal would constitute unjustified indirect discrimination against migrant workers contrary to Article 3 of the Regulation or Article 18 of the EU Treaty (“the Treaty”) (formerly Article 12 of the EC Treaty) or Article 7 of Council Regulation (EEC) 1612/68 or would be inconsistent with the Social Security (Portugal) Order 1979 giving effect to the 1978 Convention on Social Security Between the Government of the United Kingdom and the Government of Portugal.
The Facts
The factual context can be stated very briefly. Mr Ruas is a Portuguese national. He came to Britain from Portugal in 2000 with his wife and youngest daughter, Sara. His two elder daughters, Rita Raquel, born in 1988, and Micaela Sofia, born in 1992 remained in Portugal, living with his wife's mother. Mr Ruas worked in Britain and paid national insurance contributions until he became unable to work in 2004 due to ill-health. He remained living in Britain. In 2006 Mr Ruas applied for child benefit for all three of his children. At that time he was in receipt of disability living allowance and income support and qualified for national insurance credits on the ground of incapacity for work. His application was refused in respect of his two elder daughters because they were not, and could not be treated as being, in Great Britain.
The Legal Framework
The entitlement to child benefit is laid down in Part IX of the 1992 Act. It is a universal benefit in that, subject to certain qualifications, it is paid to any person responsible for one or more children in any week, and is not dependent upon national insurance contributions or upon any assessment of means. Section 141 of the 1992 Act provides so far as relevant:
“141 Child benefit
A person who is responsible for one or more children … in any week shall be entitled, subject to the provisions of this Part of this Act, to a benefit (to be known as “child benefit”) for that week in respect of the child … or each of the children … for whom he is responsible.”
Section 146 of the 1992 Act makes it a condition of entitlement to child benefit that both the child and the claimant must be in Great Britain during the relevant period. That section is as follows so far as relevant:
“146 Presence in Great Britain
(1) No child benefit shall be payable in respect of a child … for a week unless he is in Great Britain in that week.
(2) No person shall be entitled to child benefit for a week unless he is in Great Britain in that week.
(3) Circumstances may be prescribed in which any person is to be treated for the purposes of subsection ( 1) or (2) above as being, or as not being, in Great Britain.”
Mr Ruas does not rely upon any prescribed circumstances within section 146(3) of the 1992 Act.
Mr Ruas’ entitlement to child benefit rests on the proper meaning and effect of the Regulation, and in particular Article 73, which is as follows:
“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.”
Child benefit is a “family benefit” within Article 73.
Article 1 of the Regulation contains definitions of expressions used in the Regulation, including, so far as relevant, the following in relation to “employed person” and “self-employed person”:
“For the purpose of this Regulation:
(a) employed person and self-employed person mean respectively:
(i) any person who is insured, compulsorily or on an optional continued basis, for one or more of the contingencies covered by the branches of a social security scheme for employed or self-employed persons or by a special scheme for civil servants;
(ii) any person who is compulsorily insured for one or more of the contingencies covered by the branches of social security dealt with in this Regulation, under a social security scheme for all residents or for the whole working population, if such person:
- can be identified as an employed or self-employed person by virtue of the manner in which such scheme is administered or financed, or,
- failing such criteria, is insured for some other contingency specified in Annex 1 under a scheme for employed or self-employed persons, or under a scheme referred to in (iii), either compulsorily or on an optional continued basis, or, where no such scheme exists in the Member State concerned, complies with the definition given in Annex 1;
(iii) any person who is compulsorily insured for several of the contingencies covered by the branches dealt with in this Regulation, under a standard social security scheme for the who rural population in accordance with criteria laid down in Annex I;”
The title of Annex 1 of the Regulation (“Annex 1”) is: “Persons covered by the Regulation”. Paragraph 1 of Annex 1 is headed “Employed persons and/self-employed persons (Article 1(a)(ii) and (iii) of the Regulation)”. It contains a series of definitions of persons to whom the Regulation applies, which have been inserted at the instigation of individual member states. The entry for the United Kingdom, which is at sub-paragraph Y, is as follows so far as relevant:
“Y. UNITED KINGDOM
Any person who is an ‘employed earner’ or a ‘self-employed earner’ within the meaning of the legislation of Great Britain or of the legislation of Northern Ireland shall be regarded respectively as an employed person or a self-employed person within the meaning of Article 1 (a)(ii) of the Regulation…”
The expressions “employed earner” and “self-employed earner” are defined in section 2(1) of the 1992 Act as follows:
“2 Categories of earners
(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).”
It is convenient to set out at this point the following further provisions of the Regulation.
The recitals in the Regulation include the following:
“Whereas the provisions for coordination of national social security legislations fall within the framework of freedom of movement for workers who are nationals of Member States and should contribute towards the improvement of their standard of living and conditions of employment;”
“Whereas freedom of movement for persons, which is one of the cornerstones of the community, is not confined to employed persons but also extends to self-employed...
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