SH v Secretary of State for Work and Pensions, CH and Her Majesty's Revenue and Customs (CSM): [2018] UKUT 157 (AAC) ; [2019] AACR 1
Upper Tribunal Administrative Appeals Chamber decision by Judge Jacobs on 3 May 2018.
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Judicial Summary
Reported as [2019] AACR 1
Child Support Maintenance Calculation Regulations 2012 – Regulation 36 – Calculation of non-resident parent gross income
The case concerned the reimbursement by the non-resident parent’s employer of expenses in respect of fuel. The appellant reported these payments to Her Majesty’s Revenue and Customs (HMRC) and was not taxed on them. The Secretary of State, however, disregarded them, relying on regulation 36(2)(b). The appellant appealed to the First-tier Tribunal (F-tT). The F-tT judge felt obliged to apply regulation 36(2)(b). The appellant appealed to the Upper Tribunal (UT). The issue for the UT was: which has priority, the revenue approach or regulation 36(2)(b)?
Held, allowing the appeal, that:
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it is not rational to base a calculation of liability on an amount that (i) by definition the non-resident parent does not have available as it has been expended for the benefit of the employer and (ii) will not be uniform in its effect as between parents, in contrast to say the rate of income tax or national insurance. Gross income will vary from parent to parent and that is reflected in the calculation, but beyond that the calculation does not descent into detail about the make-up of the income. It proceeds, no doubt, on policy assumptions about the amount that should be available to the parent after legal liabilities for tax and national insurance have been met. I can see no rational reason for taking account of this type of income that by its nature is not available to the parent (paragraph 28);
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it is apparent from the terms and structure of regulation 36 that it is designed to make the administration less complex than it would be if the Secretary of State’s decision-makers had to make their own calculations of income, and to do so by relying on the information gathered by HMRC. That suggests a degree of coherence between the income used by both Departments (paragraph 29);
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regulation 36 is internally contradictory as between paragraphs (1) and (2)(b). I can find no way to reconcile the contradiction. The only way to remove it is to decide which has priority. In the overall structure, it is appropriate that paragraph (1) has priority. That leaves paragraph (2)(b) as redundant. The Secretary of State will now have to decide whether any amendment to the regulation and any change to the arrangements with HMRC are required (paragraph 31).
The judge set aside the decision of the F-tT and referred the case to the Secretary of State for the non-resident parent’s gross income to be recalculated.
Last updated 5 August 2020 + show all updates
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Reported as [2019] AACR 1
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First published.