[2023] UKUT 238 (AAC)

The FTT did not make a finding of fraud against the Father and I can see no evidence on which it could have done so. On the contrary, the Father noticed that the information provided by HMRC was incorrect and drew that attention of the Child Maintenance Service to that fact. It does not follow from the fact that the FTT disagreed with the Father’s figures that those figures were deliberately or dishonestly incorrect.

However, it cannot be denied that some non-resident parents do lie about their income both to HMRC and to the Secretary of State. My experience as a judge of the FTT suggests that it is some way from being an isolated occurrence.

In such cases, the goals of, on the one hand, ensuring that children receive the maintenance that is legally due to them and, on the other, of fast-tracking the assessment of such maintenance by reliance on information provided by non-resident parents via HMRC, are mutually exclusive. Where a non-resident parent has lied about his unearned income, either the assessment will be quick and incorrect or, if time is taken to uncover the truth, it will be correct but slower.

That problem is inherent in the child support system. It does not matter whether a non-resident parent has to give information to HMRC, a Family Court or the Child Maintenance Service. If he is prepared to lie about his income to the detriment of his children, he is unlikely to mind to whom he does so.

However, the unquestioning reliance on information from HMRC for which the Secretary of State contends would present an additional problem because it would create a double incentive to lie.

A non-resident parent considering whether to take the risk of lying to HMRC about his unearned income will be able to factor in the potential advantage that, as well as evading income tax, he will—unless detected—also obtain a fraudulent reduction in his liability to support his children.

Further, the likelihood of detection would itself be reduced. If the information from the HMRC were conclusive, it would not be a proper use of the FTT’s inquisitorial powers to go behind it.

I therefore accept the Mother’s submission that “[a]llowing the appeal would … create a child maintenance and tax dodgers' charter …”. That is a tendentious way of putting the matter and I do not believe that the policy of the 2012 Regulations was to incentivise fraud. But, in my judgment, the submission correctly describes one of the effects of accepting the Secretary of State’s submissions.

It is, of course, possible that the legislator recognised that the policy might lead to an increase in fraud but regarded that as the lesser of two evils; a necessary cost of getting some maintenance to most children quickly. Again, Parliament is sovereign and could have made the information from HMRC conclusive by using sufficiently clear words.

Parliament, however, has not in fact done so. For the reasons I have given, and interpreted in the context of regulation 69 as a whole, the natural meaning of “by reference to” is that the information from HMRC is not conclusive.