DG v Secretary of State for Work and Pensions & Anor

For a variation based on unearned income, regulation 69 of the Child Support Maintenance Calculations Regulations 2012 generally requires the decision-maker to take HMRC information into account as the starting point, but does not make that information conclusive. The Secretary of State must determine the correct amount of income chargeable under Parts 3 to 5 of ITTOIA and may consider other relevant evidence.

Where HMRC information identifies no income of the relevant kind, regulation 69(3) ordinarily requires the amount to be treated as nil. That rule remains subject to regulation 69(5), which permits an assessment by reference to the most recent tax year where the statutory conditions are met and sufficient evidence exists.

The First-tier Tribunal allowed a person-with-care’s appeal against a child-support calculation and found that the non-resident parent had earned income of £22,941 and unearned income of at least £35,631. It therefore increased the liability for five qualifying children.

The non-resident parent appealed to the Upper Tribunal. Permission was limited to the meaning of regulation 69(3) of the Child Support Maintenance Calculations Regulations 2012 and whether the unearned-income variation had been correctly determined. HMRC had reported nil unearned income, although the evidence included a self-assessment return showing substantial unearned income. The central issue was whether HMRC’s information was conclusive or whether the decision-maker could consider other evidence.

1. Appeal dismissed. The First-tier Tribunal made no material error of law. Its decision stood, and the appellant remained liable to pay child support maintenance calculated on gross weekly income of £1,202.70.
2. Regulation 69(1) makes the existence of a variation case depend on whether the non-resident parent has unearned income of at least £2,500. Regulation 69(2) concerns income properly chargeable to tax under Parts 3 to 5 of ITTOIA, rather than income on which HMRC actually charged tax. The Secretary of State must therefore determine the relevant factual and evaluative questions.
3. Under regulation 69(3), the phrase “by reference to information provided by HMRC” imposes a procedural requirement. The information must be consciously taken into account, normally as the starting point, and given proper weight. It is not generally the end point of the assessment. The information must bear at least some relevance to the amount of unearned income, but need not be completely accurate.
4. The concluding words of regulation 69(3) create a specific outcome: where the HMRC information identifies no income of the relevant kind, the amount is ordinarily treated as nil. That rule is subject to regulation 69(5). Where the HMRC information did not include information from a self-assessment return, regulation 69(5)(b) applied. Alternatively, the wholly irrelevant nil figure meant that regulation 69(5)(c) applied. The FTT was therefore entitled to assess the unearned income by reference to the most recent tax year and the evidence required for a self-assessment return.
5. The reasoning in PP v Secretary of State for Work and Pensions and SP [2022] UKUT 286 (AAC) that HMRC information was conclusive was not followed. The distinction between the defined “HMRC figure” used for historic income and the undefined “information provided by HMRC” in regulation 69(3) was material.
6. The judge also explained that the earlier decision in Gray v Secretary of State for Work and Pensions & James [2012] EWCA Civ 1412 concerned a different statutory scheme. Its emphasis on accuracy and the correct amount of maintenance remained relevant, but the 2012 scheme allowed greater administrative reliance on HMRC information without making that information conclusive.

• Upper Tribunal (Administrative Appeals Chamber): appeal dismissed. The Upper Tribunal held that the First-tier Tribunal had made no material error of law and that its decision stood.
• First-tier Tribunal (Social Entitlement Chamber): appeal by the person with care allowed on 23 January 2018. The tribunal determined that the non-resident parent’s gross annual income was £62,712, including unearned income taken into account under a variation.