[2023] UKUT 238 (AAC)

The Secretary of State calculated the Father’s liability on the basis of an annual income of £51,450, presumably on the basis that the resulting weekly figure was his current income and exceeded the historic income calculated on an annual income of £12,208 by more than 25%. It does not seem to have been appreciated that the Father’s letter and enclosure of 13 November 2015 showed that not all of the £51,450 comprised earnings.

Both the Secretary of State and the Father have submitted that I should set aside the FTT’s decision and reinstate that of the Secretary of State.

That submission underestimates the complexity of the problem.

Whatever might have been the case for unearned income, the Mother was within her rights to challenge the figure for current income and the FTT was entitled—and bound—to use its inquisitorial powers to the full extent that is necessary to achieve the overriding objective of dealing with the case fairly and justly. The Father has complained about the extent of the disclosure required of him, but directions to disclose will inevitably weigh more heavily on the non-resident parent than the person with care. The relevant information will be known to the former, but not necessarily the latter, and (except possibly to the issue of whether it is just an equitable to agree a variation) the circumstances of the latter are irrelevant: see paragraph 26 above.

The documents disclosed to the FTT demonstrated that (on a current income basis) the Father’s earned income was not £51,450 but only £22,941. In those circumstances, it had no alternative but to set aside the Secretary of State's decision and the submission that I should reinstate that decision cannot be correct.

Rather, the question is what decision the FTT should have substituted for that decision.

Should it have directed the Secretary of State to recalculate the Father’s liability on the basis that his gross annual income was only £22,941?

Or, given that in the course of reaching its decision, the FTT had become aware that the Father also had unearned income of at least £35,631, (Footnote: ¹⁰) should it have gone on to consider whether to agree an unearned income variation?

On the Secretary of State’s submissions, the First Interpretation is correct. The FTT was therefore obliged to accept that the Father’s unearned income was nil because that is what HMRC had told the Secretary of State and even though everyone concerned, including the Father, knew and agreed that the nil figure was wrong. Neither the Secretary of State nor the Father accepts that regulation 69(5) has any role to play in this case.

The logic of that submission is not that the FTT should have confirmed the Secretary of State’s decision but that it should have held that the Father’s gross weekly income was £439.96 (£22,941 ÷ 365 x 7), thereby reducing the maintenance payable for five children from £180.01 to £82.84 (19% of £439.96).

Indeed, if it is the case that regulation 69(5) has no role, that is the outcome that is required by any interpretation of regulation 69(3). The information from HMRC brought into play the “is to be treated as nil” part of that regulation. It therefore does not matter way “by reference to” means.