[2023] UKUT 238 (AAC)

There are currently three child support schemes. The Father’s liability to pay child support maintenance arises under the “2012 Scheme”, that is, the scheme established by the Child Support Act 1991 ("the Act") (as amended by the Child Support, Pensions and Social Security Act 2000 and Child Maintenance and Other Payments Act 2008) and by the 2012 Regulations.

Under that Scheme, the Father’s liability is a function of his own income: see generally Schedule 1 to the Act ("Schedule 1"). The Mother’s income is irrelevant. The policy underlying the Scheme is that non-resident parents should pay a percentage of their income to support their children, irrespective of the financial circumstances of the parent with care.

The first step is to ascertain the Father’s “gross weekly income” as defined in paragraph 10 of Schedule 1 (see page vii of the Appendix) and regulations 34-39 of the 2012 Regulations (see pages x-xiv). The weekly liability to pay child support maintenance is then calculated by applying the “basic rate”, namely the percentages specified in paragraph 2 of Schedule 1. (Footnote: ⁵)

By regulation 34(1), the gross weekly income is “a weekly amount to be determined at the effective date of the decision on the basis of either historic income or current income in accordance with this Chapter”.

Under regulation 35, the calculation of historic income begins with the “HMRC figure last requested from HMRC”: That figure is then adjusted to reflect any pension contributions made by the non-resident parent during the tax year in question and then divided by 365 and multiplied by 7: see page xi of the Appendix.

Unlike the phrase “information provided by HMRC to the Secretary of State”, which is used in regulation 69(3), the phrase “HMRC figure” is a defined term. Regulation 36 defines it as:

“the amount identified by HMRC from information provided in a self-assessment return or under the PAYE regulations, as the sum of the income on which the non-resident parent was charged to tax for the latest available tax year” …

under specified provisions of the Income Tax (Earnings and Pensions) Act 2003 relating to earned income, pension income and social security income, and of the Income Tax (Trading and Other Income Act) 2005 relating to trading income: see page xi of the Appendix.

The emphasis on the phrase “was charged” in that definition is mine. The historic income figure is a primary fact about the past. HMRC is required to provide the actual earned income figure on which a non-resident parent was charged tax in relation to a tax year that has concluded: not the amount on which he should have been charged, but the amount on which he was charged.

HMRC are well-placed to know how much income tax they actually charged the non-resident parent in relation to any past period. It is therefore unsurprising that the “HMRC figure” is conclusive for the purposes of determining his historic income.

That, however, is not the end of the matter. As indicated in paragraph 28 above, gross weekly income is sometimes determined on the basis of “current income”, namely “the sum of the non-resident parent's income … as an employee or office-holder; … from self-employment; and … from a pension, calculated or estimated as a weekly amount at the effective date of the relevant calculation decision”: see regulation 37 at page xii of the Appendix.

That occurs in a number of circumstances but, most importantly, when current income differs from historic income by an amount that is at least 25% of historic income: see regulation 34(2)(a) at page x of the Appendix.

So the HMRC figure, whilst conclusive for the calculation of historic income is not determinative as to “gross weekly income”. If there is a dispute as to whether the non-resident parent’s current income differs from the historic income by at least 25%, then the Secretary of State must investigate the non-resident parent’s financial circumstances in order to resolve it.

Finally, if a “case” for doing so exists and she considers it “just and equitable” to do so, the Secretary of State may agree to a “variation”: see section 28F of, and Schedule 4B to, the Act, pages vii-ix of the Appendix. In other words, she may agree to vary the amount of gross weekly income as determined on the basis of either historic or current income.

A case for a variation will exist if a non-resident parent is paying certain, prescribed, “special expenses”, or if he has “additional income”, in this case, unearned income of at least £2,500 per annum.