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	Upper Tribunal (Administrative Appeals Chamber)
You are here: BAILII >> Databases >> Upper Tribunal (Administrative Appeals Chamber) >> [2009] UKUT 18 (AAC) (28 January 2009) URL: http://www.bailii.org/uk/cases/UKUT/AAC/2009/18.html Cite as: [2009] UKUT 18 (AAC), [2010] AACR 31

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[2009] UKUT 18 (AAC) (28 January 2009)


DECISION OF THE UPPER TRIBUNAL

ADMINISTRATIVE APPEALS CHAMBER

The claimant's appeal to the Upper Tribunal is allowed. The decision of the Boston appeal tribunal dated 4 April 2007 involved an error on a point of law, for the reasons given below, and is set aside. It is proper to re-make the decision on the claimant's appeal against the decision dated 23 November 2006 on behalf of the Commissioners of Her Majesty's Revenue & Customs (Tribunals, Courts and Enforcement Act 2007, section 12(2)(b)(ii) and (4)(a)). The decision as re-made is that the appeal is allowed and that the Commissioners' decision of 23 November 2006 is set aside. It is now, as explained in paragraph 40 below, for the Commissioners to consider the date on which the claim for child benefit in respect of Rita and Micaela was made (21 July 2006 or 21 August 2006) and to determine whether all the conditions of entitlement and payability are satisfied, so as to make a decision on the claim, subject to the rulings of law below on the disapplication of section 146(1) of the Social Security Contributions and Benefits Act 1992 by Article 73 of Council Regulation (EEC) No 1408/71.

The Commissioners are also to consider whether the decision in 2002 that child benefit was not payable in respect of Rita and Micaela falls to be revised on the ground of official error, following the request made by the claimant's wife on 24 July 2006 (see paragraph 42 below).

REASONS FOR DECISION

1. As from 3 November 2008 cases that were previously being dealt with by Social Security Commissioners are to be dealt with by the new Upper Tribunal (Administrative Appeals Chamber).
2. There have been unfortunate delays at many stages of this case, in particular in the making of written submissions on behalf of the Commissioners for Her Majesty's Revenue & Customs (HMRC) before an oral hearing was directed, which took place on 27 March 2008. HMRC in effect, without expressly saying so, resiled from a fundamental part of its submissions in a letter dated 26 March 2008. At the hearing, the claimant was represented by Mr Tim Buley of counsel, acting through the Free Representation Unit (FRU). HMRC were represented by Mr Jason Coppel of counsel, instructed by their Solicitor's Office. I am grateful to both representatives for wide-ranging submissions. I directed further submissions on some points that had been raised only very shortly before the hearing. Because what was then the Commissioners' office sent the direction to the claimant's former representative and not to FRU, Mr Buley's further submission for the claimant was not received until 7 August 2008. Mr Coppel's further submission on behalf of HMRC was not received until 3 October 2008, at which time I happened to have a heavy backlog of other work.

The facts and the issue in outline

3. The facts of this case are simple and straightforward. The claimant is a Portuguese national. He came to this country from Portugal in 2000 with his wife and youngest daughter (Sara), leaving the two elder girls for whom he was responsible (Rita Raquel, born on 10 February 1988, and Micaela Sofia, born on 11 May 1992) living with his wife's mother in Portugal. He worked in this country and paid national insurance contributions until ill-health intervened in 2004. He sent money to Portugal for the upkeep of the girls. In 2006 the claimant was in receipt of disability living allowance (DLA) and income support and qualified for national insurance credits on the ground of incapacity for work. The central issue is whether child benefit was payable to him at that time in respect of Rita and Micaela despite the terms of section 146(1) of the Social Security Contributions and Benefits Act 1992:

"(1) No child benefit shall be payable in respect of a child or qualifying young person for a week unless he is in Great Britain in that week."

Regulation 21 of the Child Benefit (General) Regulations 2006 allows a child to be treated as in Great Britain during certain periods of temporary absence, but on the evidence before the appeal tribunal none of those provisions was applicable.

4. One would have expected there to be a correspondingly simple and straightforward answer established in European Community law as to the applicability of the rule in section 146(1) where the children in question are resident in another Member State. A simple and straightforward answer, against payability where the claimant was no longer in employment or self-employment, was given in Commissioner's decision R(F) 1/94. I think that that answer was wrong on the proper understanding of the authorities at the time, but the decision has been to some extent overtaken by later case-law of the European Court of Justice (ECJ). The result on the facts of R(F) 1/94 for future cases can also be supported on an alternative ground. For those reasons, expanded on in paragraphs 38 and 39 below, I have declined to follow R(F) 1/94 on this point.
5. In R(F) 1/94 the claimant and her husband and children all left Great Britain for Spain, where neither she nor her husband entered employment. Mr Commissioner Rice said that it was not disputed that the claimant and her husband were within the personal scope of Council Regulation (EEC) No 1408/71 by reason of their previous employment in the United Kingdom (UK) and that UK legislation continued to apply to them after their departure so long as they did not take employment in Spain, citing Articles 1, 2 and 13 of Regulation No 1408/71. He then accepted this submission on behalf of the adjudication officer:

"Article 73 deals with employed people whose families are in a Member State other than the competent State. However, neither the claimant nor her husband were in employment at the relevant time and I submit that therefore Article 73 cannot apply."

That is the view that HMRC maintained until the day before the oral hearing, but now accept is mistaken.

6. I have set out the main relevant provisions of Regulation No 1408/71 in an appendix to this decision, including the definitions of "employed person" and self-employed person" in Article 1(a) in terms of affiliation to social security schemes that I shall have to consider in detail below. For ease of reference, Article 73, in Chapter 7 of Title III of the Regulation, on family benefits, is as follows:

"An employed or self-employed person subject to the legislation of a Member State shall be entitled, in respect of 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."

It is agreed that child benefit is a family benefit, but that the claimant cannot take advantage of any other provisions in Chapter 7. Nor does Annex VI contain any entry about Article 73 in the United Kingdom section.

The HMRC decision and the appeal to the appeal tribunal

7. On 24 July 2006 the claimant's wife had telephoned a child benefit enquiry line to say that when they claimed child benefit for their three children in January 2002, it was only awarded in respect of Sara and not in respect of Rita and Micaela, because they were in Portugal, but she had discovered that work colleagues were receiving child benefit for children abroad. She asked why that was so and asked for the original decision to be reviewed. The officer apparently asked her to send in proof of maintenance of the two girls and was waiting to retrieve the papers until the claimant's wife wrote in. The claimant signed a letter on 25 July 2006, received on 26 July 2006, repeating what his wife had said and that he paid for the girls' books and school and asking why he and his wife could not have been helped through child benefit if other families from Poland and Portugal had been. A child benefit claim form was apparently issued to the claimant, which he completed and signed on 18 August 2006. The form asked for Rita's and Micaela's birth certificates, which the claimant explained were not enclosed because he was awaiting their arrival from Portugal. He correctly answered that the girls were living with someone else, but the form had no questions about whether he was maintaining them by payments in cash or in kind.
8. After enquiries were made about when the claimant had stopped working and what benefits he was receiving, the following decision was given on 23 November 2006:

"Child Benefit is not payable for Rita and Micaela because they are not, and cannot be treated as being, in Great Britain."

No date was given for the effect of that decision. It therefore has to be regarded as a decision on the claim described in the previous paragraph and not a response to the request to review the decision of January 2002.

9. The claimant appealed. The written submission to the appeal tribunal was that the terms of section 146(1) were not met and that, although the claimant came within the personal scope of Regulation No 1408/71 because he had been employed in the UK, he could not benefit from any of the provisions of Chapter 7 of Title III, which were carefully worked through. In particular, he could not benefit from Article 73 because he was not employed or self-employed at the time of the claim. There was a reference to R(F) 1/94 without saying that it was a Commissioner's decision. The claimant obtained assistance from Lisa Lipshaw of South Holland Citizens Advice Bureau, who put in a written submission which relied, so far as Regulation No 1408/71 went, on an argument that the claimant had been discriminated against on the ground of his nationality, contrary to Article 3.
10. The claimant and his wife attended the hearing on 4 April 2007. The appeal tribunal disallowed the appeal. In relation to the Regulation No 1408/71 arguments it said this in its statement of reasons:

"5. The tribunal confirms that the correct legal position is that child benefit is not payable for [the claimant's] children living in Portugal. He cannot take advantage of provisions that apply to people who are employed or self-employed as he does not have that status. Nor does his receipt of Disability Living Allowance and income support assist him as these are special non-contributory benefits."

The appeal to the Commissioner/Upper Tribunal

11. The claimant was granted leave to appeal against the appeal tribunal's decision by a district chairman of appeal tribunals. In giving directions for submissions I raised the question of whether R(F) 1/94 was rightly decided on the basis that "employed or self-employed person" in Article 73 of Regulation No 1408/71 referred back to the definitions in Article 1(a).
12. At the oral hearing Mr Coppel for HMRC accepted that "employed or self-employed person" in Article 73 had the meaning in Article 1(a), but submitted that that meaning, reading Article 1(a)(ii) with the entry for the UK in Annex I, was restricted to those currently in employment or self-employment. Thus, he said, the passage from R(F) 1/94 set out in paragraph 5 above was right, although not for the reasons given by Mr Commissioner Rice. His submission on this question relied in particular on three decisions of the ECJ and my own decision in R(IS) 1/06. The three ECJ decisions were Brack v Insurance Officer (Case 17/76) [1976] ECR 1429, Caisse Primaire d'Assurance Maladie d'Eure-et-Loir v Tessier (Case 84/77) [1978] ECR 7 and Walsh v National Insurance Officer (Case 143/79) [1980] ECR 1639. I shall come back to those decisions and some others, but first attempt to analyse the relevant provisions of Regulation No 1408/71 in the light of the claimant's position as at August 2006.
13. Mr Buley for the claimant argued that he fell within Article 1(a)(i), as being insured for one or more contingencies covered by branches of a social security scheme for employed or self-employed persons only. That and the question whether the UK now has one scheme or many may well need some careful investigation in another case, but for present purposes I am prepared to proceed on the basis put forward by Mr Coppel that in relation to the British social security system Article 1(a)(i) cannot be relied on because even the contributory part of the scheme caters for people who are not employed or self-employed. That also appears to have been the view of the ECJ in a number of cases that I need not cite.

The definition of "employed person" in Article 1(a)(ii)

14. So one has to go on to Article 1(a)(ii) on the basis of the relevant scheme being one for all residents or the whole working population. A person comes within the definition if compulsorily insured under such a scheme for one or more contingencies covered by branches of social security covered by the Regulation and:

"[first indent] can be identified as an employed or self-employed person by virtue of the manner in which such scheme is administered or financed, or

[second indent] failing such criteria, is insured for some other contingency specified in Annex I under a scheme for employed or self-employed persons, or under a scheme referred to in (iii) [schemes for the rural population], 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 I;"

The entry for the UK in Annex I provides that any person who is an "employed earner" or a "self-employed earner" within the meaning of the legislation of Great Britain or Northern Ireland is to be regarded as respectively an employed person or a self-employed person within the meaning of Article 1(a)(ii).

15. It is also important that Article 2(1), on the persons covered by the Regulation, provides that it applies to, amongst others, employed and self-employed persons "who are or have been subject to the legislation of one or more Member States" and are nationals of a Member State.
16. There is no dispute that while he was working in this country the claimant paid the compulsory primary earnings-related Class 1 contributions as an employed person within the meaning of section 2(1)(a) of the Social Security Contributions and Benefits Act 1992 - "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". His employer will have paid the compulsory secondary Class 1 contributions. The actual payment of those contributions will have gone towards potential qualification for any contributory benefits and in particular towards a retirement pension, through the attribution of "earnings factors" roughly equivalent to the earnings on which the contributions were calculated. The evidence was that, whether or not the claimant was awarded incapacity benefit for any period after he became incapable of work, he received "incapacity credits" from 4 July 2005 and was receiving income support in October 2006. Although such credits are often referred to as credited contributions, in accordance with section 22(5)(a) of the Social Security Contributions and Benefits Act 1992 and regulation 8B of the Social Security (Credits) Regulations 1975, what the claimant would have been credited with on the ground of incapacity for work were earnings at the lower earnings limit in force for the purposes of Class 1 contributions in each week of incapacity. Such credited earnings are relevant to qualification to some contributory benefits, including retirement pension.
17. Those circumstances as at August 2006 seem to me to fall squarely within the first indent of Article 1(a)(ii). The claimant had been compulsorily insured and continued to be insured for many branches of social security within the material scope of Regulation No 1408/71, in particular old-age benefits. Then he can be identified as an employed person by virtue of the way that the British scheme is financed and administered, through his actual earnings-related contributions as an employed person and his credited earnings. Therefore, it is not necessary to go on and consider the second indent and any effect of the entry for the UK in Annex I (which would, I tend to agree with Mr Coppel, seem not to take the claimant any further forward, but in my view not to constitute an exhaustive definition). Furthermore, the claimant had plainly been and still was subject to British social security legislation so as to satisfy Article 2(1).
18. Indeed, it seems to me that the present case is in terms of principle on all fours with the decision of the ECJ in Martinez Sala v Freistaat Bayern (Case C-85/96) [1998] ECR I-2691. Mrs Martinez Sala was a Spanish national living in Germany. She worked there as an employed person until 1989. Since then she had been in receipt of social assistance from local authorities. According to the European Commission and the Advocate General there was a possibility that she was insured by operation of law for sickness and/or a retirement pension by virtue of her receipt of social assistance, but the national court did not say whether that was so. In January 1993 she applied for a child-raising allowance for her recently born second child (confirmed by the ECJ to be a family benefit within the meaning of Article 4(1)(h) of Regulation No 1408/71). The application was disallowed on the grounds that she was not a German national and did not have a residence permit as required by the German legislation. She challenged that disallowance as contrary to the prohibition on discrimination on the ground of nationality either in Article 3 of the Regulation or under the Treaty. One of the questions referred by the national court was whether Mrs Martinez Sala was an employed person within the meaning of Article 2 of Regulation No 1408/71 in conjunction with Article 1.
19. The ECJ said this in its judgment:

"29. By its first question the national court is asking essentially whether a national of one Member State who resides in another Member State, where he is employed and subsequently receives social assistance, has the status of worker within the meaning of Regulation No 1612/68 or of employed person within the meaning of Regulation No 1408/71.

...

35. Article 2 of Regulation No 1408/71 provides that it is to apply to employed or self-employed persons who are or have been subject to the legislation of one or more Member States and who are nationals of one of the Members States as well as to members of their families.

36. So a person has the status of employed person within the meaning of Regulation No 1408/71 where he is covered, even if only in respect of a single risk, compulsorily or on an optional basis, by a general or special social security scheme mentioned in Article 1(a) of Regulation No 1408/71, irrespective of the existence of an employment relationship (see, on this point, Case 182/78 Pierik II [1979] ECR 1977, paragraphs 4 and 7, and Joined Cases 82/86 and 103/86 Laborero and Sabeto [1987] ECR 3401, paragraph 17).

37. The Commission therefore takes the view that the appellant must be considered to be an employed person within the meaning of Regulation No 1408/71 simply by virtue of the fact that she was covered by compulsory retirement pension insurance in Germany or that the social welfare body gave her and her children sickness insurance cover and paid the relevant contributions.

38. Similarly, at the hearing, the French Government argued that the appellant in the main proceedings could be considered a worker for the purposes of Community social security law because she was - and possibly still is - covered in one way or another by a German retirement pension scheme.

[39 - 44 explain why the entry for Germany in Annex I did not restrict the meaning of employed person in the present case, because it only applied for the purposes of Chapter 7 of Title III, on which Mrs Martinez Sala was not relying, so that her status was to be determined solely on the basis of Article 1(a)(ii)]

45. Since the order for reference does not provide sufficient information to enable the Court to take account of all the circumstances which may be relevant in this case, it is for the referring court to determine whether a person such as the appellant in the main proceedings comes within the scope ratione personae of Article 48 of the Treaty and of Regulation No 1612/68 or of Regulation No 1408/71."

20. There would plainly have been no point in the ECJ's referring that issue to the national court if it had considered that Mrs Martinez Sala would not have fallen with Article 1(a)(i) or (ii) if the circumstances were as assumed by the French and German governments. If it had considered that the fact that she had not been in employment or self-employment for nearly four years was legally fatal to that conclusion, it would surely have told the national court that.
21. Further, in Sürül v Bundesanstalt für Arbeit (Case C-292/96) [1999] ECR I-2685, there was not the same deficiency in the information provided by the national court. Mrs Sürül (a Turkish national with rights equivalent to those under Regulation No 1408/71 by virtue of the EEC-Turkey Association Agreement) had not been employed in Germany at all between joining her husband there in 1989 and giving birth in September 1992 and claiming the child-raising allowance, which she was awarded from January 1993. On 1 January 1994 there was an amendment to the German legislation withdrawing entitlement from those with only the type of residence authorisation that Mrs Sürül had, so that she lost the allowance. German law deemed compulsory contributions to invalidity and old-age pension insurance to be made for a period of three years by a mother responsible for the education of a child. Although the ECJ left it to the national court to determine whether Mrs Sürül was to be regarded as a worker during the period in issue, it stated in paragraph 93 of its judgment, having identified the general principles following Martinez Sala in paragraphs 85 and 86 (set out in paragraph 8 of R(IS) 1/06), that she fell within the definition for the period for which she was covered by statutory pension insurance. And that was plainly independent of any rights that she had by virtue of her status as a member of her husband's family. The lack of any employment in Germany was not regarded as a relevant factor at all.
22. Thus, it seems to me that, without any need to attempt to define the outer edges of the scope of Article 1(a) of Regulation No 1408/71, the circumstances of the claimant in the present case cannot be distinguished in any relevant way from those accepted in Martinez Sala and Sürül as meeting the definition. He had been insured by actual contributions as an employed person as part of the British contributory benefits scheme and continued to be insured by virtue of his credited earnings. Those same factors enabled him to be identified as an employed person for the purposes of the first indent to Article 1(a)(ii). And the fact that he had not been in employment since 2004 did not alter that conclusion. That is a reflection, it also seems to me, of the definition in Article 1(a) being in terms of affiliation to a social security scheme or schemes and not in terms of employment for the purposes of employment or labour law.
23. I must then consider whether any of the authorities relied on by Mr Coppel for HMRC compel a different result. My conclusion is that, on the contrary, they reinforce that result.
24. I can dispose quickly of my decision in R(IS) 1/06. The concern there was whether a person who during her residence in the Netherlands was "insured" by virtue of that residence for the purposes of child benefit, which she received, and by the accrual of entitlement to an old-age pension was within the definition in Article 1(a). Since the particular Dutch schemes for which the person was "insured" were for all residents, she could only qualify through the first indent of Article 1(a)(ii). I accepted the submission for the Secretary of State for Work and Pensions that as she had never made any contributions as an employed person to either of the schemes involved, she could not be identified as an employed person by virtue of the manner in which the schemes were administered or financed. Although there were alternative qualifications under both schemes on the basis of work done in the Netherlands, that did not assist when no work had been done. The result and the reasoning are in my view entirely consistent with the result reached above in the present case.
25. Much more important are the decisions of the ECJ, two of which I discussed to some extent in R(IS) 1/06. The first is Brack. The claimant had been an employee in Britain and paid the appropriate national insurance contributions for nine years and then became self-employed and paid the appropriate contributions down to and beyond his 65th birthday. He went to France for a convalescent holiday, during which period he was not required to pay contributions. He fell ill while there and after his return to Britain was, rightly under the British legislation, refused sickness benefit for the period in France on the ground of absence from Great Britain. The ECJ was asked, among other things, whether the claimant could, notwithstanding that he was currently self-employed, be identified as an employed person for the purposes of Article 1(a)(ii) by reason of the fact that his title to benefit was constituted to a material extent by his having paid or been credited with contributions as an employed person. At the time, the personal scope of Regulation No 1408/71 was restricted to employed persons and had not yet been extended to the self-employed.
26. The ECJ regarded the social security scheme in question as one for the whole working population and held this in paragraphs 28 and 29 of its judgment:

"28. Consequently the provision [Article 1(a)(ii)] must be understood as referring also to persons who are not `employed persons' within the meaning of the law of employment but who must be treated as such for the purposes of applying Regulation No 1408/71, taking account on the one hand of the objectives and of the spirit of this regulation and of Articles 48 to 51 of the Treaty which form its basis and, on the other hand, of the special features of the administration or financing of the scheme to which such persons are affiliated and of the changes which have taken place in the nature of that affiliation.

29. Those conditions are fulfilled in cases like the present which are distinguished by the fact that on the one hand the person concerned also paid contributions as an employed person to the financing of the relevant scheme and on the other hand that his entitlement to sickness benefits in cash at the full rate depends upon taking account of those contributions."

Part of the reasoning leading to that conclusion was that as Regulation No 1408/71 covers certain persons who have lost the status of employed person (see Article 2(1)) and indeed were no longer insured under the social security scheme, it could not be excluded that it covers persons who had lost the status of employed person but remained compulsorily insured under the same scheme (paragraph 24). The claimant did not cease to be compulsorily insured because of the fact that for certain limited periods, such as a stay abroad, payment of contributions was optional (paragraph 16).

27. Mr Coppel drew particular attention to a passage at the end of paragraph 17 of the ECJ's judgment in which it said that, having regard to the facts of the case, the question of whether Mr Brack could be identified as an employed person, by virtue of the manner in which the scheme was administered or financed, needed only to be considered in relation to the contingency of sickness. He submitted that the ECJ was therefore endorsing a limited extension beyond the situation of current contributions as an employed person only when the claimant's status was relevant to particular benefit in relation to which assistance from Regulation No 1408/71 was sought. And of course he pointed out that there are no contribution conditions for child benefit, so that if the residence conditions for the girls had been met, the claimant here would have been entitled to child benefit in respect of them if he had never worked or paid any national insurance contributions in this country.
28. The link between contributions and the benefit claimed in Brack of course cannot be denied, but I read the ECJ as saying no more than that Mr Brack was an employed person in those particular circumstances and not laying down that such a link was always necessary. If such a rule was being suggested it has long since been overtaken by other cases. In neither Martinez Sala nor Sürül were there any contribution conditions for the child-raising allowance in question and it was accepted that being insured for a different contingency would bring the claimant within the definition in Article 1(a). Indeed, in the light of the history set out by Advocate General La Pergola in his Opinion of 12 February 1998 (see paragraphs 53 to 66), Sürül must be regarded as having expressly rejected the approach put forward for HMRC. Very much in brief, in his Opinion in the joined cases of Stöber and Piosa Pereira v Bundesanstalt für Arbeit (Cases C-4/95 and C-5/95), the same Advocate General had floated, partly by reference to an argument that had been made by the European Commission in Nieuwe Algemene Bedrijfsvereniging v Warmerdam-Steggerda (Case 388/87) [1989] ECR 1203, the possibility that the determination of whether a claimant was an employed or self-employed person had to be made by reference to the contingency to which the benefit claimed related. The question of the correctness of that approach was not tackled in the judgments in either of those cases, but was referred to again in the Advocate General's Opinion in Sürül. Thus, when, in paragraph 93 of its judgment, the ECJ stated that Mrs Sürül could show, in the context of her claim for a family benefit with no contribution conditions, that she came within the meaning of worker by reason of her insurance, even against only one risk under a social security scheme (ie for invalidity or pension insurance), that can only be taken as a decisive rejection of the argument now made for HMRC.
29. The second ECJ decision relied on by Mr Coppel was Tessier. There, the claimant was a French national who had worked as an au pair in the UK, although it was not known whether she was obliged to pay national insurance contributions. On her return to France a claim for sickness insurance benefits was disallowed on the grounds that she had not completed the required number of hours of employment and was not a migrant worker within the meaning of Regulation No 1408/71. It was argued that she was covered by the Regulation because of her entitlement while in the UK to treatment under the National Health Service, a social security scheme for all residents. The ECJ held that the claimant could only be identified as an employed person through the operation of the special provision for the UK in what was then Annex V that all persons required to pay contributions as employed persons were to be regarded as workers, which condition would have to be investigated by the national court. Thus, the ECJ accepted (see paragraph 12 of the judgment) that there were no criteria in the way in which the National Health Service scheme was administered or financed that enabled the claimant to be identified as an employed person. The evidence was that the scheme applied to all ordinary residents and on a discretionary basis to visitors from other countries, irrespective of whether they were in a gainful occupation.
30. I do not see how the judgment in Tessier takes the argument for HMRC any further forward. Proceeding as I am on the basis that the issue is affiliation to a social security scheme for all residents, it is accepted that there has to be an identification of the claimant concerned as an employed or self-employed person. Mrs Tessier could not be so identified on the findings of the national court, because it had not been investigated whether her affiliation was to anything other than the National Health Service. The ECJ said nothing in its judgment expressly in support of the necessity of a link between the benefits claimed and the contingency for which the person was insured, despite the reference to Brack in the Advocate General's Opinion. And even if there had been some implied support, its effect would have been overtaken by the decisions discussed in paragraphs 28 and 29 above.
31. The third ECJ decision cited by Nr Coppel was Walsh v National Insurance Officer (Case 143/79), although I do not think that he put much weight on it. The claimant had worked in the UK before ceasing on marriage and moving to Ireland with her husband. She gave birth to a child there and shortly afterwards returned to the UK, where she claimed maternity allowance. The question was whether she could receive that allowance for the period while she was still in Ireland, which the British legislation excluded. The ECJ accepted that the claimant did not lose her status as worker by reason only of the fact that she was no longer paying contributions and was not bound to do so when the contingency occurred. In this particular case, it was the claimant's UK contributions that qualified her for maternity allowance, subject to the residence rules, so that there was a reference to that state of affairs. But the decision cannot be taken as in any way deciding that such a connection was necessary.
32. Thus I reject the submissions for HMRC and confirm the conclusion in paragraph 22 above that the claimant was at the date of the claim and decision an employed person within the meaning of Articles 1(a) and 2(1) of Regulation No 1408/71. Therefore I do not need to say anything about the other interesting submissions made about discrimination on the ground of nationality or the possible application of the UK-Portugal Social Security Convention if the result had been otherwise. I merely draw attention to what the ECJ said in paragraphs 38 and 39 of its judgment in Stöber and Piosa about the German legislation that granted family benefits to persons resident in its territory where their dependent children were resident in that territory:

"38. Accordingly, that law treats nationals who have not exercised their right to free movement and migrant workers differently, to the detriment of the latter, since it is primarily the latter's children who do not reside in the territory of the Member State granting the benefits in question.

39. In so far as the case-files contain no material capable of providing objective justification for that difference in treatment, it must be regarded as discriminatory and hence as incompatible with Article 52 of the Treaty."

Article 73

33. Mr Coppel did not seek to argue that, if the claimant fell within the definition in Article 1(a), he was nonetheless not an employed person within the meaning of Article 73. However, since that has apparently been the view of the British authorities and the basis of decision-making for many years, I ought to explore any possible support for it in the context of Chapter 7 of Title III of Regulation No 1408/71.
34. The first possible basis is that Article 73 requires payment of benefit for members of the employed or self-employed person's family and that, as Rita and Micaela were not living with the claimant, they were not members of his family. However, in accordance with Article 1(f)(i) a member of the family means any person defined or recognised as a member of the family or designated as a member of the household by the legislation under which benefits are payable. Under section 141 of the Social Security Contributions and Benefits Act 1992, claimants can be entitled to child benefit in respect of children for whom they are responsible. Under section 143(1) a person is to be treated as responsible for a child in a week if he has the child living with him in that week or is contributing to the cost of providing for the child at a weekly rate not less than the weekly rate of child benefit in respect of that child. Plainly, for the purposes of Regulation No 1408/71, the British legislation recognises a child within either limb of section 143(1) as a member of the claimant's family. The entry for the UK in Section II of Annex I does not assist, because it is only for the purposes of determining entitlement to benefits in kind.
35. In the present case, on the evidence currently available it does not seem that the claimant had Rita and Micaela living with him at the date of the decision or was able to take advantage of any of the deeming provisions in section 143(2) or (3). Thus, he would have to show satisfaction of the second limb of section 143(1) to satisfy the British conditions of entitlement to child benefit. The evidence will have to be investigated, but if that British condition is met, Rita and Micaela will be members of the claimant's family for the purposes of Article 73 of Regulation No 1408/71. Consideration may also have to be given to the provision of a certificate from the Portuguese authorities in accordance with Article 86(2) of Council Regulation (EEC) No 574/72, the implementing Regulation for Regulation No 1408/71.
36. The second possible basis for an argument that "employed or self-employed person" has a special meaning in Chapter 7 of Title III is that Article 72a applies to employed persons who have become fully unemployed and Article 74 applies to unemployed persons who were formerly employed or self-employed. There is some reference back to Chapter 6 of Title III on unemployment benefits, where both of those formulations are used on occasion. However, the use of language is inconsistent and imprecise, so that I consider that it cannot be taken as doing anything other than identifying a sub-category of those who come within the general meaning of "employed or self-employed person". Thus, when that term is used in Article 73 there is no basis for giving it any meaning restricted to those currently in employment or self-employment. I am aware of no ECJ authority suggesting otherwise. No such argument was raised in Stöber and Piosa Pereira, where it might have been thought to be relevant if it had any merit, and it would be inconsistent with the emphasis placed, since Algemeen Ziekenfonds Drenthe-Platteland v Pierik (Case 182/78) [1979] ECR 1977 (Pierik II), if not before, on the generality of application of the definition in Article 1(a).
37. Accordingly, Mr Coppel for HMRC was right in his submission that in Article 73 of Regulation No 1408/71 "employed or self-employed person" has the meaning given by Articles 1(a) and 2(1).

R(F) 1/94

38. Where does that leave the decision of Mr Commissioner Rice in R(F) 1/94? His reasoning that, although the claimant there was within the personal scope of Regulation No 1408/71, Article 73 could not be applied to her because at the relevant time neither she nor her husband were in employment cannot stand. As explained in detail above, HMRC are right in their submission that that is not the law. I consider that the learned Commissioner could not have reached the conclusion he did if he had been referred to Pierik II. Therefore, notwithstanding that at least a majority of the Commissioners at the relatively recent time must have thought that R(F) 1/94 was rightly decided, to follow its reasoning would be a perpetuation of error (see paragraph 20 of R(I) 12/75). I decline to do so.
39. In addition, the alternative ground relied on in R(F) 1/94 appears to have been correct in principle, although only applicable to a small part of the period in issue before the appeal tribunal and the Commissioner. It was not a case merely of dependent children being in another Member State, but of the whole family leaving Great Britain to live in Spain. Neither the claimant nor her husband took up employment there. Mr Commissioner Rice held that, by virtue of Article 13(2)(f) of Regulation No 1408/71 in combination with paragraphs 19 and 20 of Annex VI, Spain had become the competent State, ie the State to whose social security legislation the claimant was subject. For that reason, one of the conditions of Article 73 was not met. That part of the Commissioner's reasoning appears correct (although the effect of paragraph 3(b) of Annex VI is especially obscure) and to be consistent with, for example, Kuusijärvi v Riksförsäkringsverket (Case C-275/96) [1998] ECR I-3419. He recognised that Article 13(2)(f) and paragraphs 17 to 20 of Annex VI were only inserted with effect from 29 July 1991, while R(F) 1/94 was concerned with entitlement to child benefit from 30 May 1988. The case-law on Article 13(2) prior to the insertion of head (f) suggested that the legislation of the State of employment continued to govern on a change of residence unless the person took up some occupational activity in the State of residence or had definitively ceased any such activity. The period from 29 July 1991 was, as the law stood at the time, part of the period that could have been considered by the Commissioner, because the appeal tribunal did not make its decision until 22 January 1992, so that Article 13(2)(f) was relevant to that period. But in relation to the period from 30 May 1988 to 28 July 1991, the reasoning on Article 73 was apparently decisive. Nevertheless, the existence of the alternative ground of principle lessens the obstacles to my deciding that the first ground of the decision is wrong in law.

The Upper Tribunal's conclusions on the appeal

40. For the reasons given above, the appeal tribunal was in error of law in applying section 146(1) of the Social Security Contributions and Benefits Act 1992 and in deciding that Article 73 of Regulation No 1408/71 did not operate to disapply that provision because the claimant was not in employment. Its decision must be set aside. As there is no dispute as to the facts on which HMRC's initial disallowance of the claim and the appeal tribunal's decision were based, it is appropriate to re-make the decision on the claimant's appeal against the decision of 23 November 2006.
41. As noted in paragraph 35 above, before a new outcome decision could be given in favour of the claimant, it is necessary for there to be an investigation and findings of fact about whether, from the date of claim and down to 23 November 2006, the claimant was contributing to the cost of providing for Rita and Micaela at a weekly rate not less than the applicable rate of child benefit for each child. There may also, if HMRC consider it necessary, need to be action to obtain a certificate from the relevant Portuguese authorities relating to Rita and Micaela in accordance with Article 86 of Regulation No 574/72. Since the claimant was not asked by HMRC to obtain such a certificate and it is not clear to me what is supposed to be certified, he is not to be disadvantaged by not having submitted such a certificate with his claim. In any event, there seems nothing to prevent a certificate being given retrospectively. The evidence is not before me on which to make a decision on the above issue. In accordance with paragraph 48 of Tribunal of Commissioners' decision R(IS) 2/08, HMRC's decision of 23 November 2006 is set aside, leaving them to make a fresh decision on the claim giving effect to my rulings of law above on the issue on which it initially disallowed the claim and determining all other issues that are necessary to decide the claim one way or another. The claimant will of course have a right of appeal against the decision that is made.
42. I also request (as I cannot direct) that HMRC consider the following issue. According to the claimant and his wife, a claim for child benefit in respect of Rita and Micaela was made in 2002 at the same time as a claim in respect of Sara, but was disallowed on the ground of the girls' residence in Portugal. That was at a time when it appears that the claimant was in employment and paying primary Class 1 national insurance contributions as an employed person. HMRC have the power at any time, whether or not there has been a request by or on behalf of a claimant, to revise a decision made in 2002 on the ground that it arose from official error (Social Security and Child Support (Decisions and Appeals) Regulations 1999, regulation 3(5)(a)). A decision then that child benefit was not payable in respect of Rita and Micaela, unless there had been a specific conclusion that the claimant was not contributing to the cost of providing for them at a weekly rate not less than the applicable weekly rate of child benefit, would appear to have arisen from official error in the general meaning of the definition in regulation 1(2). It involved an error of law in not giving effect to Article 73 of Regulation 1408/71. The case appears also not to fall into the exclusion from the definition of "official error" where the error is shown to be such by a subsequent decision of a Commissioner/Upper Tribunal or the court (apparently including the ECJ: Tribunal of Commissioners decision CP/1425/2007). If, as it appears, the claimant was at the time of that decision in employment and affiliated to the UK social security scheme, even on the then (mistaken) official understanding that the law was as stated in Commissioner's decision R(F) 1/94, payment of child benefit in respect of Rita and Micaela was not precluded merely by their residence in Portugal. The error was therefore one that did not need to be revealed by the present decision or any other intervening decision of the ECJ. For essentially the same reason, it appears that section 27 of the Social Security Act 1998 does not inhibit an award of child benefit in respect of Rita and Micaela on a revision of a 2002 decisions for official error.
43. I further request that HMRC inform me of the outcome of the decision under paragraph 41 when it is made and of what action is taken on the point under paragraph 42.

(Signed) J Mesher

Judge of the Upper Tribunal

Date: 28 January 2009

APPENDIX TO DECISION CF/2266/2007

COUNCIL REGULATION (EEC) NO 1408/71

Article 1(a)

For the purposes of this Regulation:

(a) employed 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 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 I 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 I;

(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 whole rural population in accordance with the criteria laid down in Annex I;

(iv) any person who is voluntarily insured for one or more of the contingencies covered by the branches dealt with in this Regulation, under a social security scheme of a Member State for employed or self-employed persons or for all residents or for certain categories of residents:

- if such person carries out an activity as an employed or self-employed person, or

- if such person has previously been compulsorily insured for the same contingency under a scheme for employed or self-employed persons of the same Member State;

Article 2(1)

"This Regulation shall apply to employed and self-employed persons and to students who are or have been subject to the legislation of one or more Member States and who are nationals of one of the Member States or who are stateless persons or refugees residing within the territory of one of the Member States, as well as to members of their families and their survivors.

Article 73

"An employed or self-employed person subject to the legislation of a Member State shall be entitled, in respect of 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."

Annex I, Section I (Employed persons and/or self-employed person (Article 1(a)(ii) and (iii) of the Regulation))

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. [Equivalent provision for Gibraltar omitted]