No one who has ever been foolish enough to venture into the murky world of child support maintenance could avoid becoming entangled in the thicket of regulations governing this arcane area of law. It is no surprise, therefore, that even those involved in the child support system can get things wrong sometimes.
So it was in the case CH v (1) Secretary of State for Work and Pensions, (2) DN (CSM) (Child support : maintenance assessments/calculations), which concerned the issue of whether a non-resident parent (NRP) who lives in England but does not pay UK tax should be liable to pay child support.
To start at the beginning, the basic rule has always been that the Child Support Agency (CSA) can only make a maintenance assessment if both parents and the child live in this country. If they do not then, unless it is agreed, the child maintenance will have to be arranged through a court.
It followed from that basic rule that the NRP (i.e. the parent who pays the child support) should be gainfully employed (or self-employed) with earnings in this country for the CSA to be able to make an assessment. This was the position until 2012. However, the position was then altered so that the CSA could also make an assessment if the NRP is gainfully employed outside the UK, provided that their income is chargeable to income tax in this country, or would have been were it not for any ‘double taxation’ arrangements between the UK and the country where the NRP is employed.
As the name suggests, these ‘double taxation’ arrangements are designed to prevent the employee being taxed to an unfair extent on the same earnings in the UK and another country (a person who is resident in the UK can still be liable to pay UK tax on overseas earnings). Thus any tax paid by the employee in the other country is allowed as a credit against UK tax due on the same earnings.
The facts in this case were that the parents were divorced some time ago and the child lives with the mother. The father lives in Kent but works for a Belgian company based in Brussels. He works mainly in Brussels, where he has lodgings, and his salary, which is paid in Euros, is subject to Belgian taxation (as one might expect, there is a double taxation arrangement between the UK and Belgium).
The mother applied for child support maintenance. The father (who it should be said has never sought to shirk his responsibility to pay child support and, indeed, was paying the mother an agreed sum) informed the CSA that he was resident in the UK but that he was not paying UK tax, as he was paying a higher rate of tax in Belgium than he would have been liable to pay in the UK.
In the light of this information the Secretary of State decided that the father’s liability to pay child support was nil, as he had no income that could be taken into account. The mother appealed, but her appeal was dismissed by the First-tier Tribunal, which upheld the decision of the Secretary of State.
The mother appealed again, to the Upper Tribunal. By this time, however, the Secretary of State had realised his original error, and the error of the First-tier Tribunal. He conceded that the father fell under the 2012 amendment, as he would be liable for UK income tax on his Belgian earnings, but for the double taxation arrangement. Accordingly, the mother’s appeal was allowed.
At the end of his judgment Upper Tribunal Judge Rowland had some words to say, both about the Secretary of State’s ‘decision maker’, who seemed to misunderstand the change to the regulations brought in in 2012, and about the First-tier Tribunal, which appeared to assume that the Secretary of State’s decision must be correct, in which case “it abdicated its responsibility as an independent judicial body and this decision will stand as a reminder that the Secretary of State is not always right on technical matters of law.” In other words, even the Secretary of State can get it wrong.
The full judgment of the Upper Tribunal can be read here.
Photo by alancleaver_2000 via Flickr