SG v SSWP & Anor (CSM) (No.2)

In a child-support appeal under the former scheme, a tribunal must calculate income by reference to circumstances obtaining when the original decision was made. It may not take account of later circumstances, although later evidence may, where relevant, support an inference about the earlier position.

Capital receipts obtained by re-mortgaging business properties are borrowings secured on assets. They are not profits or gains and cannot be included as self-employed income. Rental income falls to be treated as gross periodical income, subject only to the limited deductions permitted by the applicable regulations. Where the factual inquiry remains substantial and requires financial expertise, remittal to a freshly constituted First-tier Tribunal may be required in the interests of fairness and justice.

The father appealed against a First-tier Tribunal decision concerning his child-support liability from August 2002. The Secretary of State had revised an earlier nil assessment and assessed income of £80,000 a year.

An earlier Upper Tribunal decision had set aside a previous tribunal decision. A later Upper Tribunal decision set aside the second First-tier Tribunal decision but re-made it. The Court of Appeal then allowed the father’s appeal by consent on the issue whether receipts from re-mortgaging could be treated as self-employed income, and remitted the matter for fresh consideration.

The issues were the proper disposal of the appeal and the limited factual inquiry to be conducted on remittal, particularly the father’s income between 16 August 2002 and 2 March 2004.

1. The appeal was allowed. The First-tier Tribunal’s decision involved errors of law. It had failed to deduct income tax and national insurance from the assessed annual income, and had taken account of circumstances not obtaining when the original decision was made. That was contrary to section 20(7)(b) of the Child Support Act 1991.

2. The Court of Appeal’s consent order had set aside the finding that the father’s income was £80,000 and the earlier re-made decision. The fresh tribunal must proceed on the agreed basis that capital receipts from re-mortgaging properties are borrowings against business assets, not profits or gains of the property business. They cannot be included in self-employed income for child-support purposes.

3. The remitted issue was limited to the father’s true income from 16 August 2002 to 2 March 2004. The new tribunal must determine that issue afresh, on all available evidence and on the balance of probabilities. Earlier findings about income were not binding. It must not treat post-March 2004 events as circumstances obtaining at the material date, though later evidence could support an inference about the earlier financial position.

4. Rental income under the old scheme was gross “other” periodical income, subject to limited deductions, rather than net taxable rental income. The tribunal could also investigate other proper sources of income and any alleged deprivation of income.

5. The matter was remitted for a limited re-hearing before a freshly constituted First-tier Tribunal comprising a judge and a financially qualified member. The Secretary of State was directed to prepare a fresh, focused bundle and submission.

• Upper Tribunal (Administrative Appeals Chamber): This decision allowed the father’s appeal, set aside the decision of the Chesterfield First-tier Tribunal dated 14 February 2012, and remitted the case for a limited re-hearing.

• Court of Appeal: By consent order in C3/2014/0411, the father’s appeal against the earlier Upper Tribunal decision was allowed on the re-mortgaging-income ground only. The earlier finding of £80,000 annual income and the re-made decision were set aside, and the matter was remitted to the Upper Tribunal.

• Upper Tribunal (Administrative Appeals Chamber): In [2013] UKUT 0455 (AAC), the tribunal set aside the second First-tier Tribunal decision for failing to deduct tax and national insurance and for taking account of circumstances after the original decision date.

• First-tier Tribunal (Social Entitlement Chamber): On 14 February 2012, it purported to allow the father’s appeal but directed recalculation using annual income of £80,000 without deductions for income tax or national insurance.