MQB v Secretary of State for Work and Pensions and another
| Jurisdiction | UK Non-devolved |
| Neutral Citation | [2021] UKUT 263 (AAC) |
| Year | 2021 |
| Court | Upper Tribunal (Administrative Appeals Chamber) |
2021 Oct 19
Children - Child support maintenance - Assessment - Calculation of child support payment to be made by non-resident father - First-tier Tribunal taking into account “unearned income” of father in form of dividends from companies - Whether permissible to take dividends into account where none received in latest tax year - Whether sufficient that father still holding assets from which dividends previously derived -
By two successive decisions the non-resident father’s liability to pay child support in respect of his two children was first fixed at a weekly rate of £234.33 and then reduced to £132.61. The father’s appeal against the first decision was dismissed and the mother’s appeal against the second decision was allowed, with the First-tier Tribunal substituting a decision that the child support payments should continue at the higher amount. In reaching its decision the tribunal found that the father had “unearned income” in the form of dividends from his companies which was to be taken into account under regulation 69 of the Child Support Maintenance Calculations Regulations 2012F1. It considered the father’s explanation that his practice was to draw monies as a director’s loan during a financial year, that he would then credit the dividends to the loan accounts at year end to extinguish the debts, and that he had received no further dividends since crediting the previous one to his loan account at the end of the previous financial year. However, the tribunal concluded that where the father continued to own the asset which was capable of providing unearned income, that should be taken into account by way of an exception to the usual position under regulation 69(3) by which unearned income would normally be treated as nil if the information provided by HM Revenue and Customs for the latest tax year identified no such income. It considered that the corollary of regulation 69(6), whereby unearned income would be treated as nil if the non-resident parent no longer had any property or assets from which unearned income had been derived in a past tax year and had no current income from which unearned income could be derived, was that where an asset continued to be held it could be taken into account for the purposes of assessing unearned income.
On the father’s appeal—
Held, allowing the appeal, (1) that although regulation 69(6) of the Child Support Maintenance Calculations Regulations 2012 provided an exception to regulation 69(3), it operated by restricting not extending the circumstances in which the Secretary of State or on appeal the First-tier Tribunal might otherwise agree a variation to child support payments; that there were no circumstances in which regulation 69 allowed a variation to be agreed unless the non-resident parent had actually received the threshold amount of unearned income (as defined in regulation 69(2)) during either the “latest available tax year” (as defined in regulation 4), or the most recent tax year (in circumstances where regulation 69(5) applied); that nothing in regulation 69 permitted the Secretary of State or the tribunal to deem that a non-resident parent had received unearned income which he had not in fact received; that the effect of regulation 69(6) was that where a non-resident parent no longer had any source of unearned income, including assets or property generating unearned income which had previously been taken into account, the amount of his unearned income was to be taken as nil; that where the non-resident parent still possessed that property or those assets regulation 69(6) did not apply; and that, accordingly, the First-tier Tribunal had misdirected itself as to the interpretation of regulation 69(6) (post, reasons, paras 11–13).
(2) That, furthermore, the money which the father had withdrawn from the director’s loan accounts during the tax year, thereby creating a debt from him to the company in question, was not unearned income as defined in regulation 69(2) since the value of the loan would have fallen to be taxed, if at all, as a benefit in kind under Chapter 7 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003, rather than under Parts 3, 4 or 5 of the Income Tax (Trading and Other Income) Act 2005 as was required by the definition; and that the tribunal’s decision was therefore wrong in law and would be set aside and the matter remitted for reconsideration (post, reasons, paras 14, 15, 20).
(3) That, on the evidence, the further issue arose whether the father had diverted the income which he borrowed from his companies, within the meaning of regulation 71 of the 2012 Regulations, by leaving that money in those companies as an asset in the form of the right to sue him for the debt; and that as the First-tier Tribunal had yet to consider that issue, it was to do so on reconsideration of the appeals (post, reasons, paras 18, 20).
The following case is referred to in the judgment:
AB v Secretary of State for Work and Pensions
APPEAL from the First-tier Tribunal (Social Entitlement Chamber)
By decisions dated 19 March 2019 the First-tier Tribunal (Social Entitlement Chamber): (1) dismissed an appeal by the non-resident father, MQB, against a decision of the Child Maintenance Service dated 9 March 2017 fixing his child support payments for his two children at a weekly rate of £234.33 for the period from 27 September 2016; and (2) allowed an appeal by the mother, SRB, against a subsequent decision dated 5 May 2017 reducing those payments to £132.61 with effect from 5 April 2017, substituting a decision that the father continued to be liable at the higher weekly rate from the effective date of 20 April 2017. The district tribunal judge granted permission to the father to...
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MQB v Secretary of State for Work and Pensions and SRB (CSM)
...[2021] UKUT 263 (AAC) Appeals Nos. CCS/31/2020 CCS/30/2020 IN THE UPPER TRIBUNAL ADMINISTRATIVE APPEALS CHAMBER On appeal from the First-tier Tribunal (Social Entitlement Chamber) Between: MQB Appellant -vSecretary of State for Work and Pensions First Respondent -andSRB Second Respondent Be......