In Wendy Carrington v HMRC EWCA Civ 1724, the Court of Appeal (CA) found EU law did not cause the entitlement to UK Child Benefit to remain after the taxpayer ceased to be UK resident.

  • Mrs Carrington (the taxpayer) ceased to be UK Resident in August 2011.
  • Prior to departure, the taxpayer received two benefits in respect of her son, the care component of the Disability Living Allowance (DLA) and Child Benefit.
  • The taxpayer notified the Department of Work and Pensions, who administered the DLA, of her move and assumed that this was sufficient for both benefits.
  • While payments of DLA stopped, the payment of Child Benefit continued as the benefits were not administered together.
  • In July 2013 HMRC became aware of the taxpayers’ relocation and suspended the Child Benefit payments.
  • HMRC concluded her absence from the UK precluded entitlement to child benefit and that it should be repaid.
  • The taxpayer appealed to the First Tier Tribunal (FTT).

The FTT dismissed the appeal finding that:

  • Regrettably, there was no communication between government departments and the obligation was on the recipient to notify the appropriate department.
  • Child benefit was not due and the taxpayer had failed to notify HMRC of her change of circumstances.
  • European law did not aid the taxpayer.

The taxpayer appealed to the Upper Tribunal who allowed the appeal finding:

  • EU law meant that relocating did not reduce or withdraw the entitlement to Child Benefit.

The CA allowed HMRC’s appeal finding that:

  • Under domestic law, Child Benefit is only payable if both the child and the recipient are ordinarily resident in Great Britain.
  • As the taxpayer ceased to be ordinarily resident in Great Britain then if domestic legislation is the only consideration, the Child Benefit is not due.
  • The EU law concepts of a competent state and the applicable legislation go hand in hand, residence in a competent state determines the applicable legislation.
  • As a result of the change in the residence of the recipient, UK domestic law ceased to be applicable and Child Benefit was not due.
  • EU law protected the Child Benefit entitlement of a UK resident individual whose child was not resident in the UK but did not protect the entitlement if the recipient ceased to be UK resident as the taxpayer contended.

Useful guides on this topic

SRT: Statutory Residence Test
What is the statutory residency test? Why is it important and how does it work?

SRT: Statutory Residence Test Toolkit (freeview)
This is a freeview interactive tool to determine 'At a glance' whether you are UK resident or not in a tax year for 2013/14 onwards.

External links

Wendy Carrington v HMRC EWCA Civ 1724

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