Decision Summary Information

Back to Results | Search Again | Most Recent Decisions

Neutral Citation Number:	2011 UKUT 510 AAC
Reported Number:
File Number:	CCS 392 2011
Appellant:	TG
Respondent:	CMEC
Judge/Commissioner:	Judge J. Mesher
Date Of Decision:	13/09/2011
Date Added:	05/09/2012
Main Category:	Child support
Main Subcategory:	calculation of income
Secondary Category:
Secondary Subcategory:
Notes:	Reported as [2013] AACR 5. Calculation of income – assessment of self-employed income – whether decision-makers must accept the information submitted for income tax purposes or are entitled to make their own findings of fact The appellant was the father of two children aged 16 and 13 who lived with their mother (the second respondent). In 2002 the mother successfully applied for child support and the Child Support Agency (CSA) assessed the appellant’s liability. In 2008 the CSA made a revised assessment of the child support based upon the appellant’s declared net weekly income. The mother appealed to the First-tier Tribunal (F-tT) on the ground, among others, that the appellant had wrongly stated his weekly income. The Child Maintenance and Enforcement Commission (CMEC) (which had replaced the CSA) made a departure direction increasing the amount payable, on the basis that the appellant’s lifestyle was inconsistent with his declared income. Both parents appealed against the direction on different grounds: the mother that the revised child support was too low and the father that the direction should not have been made. All three appeals came before the F-tT. The F-tT held that the appellant had failed to declare his full income and found that his accounts for years ending 2007 and 2008, which had underpinned the figure for profits from self-employment on his 2007/2008 tax return, significantly understated his true profits. It directed CMEC to make the assessment on its calculation of the true profits, without making any deduction for income tax and national insurance from the additional amount over that declared to Her Majesty’s Revenue and Customs (HMRC). It was therefore unnecessary to consider the appeals against the departure direction. On the appellant’s further appeal, the Upper Tribunal judge found that the decision of the F-tT involved no material error of law which would justify setting it aside and that the F-tT had been entitled to go behind the figures supplied to HMRC by the appellant and to make its own findings of fact. The appellant was given permission to appeal to the Court of Appeal. The issue before the court was how to establish the appellant’s earnings, in particular whether decision-makers are bound to accept the information provided to HMRC or whether they are entitled to make their own findings of fact. Held, allowing the appeal, that: 1. the words in paragraph 2A to 3 of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 have an ordinary and natural meaning and the contrary position, that the decision-maker is bound to accept the information placed before, or even the information supplied by, the HMRC, is far from conclusive. The decision-maker is entitled to rely on an evaluation of the father’s actual profits from self-employment in the relevant period rather than the figures submitted to HMRC in his tax return: reasoning on KB v CMEC (CSM) UKUT 434 (AAC) and DB v CMEC (CSM) [2010] UKUT 202 (AAC) approved (paragraph 28); 2. if a decision-maker increases the profit above the level accepted by the HMRC then their responsibility is to deduct the income tax and national insurance contributions which would be payable on that level of profit (paragraphs 29 to 30). The Court remitted the case to the Secretary of State to arrange for the necessary recalculation of the child support maintenance assessment.
Decision(s) to Download:	CCS 0392 2011-00.doc [2013] AACR 5ws.doc