[2023] UKUT 238 (AAC)

Taking all those factors into consideration, I judge that regulation 69 operates as follows:

A case for variation exists under regulation 69 if—in the relevant year—the non-resident parent has an income of at least £2,500 that is chargeable to income tax under Parts 3 to 5 of ITTOIA but not relieved by section 118 of the Income Tax Act 2007: see regulation 69(1), (2) and (4). “Chargeable” means income on which income tax should properly have been charged under those Parts, not the income on which tax was actually charged.

In determining the level of the non-resident parent’s unearned income, the Secretary of State should—with one exception—normally take the information from HMRC as her starting point. That information will usually be no more than what HMRC have been told by the non-resident parent. However, information in a self-assessment return is given under a formal declaration that it is true, and under-declaration is subject to penalties including, in an appropriate case, criminal penalties. To that extent, regulation 69 pays the non-resident parent the courtesy of supposing that the figures he has declared to HMRC were correct.

If, however, there is other evidence that suggests the HMRC Information is incorrect, the Secretary of State is entitled to consider that evidence and—attaching whatever weight to it seems appropriate—to reach her own conclusion as to the true level of unearned income.

The exception referred in sub-paragraph (b) above is that, if the HMRC Information does not disclose any unearned income, the Secretary of State must treat the amount of the non-resident parent’s income as nil.