The Court of Appeal has ruled that courts need not rely on figures submitted to HMRC when calculating child support liability.
Trevor Gray is a self-employed handyman and the father of two teenage children from his first marriage. He had declared a net weekly income of only £151.37 to HMRC. A first-tier tribunal, however, ruled that he had not in fact declared his full income and calculated he actually had an annual income of £18,300
Mr Gray appealed this decision, saying the courts should accept the figures submitted to HMRC.
Delivering judgement in the ruling, Lord Justice Ward described the intention of the relevant HMRC regulations:
“I accept that the aspiration of the regulations is… to reflect the original policy intention so that self-employed earnings for income tax purposes are the same as earnings for child support earnings.”
Nevertheless, he stated:
“…the regulations do not go so far as to state that a father’s earnings for income tax purposes shall be treated as his earnings for child support purposes. There is no such deeming [applicable] provision.”
Therefore, he ruled that child support officers are:
“…entitled to rely on an evaluation of the father’s actual profits from self-employment in the relevant period rather than the figures submitted to the HMRC”.
For this reason, he dismissed the appeal. However, Lord Justice Ward did allow an additional appeal from the father on the amount of tax he was liable to pay, given the difference between the figures accepted by the HMRC and the amount of earnings found by the initial tribunal.