Introduction

The case of Carrington v Revenue And Customs ([2021] EWCA Civ 1724) addresses a pivotal issue in the realm of social security benefits within the European Union. Mrs. Carrington, the appellant, relocated from England to Spain in August 2011 along with her husband and their 11-year-old son, referred to as T, who has Autism Spectrum Disorder (ASD). The crux of the dispute revolves around whether Mrs. Carrington maintained her entitlement to the United Kingdom (UK) child benefit following her permanent move to Spain, under the provisions of EU Regulation 883/2004.

The case was initially handled by the First-tier Tribunal (FTT), which upheld HMRC's decision to cease child benefit payments, leading Mrs. Carrington to seek redress through the Upper Tribunal and subsequently the England and Wales Court of Appeal (Civil Division).

Summary of the Judgment

The central issue was whether Mrs. Carrington was entitled to continue receiving UK child benefit after her family's permanent relocation to Spain. Initially, HMRC suspended payments upon discovering the move, citing a change in her ordinary residence, which under UK domestic law, terminated her entitlement.

The FTT rejected Mrs. Carrington's appeal, affirming HMRC's decision. However, the Upper Tribunal (UT) later allowed her appeal concerning the Disability Living Allowance (DLA), recognizing that under EU Regulation 883/2004, certain benefits like the care component of DLA could be "exported" and continued despite the move to Spain. The UT initially held that Article 7 of the Regulation supported the continuation of child benefits, a point contested by HMRC.

Upon further appeal, the Court of Appeal examined the interpretation of Regulation 883/2004, particularly Article 7, and ultimately sided with HMRC. The Court concluded that Article 7 does not safeguard the continuation of family benefits such as child benefits when a change in residence results in a shift in the applicable national legislation. Consequently, Mrs. Carrington's entitlement to UK child benefit was rightly terminated following her relocation to Spain.

Analysis

Precedents Cited

The judgment extensively referenced several key EU cases and regulations that informed the court’s interpretation:

• Tolley v Secretary of State for Work and Pensions [2017] 1 WLR 1261: Addressed the exportability of sickness benefits under Regulation 1408/71, establishing that certain benefits could be retained post-relocation if specific conditions were met.
• Effing [2005] 1 CMLR 43: Highlighted the single applicable legislation principle, ensuring that an individual is subject to the social security legislation of only one Member State at any given time.
• Bosmann v Bundesagentur f r Arbeit-Familienkasse Aachen [2008] 3 C.M.L.R.3: Reinforced that a Member State is not obligated to maintain family benefits post-relocation unless expressly provided by the Regulation.
• Anne Kuusijärvi v Riksförsäkringsverket [1998] ECR I-3419: Demonstrated limitations in preserving family benefits following a change in residence under Regulation 1408/71.

Legal Reasoning

The Court’s legal reasoning centered on the interpretation of Regulation 883/2004, particularly Articles 7 and 11, in the context of family benefits. The critical points include:

• Article 7 "Waiving of Residence Rules": This provision prevents the reduction or termination of cash benefits solely because the beneficiary resides in another Member State. However, the Court determined that this protection applies only when there is no change in the applicable legislation governing the benefit.
• Article 11 "Determination of the Legislation Applicable": Establishes the "single applicable legislation principle," ensuring that an individual is subject to only one Member State’s social security legislation at a time, based on their habitual residence and other criteria.
• Article 59 of the Implementing Regulation: Specifies transitional provisions when there is a change in the applicable legislation due to relocation, aligning with HMRC’s interpretation that benefits should transition to the new competent Member State.

The Court concluded that once Mrs. Carrington moved to Spain, the applicable legislation switched from the UK to Spain. Consequently, under Article 11, Spain became the competent Member State, and Article 7 did not override the termination of child benefits based on the change in residence and applicable law.

Impact

This judgment has significant implications for the interpretation and application of EU social security regulations post-Brexit:

• Clarification of Article 7: Establishes that Article 7 does not guarantee the continuation of family benefits like child benefits when a move results in a change of applicable legislation.
• Distinction Between Benefit Types: Differentiates between the exportability of sickness benefits and family benefits, limiting the latter’s protection under Article 7.
• Administrative Coordination: Highlights the necessity for proper administrative communication between different government departments to prevent unintended overpayments.
• Legal Precedent: Sets a precedent for future cases involving the exportability of family benefits, guiding both tax authorities and beneficiaries in similar disputes.

Complex Concepts Simplified

Regulation 883/2004

An EU regulation aimed at coordinating national social security systems to ensure that individuals moving between Member States do not lose their social security entitlements. It determines which Member State's legislation applies based on various criteria, such as employment status and habitual residence.

Article 7 "Waiving of Residence Rules"

This provision stipulates that cash benefits cannot be reduced or terminated solely because the beneficiary resides in a different Member State. It is designed to protect certain social security benefits from being affected by changes in residence, but it does not override the determination of applicable legislation.

Agent Article 11 "Determination of the Legislation Applicable"

Establishes the principle that an individual is subject to only one Member State’s social security legislation at any given time. The applicable legislation is generally that of the Member State of habitual residence unless specific conditions apply.

Competent Member State

The Member State whose legislation governs the provision of social security benefits to an individual. Determined based on factors like habitual residence and employment activity.

Conclusion

The Carrington v Revenue And Customs judgment serves as a critical clarification in the interpretation of EU Regulation 883/2004 concerning the exportability of family benefits. By affirming that Article 7 does not sustain the continuation of child benefits following a change in residence and applicable legislation, the Court has underscored the importance of the "single applicable legislation principle." This ensures that social security benefits are consistently governed by the legislation of the Member State of habitual residence, thereby preventing indefinite exportation of benefits like child benefits across borders.

For beneficiaries and governmental bodies alike, this judgment reinforces the necessity of aligning social security entitlements with current residency and applicable national laws. It also highlights the complexities inherent in cross-border social security matters, emphasizing the need for clear administrative procedures and legal interpretations to manage such transitions effectively.

Moving forward, this case sets a precedent that will guide the handling of similar disputes, ensuring that the coordination of social security benefits remains grounded in the principles established by EU regulations and upheld by judicial review.