![[2023] UKUT 238 (AAC)](https://backend.juristeca.com/files/emisores/logo_3a2BKne.png){kind=logo}
Section 1
This decision is given pursuant to section 12 of the Tribunals, Courts and Enforcement Act 2007 and section 27 of the Judicial Pensions and Retirement Act 1993.
The appeal to the Upper Tribunal does not succeed.
The First-tier Tribunal did not make any material legal mistake in relation to the claimant’s appeal (ref. SC242/16/01259) which was decided at Fox Court on 23 January 2018.
Therefore, that decision stands and the appellant is liable to pay child support maintenance for the five qualifying children that are identified in the appeal papers on the basis that, from the effective date of 30 December 2015, his gross weekly income—as varied under section 28F of, and paragraph 4 of Schedule 4B to, the Child Support Act 1991, and regulation 69 of the Child Support Maintenance Calculations Regulations 2012—was £1,202.70.
REASONS
Summary
This appeal is about the circumstances in which the Secretary of State or, on appeal, the First-tier Tribunal ("FTT"), (Footnote: 1) may agree a variation under regulation 69 of the Child Support Maintenance Calculations Regulations 2012 ("the Regulations") on the ground that the non-resident parent has “unearned income”.
“Unearned income” is defined for the purposes of regulation 69 as being income that is chargeable to tax under three specified Parts of the Income Tax (Trading and Other Income Act) 2005 ("ITTOIA").
The only issue is whether, when the amount of any unearned income is determined, the Secretary of State must accept the information provided by HMRC as to the amount of the non-resident parent’s income that is so taxable or whether she (Footnote: 2) is free to take into account evidence showing that figure may be incorrect.
I have decided that, subject to one exception, the latter is the case.
In reaching that decision, I regret that I been unable to persuade myself that the decision of Judge Wikeley in PP v Secretary of State for Work and Pensions and SP (CSM) [2022] UKUT 286 (AAC) is correct on this issue, and—to that extent—I have declined to follow it.
- Heading
- Section 1
- Background and procedural history
- Regulation 69
- The possible interpretations of regulation 69(3)
- Self-assessment and child support
- Assessment of income for the purposes of income tax
- Under section 8 TMA 1970 , HMRC may require a person to make a tax return Under section 9, that return must include a self-assessment of the amount the person is chargeable to income tax and the amount payable by him ( i.e. , the amount so chargeable
- Under section 9ZB, HMRC may amend a return
- How self-assessment operated in this case
- other UK income not otherwise declared (described as property management income) of (£17,020 less expenses of £1,201)
- The maintenance calculation
- UK income not otherwise declared
- if the properties managed belonged to another person or company and were managed by him as a business—or if he carried out the management as an employee or as the officer of a limited company—then the
- In short, the Father’s income from property management cannot be neither earned nor unearned
- The Secretary of State’s submissions
- The decision in SB
- The decision in Gray
- Criteria for assessment
- The Explanatory Memorandum
- Interpretation of regulation 69(3)
- Relationship between regulation 69(3) and (5)
- Inconsistency
- The Father’s submissions
- The decision in PP
- Discussion
- Interpretation of regulation 69
- is to be determined by reference to
- The decision in SB
- Criteria for assessment
- Inconsistency
- “Doing HMRC’s job for them”
- In performing the latter task, the Secretary of State is doing her own job, not HMRC’s. Even if she decides that the figure in the non-resident parent’s self-assessment return is incorrect, that decis
- Incentivising fraud
- Alternative remedies
- has diverted income
- an “unearned income” variation is only available where the non-resident parent has actually received unearned income: see MQB v Secretary of State for Work and Pensions & SRB (CSM) [2021] UKUT 263 (AA
- it is of the essence of a “diversion” variation, that the diverted income has been diverted at source to another person or for another purpose and that the non-resident parent has therefore not receiv
- Reconciling the two parts of regulation 69(3)
- In short, the regulation unambiguously means what Judge Jacobs—with considerably greater concision than I have been able to manage—says it means in Child Support: The Legislation: see paragraph 17 abo
- Conclusion
- That, however, is subject to regulation 69(5)
- Conclusions