The EU commission is taking the the UK to court for breaching EU convention law by adding an extra hurdle by way of Right to Reside and Habitual Residency Tests to EU nationals.
Patmalniece (FC) (Appellant) v Secretary of State for Work and Pensions (Respondent)  UKSC 11 is the leading Supreme Court case on the topic. (Full Judgement and Summary) it was to be considered whether applying the test, here in regards to Pension Credit for a Latvian citizen was directly discriminatory or not and if so in breach of EU Law.
The Supreme Court, by a majority, dismissed the appeal. It held unanimously that the conditions are indirectly discriminatory. But the majority (Lord Walker dissenting) hold that this discrimination is justified because the Regulations are a proportionate response to the legitimate aim of protecting the public purse. They argued it was not directly discriminatory on grounds of nationality as UK citizens were also subject to the HRT aspect of the test (however automatically passing Right to Reside test).
Following this on 29th September 2011 the EU commission gave a Reasoned Opinion that the test was contrary to EU social security coordination rules (EC Regulation EC 883/2004) which concerna social security benefits and not social assistance benefits. Under these rules, EU citizens have the same rights and obligations as nationals of the country where they are covered.
Further that the EU directive on the free movement of EU citizens (Directive 2004/38/EC) allows for restrictions of access to social assistance only, but it cannot restrict the access to social security benefits (including special non-contributory cash benefits). In the absence of any such explicit derogation, the principle of equal treatment ensures that EU citizens may not be treated differently from the nationals of a Member State.
Chris Grayling the work minister at the time stated he would oppose any action by the EU and that he added: “… it would cost us £2.5 billion.” source
After a relatively quiet 2 years the EU commission has decided to take the case to court, with more details appearing on Thursday.
A government spokesperson in response has said:
It is absolutely imperative that we do all we can to protect our benefits system from abuse by migrants. The ‘right to reside’ part of our Habitual Residence Test is a vital and fair tool to ensure that benefits are only paid to people who are legally allowed to live in Britain.
Our rules are in line with European Union law and fully support the freedom of people to work or look for work, while making sure there are restrictions on access to benefits for those who have never worked in the UK and have no intention of doing so.
We will not only fight this action but press ahead with plans to strengthen Britain’s benefits system to ensure it cannot be abused.
What remains to be seen now is how this action will effect UK/EU relations and whether the same will have a knock on effect on other area’s also such as Homelessness regulations which stipulate extra tests for EU citizens again.
Effect of case
If the matter is found against the UK it is reported it would cost the UK an extra £2.5 Billion. Notwithstanding the above the UK will be liable for compensation under Francovich v Italy which stated:
In the absence of any Community legislation, it is in accordance with the rules of national law on liability that the State must make reparation for the consequences of the loss and damage caused. Nevertheless, the relevant substantive and procedural conditions laid down by the national law of the Member States must not be less favourable than those relating to similar domestic claims and must not be so framed as to make it virtually impossible or excessively difficult to obtain reparation.
However until the matter is decided upon we cannot comment on how this will be administered if the UK does fall foul of EU law.
In the meanwhile however have a look at our Complaint and compensation Guide if advised to apply for wrong benefit by DWP.