DT v Secretary of State for Work and Pensions & Anor (CSM)

For child maintenance under the 2012 scheme, historic income must ordinarily be based on the HMRC figure last requested. A tribunal cannot substitute income from a more recent tax year merely because that would appear fairer. Current income displaces historic income only where the regulatory threshold is met.

The taxable element of a redundancy payment forms part of historic income, but not current income. Where a parent controls payments from a company and unreasonably retains income or takes dividends instead of earnings, a variation for diversion of income may be appropriate under Child Support Maintenance Calculation Regulations 2012.

A consent order, or a concession accepted by a tribunal, must be appropriate and procedurally fair. An unexplained agreement inconsistent with the governing scheme may be set aside.

The father appealed against a First-tier Tribunal consent order concerning child support maintenance from 9 September 2017. The order directed use of his taxable income for 2016/17, £81,725, rather than the HMRC figure for 2015/16, £66,319.62, on which the original assessment had been based.

The father contended that the taxable part of his redundancy payment should be excluded. The Secretary of State supported the appeal, arguing that the consent order was not appropriate and that the tribunal had not addressed the statutory basis for selecting the relevant income year.

The Upper Tribunal considered the distinction between historic and current income, the treatment of dividends from the father’s company, and whether a variation for diversion of income should have been made. The central issue was whether the First-tier Tribunal could fairly accept the parties’ agreement to calculate maintenance using 2016/17 income.

1. Appeal allowed. The First-tier Tribunal’s purported consent order was made in error of law. It was set aside under section 12(2)(a) and (b)(ii) of the Tribunals, Courts and Enforcement Act 2007.

2. A consent order must have the consent of all parties and be appropriate. The same practical safeguards apply where a tribunal accepts a concession. A party will usually be held to an informed concession, but a tribunal must not accept one that is inconsistent with legislation or compelling evidence without an adequate explanation. The father agreed that his taxable income in 2016/17 was £81,725, but did not give informed consent to that year being used in preference to 2015/16 or 2017/18. The procedure was therefore unfair.

3. Under regulations 34 to 36 of the Child Support Maintenance Calculation Regulations 2012, historic income was the HMRC figure last requested, here £66,319.62 for 2015/16. A later tax year could not be substituted simply because it was more recent. A further HMRC request is not appropriate merely because information for a later year subsequently becomes available.

4. The taxable element of the father’s redundancy payment would have been included if historic income for 2016/17 had been relevant. It could not be included in current income. The father’s choice to retain company money or receive dividends rather than earnings unreasonably reduced income otherwise counted as current income. A regulation 71 variation should therefore have added £50,000 dividends to taxable pay of £11,500, producing current income of £61,500.

5. That calculation did not justify use of 2016/17 income. The correct historic-income year remained 2015/16. The Upper Tribunal remade the decision: the father’s liability from 9 September 2017 was to be calculated on gross income of £66,319.62. Remittal was refused because the facts were not substantially disputed and the matter had already taken too long.

• Upper Tribunal (Administrative Appeals Chamber): Allowed the father’s appeal and set aside the First-tier Tribunal consent order: [2023] UKUT 175 (AAC).
• First-tier Tribunal (Social Entitlement Chamber): On 5 October 2020, by purported consent order, directed that maintenance from 9 September 2017 be calculated using gross income of £81,725 for 2016/17. That decision was set aside by the Upper Tribunal.