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Neutral Citation Number:	2010 UKUT 83 AAC
Reported Number:
File Number:	CCS 571 2009
Appellant:	MG
Respondent:	CMEC
Judge/Commissioner:	Judge J. Mesher
Date Of Decision:	19/03/2010
Date Added:	31/03/2010
Main Category:	Child support
Main Subcategory:	variation/departure directions: other
Secondary Category:	Child support
Secondary Subcategory:	calculation of income
Notes:	Reported as [2010] AACR 37. Variation – assets – circumstances in which an asset will produce income which takes it out of the exception in regulation 18(3)(d) of the Variations Regulations A nil maintenance calculation was made in respect of the non-resident parent father. The mother applied for a variation of that decision on the basis that the father held assets which fell within regulation 18 of the Child Support (Variations) Regulations 2000. A tribunal found that the father controlled the beneficial interest in properties which it valued at £1,100,000, but that he had no income from the properties taken as a whole (there being no taxable profit from his property management business). However, it decided that £800,000 of the capital assets should be taken into account under regulation 18 as those assets were not being retained for a reasonable purpose, thus falling outside the exception in regulation 18(3)(b). The father appealed to the Upper Tribunal. The point of law before the Upper Tribunal was how regulation 18(3)(d) of the Variations Regulations applied to the father’s property holding. That regulation provides that an asset used in the course of a trade or business should not be taken into account under regulation 18 unless it is a “legal estate or beneficial interest in land and rights in or over land” which produces income not taken into account under Part III of the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000. Held, allowing the appeal, that: 1. a parent who is engaged in a business letting or managing property is a self-employed earner for the purposes of Part III of the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000: GD v Secretary of State for Work and Pensions [2008] UKUT 27 (AAC) followed (paragraph 22); 2. when calculating net income from that business for the purposes of paragraphs 7 and 8 of Part III, “gross earnings” will not include income (such as rental income or other profit from land or property) which Her Majesty’s Revenue and Customs would require to be entered into the “property” pages of a tax return. It will only include income that should be entered on the self-employment pages: CD v Secretary of State for Work and Pensions [2009] UKUT 48 (AAC) followed in preference to GD (paragraph 23); 3. as a consequence, profits from beneficial interests in or rights over land do not fall within Part III and any such asset which produces income is not within the exception in regulation 18(3)(d) of the Variations Regulations. That asset will therefore be taken into account under regulation 18 for the purposes of deciding whether there should be a variation of the maintenance calculation, unless it comes within one of the other exceptions in regulation 18(3): GD not followed (paragraph 33); 4. in deciding whether an asset produces income, the test is whether each asset considered individually produces gross receipts. The overall profitability of the business is ignored: CD not followed (paragraph 40); 5. the tribunal gave inadequate reasons for its decision on the extent to which the father’s business assets fell within the exception in 18(3)(b). The judge set out factors relevant to the question of whether property assets held by the father’s business were retained for a reasonable purpose (paragraph 47). The case was a remitted to a new tribunal to investigate several issues.
Decision(s) to Download:	[2010] AACR 37 bv.doc