Child support – assessment of income – income charged to tax and income on which tax is due – how section 20(7)(b) applies when income charged to tax is changed
Evidence – HMRC – computer interface with Child Maintenance Service
The Child Maintenance Service (CMS) made a child support maintenance decision, based upon information obtained via the computer interface with Her Majesty’s Revenue and Customs (HMRC), that the non-resident father had a gross annual income of £137,502 for the tax year 2011/2012. The father appealed against that decision to the First-tier Tribunal (F-tT), arguing that HMRC had wrongly assessed his income, having misunderstood the effect of a tax deferral scheme on tax already paid. The Secretary of State’s submission to the F-tT simply confirmed the figure used in the original calculation; it was subsequently explained that the interface was fully automated and so the only possible evidence would be a screenshot of the appropriate page. The F tT upheld the father’s appeal, deciding that his historic income was £34,781 (not £137,502), being the figure on which he was charged to tax and that it should be used to calculate his gross weekly income. The mother appealed against that decision to the Upper Tribunal and among the issues before it was the question of how changes in the historic income figure for a particular year should be considered and the quality of evidence provided to the Secretary of State.
Held, allowing the appeal, that:
the F-tT erred in using the figure of £34,781 as that sum had been reached after deducting the father’s personal allowance. Under regulation 36(1) of the Income Tax Act 2007 the tribunal had been required to identify the income on which tax was charged under the Income Tax (Trading and Other Income) Act 2005 and was only entitled to take account of deductions allowed under Part 2 of the 2005 Act or under section 83 of the 2007 Act. The personal allowance was deducted when calculating the amount on which tax was due, not the amount on which someone was charged to tax (paragraph 12);
it was clear from regulation 36(1) that it was only the non-resident parent’s income which was relevant when considering the parent’s finances and that it was not permissible to go behind HMRC’s approach, which was determinative (paragraph 14);
under regulation 14 of the 2012 Regulations only the Secretary of State could revise a decision and if there was an appeal a tribunal could consider the issues again: R(IB) 2/04. In doing so the tribunal must act within the limits imposed by section 20(7)(b) of the Child Support Act 1991; it need not consider any issue not raised by the appeal and should not take into account any circumstances not obtaining at the time of the Secretary of State’s decision. In the instant case the F-tT could take account of the new information provided by HMRC as the Secretary of State’s decision concerned the amount on which the father was charged to tax for the latest available tax year and was retrospective (paragraphs 18 to 19);
(obiter) the Secretary of State should routinely provide First-tier Tribunals with a screenshot of the relevant parent’s income (paragraph 22).
The judge set aside the decision of the F-tT and remitted the appeal to a differently constituted tribunal to be re-decided in accordance with his directions.