[2023] UKUT 238 (AAC)

When the Father first made his appeal, the Secretary of State’s position was that the FTT had reached the correct result by a permissible method. That, however, was an error by the original submission writer and the Secretary of State’s submissions have changed accordingly, which, in turn, means that Ms Spicer’s submissions on behalf of the Father have had to develop in response to that volte face. It is therefore convenient to summarise them by reference to her final skeleton argument as follows:

“Introduction

1.

The Appellant is grateful to note that the First Respondent has changed her position, and now supports the appeal.

2.

She submits that the appeal should be allowed on the basis that pursuant to regulation 69(3) the Appellant's unearned income figure as provided by HMRC should be the figure which is used for the purposes of calculating additional weekly income where a variation is agreed to under this regulation - ie the first of the possible interpretations identified by Judge Poynter in paragraph 15 of his directions dated 27 June 2019.

3.

However, she also agrees that if the Upper Tribunal concludes that the second interpretation is correct, the appeal should be allowed - broadly speaking for the reasons set out in the Appellant's earlier submission.

4.

The Appellant remains of the view that the wording of regulation 69(3) fits marginally more naturally with the second interpretation; however if the Upper Tribunal prefers the submissions of the Secretary of State in support of the first interpretation, he would be content for the appeal to be allowed on that basis. In either case, it is clear that his unearned income was not determined correctly and the First-tier Tribunal's decision will need to be set aside.

Observations on how regulation 69(3) of the Child Support Maintenance Calculation Regulations 2012 - and in particular the closing words - interact with regulation 69(5)

5.

The Appellant agrees with the Secretary of State that regulation 69 (3) provides the "default" or "general" method for calculating the amount of any unearned income to be treated as additional weekly income in the maintenance calculation, which must be used except where one of the scenarios at regulation 69(5) (a) - (c) applies.

6.

The Appellant also agrees that the closing words of regulation 69(3) make it mandatory for the non-resident parent's unearned income to be calculated as nil where the information provided by HMRC does not identify any income which is of one of the types defined in regulation 69 (2), and assuming regulation 69(5) does not apply.

7.

More open to question is the submission that because the HMRC information is conclusive where no income is identified, it should also be conclusive where some income is identified. If this is correct it not wholly clear why Parliament felt the need to address both scenarios in this paragraph. That is, if the HMRC figure is conclusive it would be conclusive even if it were nil, thus rendering the closing words otiose. 8. Furthermore, it could be argued that ordinarily the use of the words “by reference to" suggest that it would at least be permissible to have regard to matters other than solely the criterion specified. Were the HMRC figure to be only criterion to be considered for determining the amount of unearned income, the regulation could, it suggested, easily have been drafted in a way that mirrored the drafting of regulation 35(1) (notwithstanding the points made by the Secretary of State at 19 (xii) of her Counsel's submissions).”

Ms Spicer adds that the Father continues to maintain that the figures in his tax return were correct, (Footnote: ¹⁴) even though HMRC made an error in reporting those figures to the Secretary of State; that he himself had pointed out that error; and that the Secretary of State could have made a fresh request to HMRC for a corrected figure. The Tribunal should therefore have accepted that his unearned income was £35,631 rather than carry out a fresh assessment leading to an unearned income figure of £39,717.

The carrying out of such an assessment, Ms Spicer submitted, was only consistent with the Third or Fourth Interpretations, which—for the reasons given by Mr Najib—could not represent the law. Further, any simplification of a system is inevitably going to involve cases in which absolute accuracy will be sacrificed to speed and administrative convenience. That is not a reason to adopt either the Third or Fourth Interpretations. It is important that the Regulations should be clear and easy to apply.

Ms Spicer further submits that failure to declare income is a matter for HMRC not the Secretary of State and it is not for the Child Maintenance Service to do HMRC’s job for them.