AR v Secretary of State for Work and Pensions, HM Revenue and Customs and LR (No.2): [2019] UKUT 151 (AAC) ; [2019] AACR 25

Upper Tribunal Administrative Appeals Chamber decision by Judge Wikeley on 8 May 2019.

From:
HM Courts & Tribunals Service and Upper Tribunal (Administrative Appeals Chamber)
Published
28 May 2019
Last updated
3 September 2021 — See all updates
Categories:
Child support
Sub-categories:
Child support - calculation of income, Child support - maintenance assessments/calculations
Judges:
Wikeley, N
Decision date:
8 May 2019

Read the full decision in [2019] AACR 25ws

Judicial Summary

Reported as [2019] AACR 25

Child support case under 2012 Scheme - Meaning of ‘latest available tax year’ – Whether regulation 4 and 36 of the Child Support Maintenance Calculations Regulations 2012 are in conflict – Application in cases where NRP subject to Pay As You Earn (PAYE) real time information procedures but also required to lodge P11D and self-assessment return (SAR) but where no tax liability following such lodgement

The father was a company director and the sole employee of his company. Following a Child Maintenance Service (CMS) request on 25 April 2017, Her Majesty’s Revenue and Customs (HMRC) supplied a historic income figure for the 2015/16 tax year ie using data not from the tax year just ended (2016/17), but rather from the preceding tax year. Using that information, on 9 May 2017 the CMS calculated the father’s child support liability as being £173.91 a week. The father challenged the decision on the basis that CMS was not using up to date information. The First-tier Tribunal (F-tT) allowed the father’s appeal and set aside the CMS decision directing that the father’s child support liability should be calculated by reference to his historic income figure for the (most recent) 2016/17 tax year. The appellant appealed to the Upper Tribunal (UT). The issues before the UT were the proper meaning of the expression “the latest available tax year”; the interpretation and application of regulations 4 and 36 of the Child Support Maintenance Calculation Regulations 2012 (SI 2012/2677) and how those two provisions can be read together; and whether the father’s child support liability in May 2015 had been assessed on the basis of HMRC data drawn from the correct tax year.

Held, dismissing the appeal, that:

  1. “gross weekly income” means (in most cases) “historic income” (regulation 34), while “historic income” in turn means taking as a base line the non-resident parent’s “HMRC figure” (regulation 35). But the “HMRC figure” does not mean simply ‘information in the hands of HMRC’. Rather, it is “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” (regulation 36(1)).Thus, the regulation refers to “the amount identified by HMRC from information provided…” and not “the amount held by HMRC from information provided…”. The use of the expression “identified by HMRC” demonstrates that some form of active engagement with and manipulation of the relevant information by HMRC is required (paragraph 44);

  2. regulation 36(1) does not define the “HMRC figure” by reference just to what is in the PAYE Real Time Information returns. Rather, it is the “sum of the income on which the non-resident parent was charged to tax for the latest available tax year” once the component elements set out in regulation 36(1)(a)-(d) inclusive have been aggregated by HMRC (paragraph 45);

  3. this construction of regulation 36(1) is not overridden by the wording of regulation 4(1). This provision defines the “latest available tax year” as meaning “the tax year which… is the most recent relevant tax year for which HMRC have received the information required to be provided in relation to the non-resident parent under the PAYE Regulations or in a self-assessment return” (paragraphs 46);

  4. where both sources of information exist for the same tax year then information provided in a SAR takes priority over information provided in PAYE Real Time Information and the former is to be used as the basis for the HMRC figure identified for the purposes of regulation 36(1) (paragraph 47);

  5. regulation 4 is merely a subsidiary definition provision. It follows that regulation 4(1) must be read in such a way that it is consistent with the purpose of regulation 36(1), namely the focus on all sources of income charged to tax for the same “latest available tax year” (paragraph 54).

Published 28 May 2019
Last updated 3 September 2021 + show all updates

  1. Decision selected for reporting as [2019] AACR 25

  2. First published.