The Upper Tribunal | Case Number: UA-2023-001154-CSM |
Summary: First-tier Tribunal failed to explain how it applied regulation 71 of the Child Support Maintenance Calculation Regulations 2012.
Before
UPPER TRIBUNAL JUDGE JACOBS
Between
MG | Appellant |
v | |
Secretary of State for Work and Pensions | First Respondent |
DB | Second Respondent |
Decided on 13 May 2025 without a hearing
Representatives
First Respondent: Dominic Cooper of counsel at the application stage
Secretary of State: DMA Leeds
Second Respondent: Was not represented
Decision of Upper Tribunal
On appeal from the First-tier Tribunal (Social Entitlement Chamber)
Reference: SC946/19/02378
Decision date: 2 March 2023
Hearing: Manchester
As the decision of the First-tier Tribunal involved the making of an error in point of law, it is SET ASIDE under section 12(2)(a) and (b)(i) of the Tribunals, Courts and Enforcement Act 2007 and the case is REMITTED to the tribunal for rehearing by a differently constituted panel.
DIRECTIONS:
The tribunal must undertake a complete reconsideration of the issues that are raised by the appeal and, subject to the tribunal’s discretion under section 20(7)(a) of the Child Support Act 1991, any other issues that merit consideration.
The reconsideration must be undertaken in accordance with KK v Secretary of State for Work and Pensions [2015] UKUT 417 (AAC).
In particular, the tribunal must investigate and decide how regulation 71 of the Child Support Maintenance Calculation Regulations 2012 applies at the effective date of 13 September 2018.
In doing so, the tribunal must not take account of circumstances that were not obtaining at that time: see section 20(7)(b) of the Child Support Act 1991. Later evidence is admissible, provided that it relates to the time of the decision: R(DLA) 2 and 3/01.
Reasons for Decision
History and background
MG is the non-resident parent of Rio. DB is Rio’s parent with care. The Secretary of State decided that MG was liable to pay £163.28 a week in respect of Rio from the effective date of 13 September 2018. That was based on a gross annual income of £80,691.78. It was made under regulation 71 of the Child Support Maintenance Calculation Regulations 2012 (SI No 2677).
MG exercised his right of appeal to the First-tier Tribunal on 14 September 2019. There followed a series of adjourned hearings – the first on 26 October 2020 and the last on 29 June 2022 – before the appeal was finally decided on 2 March 2023. It is not necessary to rehearse the various reasons that led to the adjournments.
The tribunal set aside the Secretary of State’s decision and directed the Secretary of State to recalculate MG’s liability using a gross income figure of £77,141.15. It differed from the Secretary of State only to correct arithmetical errors in the calculation by the Financial Investigations Unit [FIU].
Upper Tribunal Judge Ward gave MG permission to appeal at an oral hearing. The Secretary of State has supported the appeal. Neither DG nor DB has made any substantive submission on this appeal.
When Judge Ward retired as a salaried judge, the case was reassigned to me.
Regulation 71
Regulation 71 of the 2012 Regulations provides:
Diversion of income
A case is a case for a variation for the purposes of paragraph 4(1) of Schedule 4B to the 1991 Act where—
the non-resident parent (“P”) has the ability to control, whether directly or indirectly, the amount of income that—
P receives, or
is taken into account as P's gross weekly income; and
the Secretary of State is satisfied that P has unreasonably reduced the amount of P's income which would otherwise fall to be taken into account as gross weekly income or as unearned income under regulation 69 by diverting it to other persons or for purposes other than the provision of such income for P.
Where a variation is agreed to under this regulation, the additional income to be taken into account is the whole of the amount by which the Secretary of State is satisfied that P has reduced the amount that would otherwise be taken into account as P's income.
The Secretary of State’s support for the appeal
I begin with a point made by Judge Ward in his grant of permission.
I further consider that even if (without so deciding) the FtT was entitled to rely on figures derived from [MG’s company’s] bank statements, it is arguable that it was not entitled to adopt (with only arithmetical corrections) the FIU’s figure, which includes some £11,000 of payments which on their face cannot be viewed as income of the business but as, for instance, refunds of purchases returned or proceeds of sale of a vehicle.
MG had declared income of £11,000 for the tax year 2016/2017. The FIU investigation had identified his income as £80,961.78. The tribunal reduced this to £77,141.14. It found that that was MG’s gross income for that year and that the excess over £11,000 he had declared was caught by regulation 71.
The Secretary of State’s representative supports Judge Ward’s point. More significantly, she supports the appeal on the more general ground that the First-tier Tribunal failed to consider the requirements of regulation 71 and explain why they were satisfied. I accept that submission.
The tribunal did not consider each element of regulation 71, make appropriate findings and explain their significance for regulation 71. It may have decided to limit itself to MG’s grounds of appeal under section 20(7)(a) of the Child Support Act 1991. Even on that basis, it had to explain why it rejected MG’s complaint about the FIU’s calculation. The tribunal should have provided more than the somewhat opaque statement in paragraph 21:
In the absence of any credible explanation, the 1st respondent [the Secretary of State] is entitled to treat the deposits into the bank accounts identified above as income and to take this into account in the calculation of maintenance.
Conclusion
That is why I have set the First-tier Tribunal’s decision aside and remitted the case to the First-tier Tribunal.
Authorised for issue | Edward Jacobs |