AR v Secretary of State for Work and Pensions, HM Revenue and Customs and LR (No.2)
| Jurisdiction | UK Non-devolved |
| Judge | Judge Wikeley |
| Neutral Citation | [2019] UKUT 151 (AAC) |
| Court | Upper Tribunal (Administrative Appeals Chamber) |
| Subject Matter | Child support,Child support - calculation of income,Child support - maintenance assessments/calculations,Wikeley,N |
| Date | 08 May 2019 |
| Published date | 28 May 2019 |
AR v SSWP, HMRC and LR (No.2)
[2019] AACR 25
1
[2019] AACR 25
AR v SSWP, HMRC and LR (No.2)
[2019] UKUT 151 (AAC)
Judge Wikeley CCS/1263/2018
8 May 2019
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 th e 2015/16 tax year ie using data not from the tax year ju st 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 dec ision 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 appea led 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 o f the Child Support Mainten ance 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 in come” means (in most cases) “historic income” (regulation 34), while
“historic income” in turn means taking as a base line th e non-resident parent’s “HMRC figure”
(regulation 35). But the “HMRC figur e” 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 “th e amount
identified by HMRC from information p rovided...” and not “the amount held by HMRC from
information provided...”. The use of the expression “identified by HMRC” demonstrates that some
form of ac tive en gagement 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 retur n” (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 sub sidiary 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 y ear” (paragraph 54).
AR v SSWP, HMRC and LR (No.2)
[2019] AACR 25
2
DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)
The DECISION of the Upper Tribunal is to dismiss the appeal by the Appellant
(“the father”).
The decision of the Norwich First-tier Tribunal dated 7 March 2018 under file
reference SC142/17/01515 stands.
This decision is given under section 11 of the Tribunals, Courts and Enforcement Act
2007.
REASONS FOR DECISION
The question that arises for decision in this Upper Tribunal appeal
1. This appeal is about 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. It therefore concerns the proper
meaning of the expression “the latest available tax year” in the context of the
provision by Her Majesty’s Revenue and Customs (HMRC) of information about a
non-resident parent’s income in response to a request by the Department for Work
and Pensions’ Child Maintenance Service (CMS).
The context
2. It is relevant to note at the outset that the appellant in the present appeal was also
the appellant in the earlier Upper Tribunal case of AR v Secretary of State for Work
and Pensions (SSWP) and LR (CSM) [2017] UKUT 69 (AAC); [2017] AACR 23. For
that reason alone, and to distinguish it from its predecessor, the present case will carry
an NCN (neutral case number) with the case name AR v SSWP, HMRC and LR (CSM)
(No.2). The original reported 2017 case involved two issues, which I labelled in that
decision as “Issue A” and “Issue B”. “Issue A” was 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. “Issue B” was whether the father’s gross income had been correctly
identified and concerned the treatment of payments received by the father in respect
of certain work-related expenses. In the present appeal “Issue A” is necessarily
revisited, albeit in relation to a later annual review. “Issue B”, concerning work-
related expenses, which was the principal matter in dispute in the previous appeal,
does not arise in the current proceedings.
The original Child Maintenance Service decision now under appeal
3. The Appellant (“the father”) and the Third Respondent (“the mother”) are the
parents of two children, a daughter (now aged 21) and a son (now aged 18). From the
practical point of view, the present appeal is accordingly of limited value. However,
the issue of statutory interpretation raised by the appeal will affect many other cases.
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