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Judicial Summary

Reported as [2019] AACR 25

Child support case under 2012 Scheme - Meaning of 鈥榣atest available tax year鈥� 鈥� Whether regulation 4 and 36 of the Child Support Maintenance Calculations Regulations 2012 are in conflict 鈥� 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鈥檚 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鈥檚 child support liability as being 拢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鈥檚 appeal and set aside the CMS decision directing that the father鈥檚 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 鈥渢he latest available tax year鈥�; 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鈥檚 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. 鈥済ross weekly income鈥� means (in most cases) 鈥渉istoric income鈥� (regulation 34), while 鈥渉istoric income鈥� in turn means taking as a base line the non-resident parent鈥檚 鈥淗MRC figure鈥� (regulation 35). But the 鈥淗MRC figure鈥� does not mean simply 鈥榠nformation in the hands of HMRC鈥�. Rather, it is 鈥渢he 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鈥� (regulation 36(1)).Thus, the regulation refers to 鈥渢he amount identified by HMRC from information provided鈥︹�� and not 鈥渢he amount held by HMRC from information provided鈥︹��. The use of the expression 鈥渋dentified by HMRC鈥� 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 鈥淗MRC figure鈥� by reference just to what is in the PAYE Real Time Information returns. Rather, it is the 鈥渟um of the income on which the non-resident parent was charged to tax for the latest available tax year鈥� 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 鈥渓atest available tax year鈥� as meaning 鈥渢he tax year which鈥� 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鈥� (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 鈥渓atest available tax year鈥� (paragraph 54).