Commissioner’s case no: CCS/3405/2002

DECISION OF THE CHILD SUPPORT COMMISSIONER

1.	This is an appeal by the absent parent, brought with the leave of a legally qualified panel member, against a decision of the Manchester Appeal Tribunal made on 18 June 2002. For the reasons set out below that decision was in my judgment erroneous in law. I allow the appeal, set aside the Tribunal’s decision and remit the matter for redetermination in accordance with the direction given in paragraph 15 below.

2.	The parent with care applied for child support maintenance on 6 December 2000, the parties having I think separated shortly before that. A maintenance enquiry form was issued to the absent parent, a self-employed taxi driver, on 5 November 2001. On 22 January 2002 the Secretary of State decided that the absent parent was liable to pay £5.40 per week from 31 December 2001 by way of child support maintenance. That assessment was based on the income and expenses from the absent parent’s business being as shown on an income and expenditure account prepared by his accountants for the year ended 5 April 2001 (see p.37) (but excluding the figure for depreciation), the figure for gross receipts less allowable expenses being £5857 (see p.9). 

3.	The parent with care appealed on 5 February 2002, contending that the absent parent earned more than that.

4.	On 25 March 2003 the decision was apparently looked at again, but not revised. However, on that same date the Child Support Agency wrote to the absent parent asking him to forward his “self assessment form (as submitted to the Inland Revenue) or a tax calculation notice for the year ending 2001.” There is in the papers which were before the Tribunal an Inland Revenue tax calculation for the year ended  5 April 2001 based on income of £5554, and stating “I have been able to process your return without any need for revision.” 

5.	The Secretary of State’s written submission to the Tribunal stated that the absent parent’s income had been calculated in accordance with para. 3 of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 (“the MASC Regulations”), but that that might be incorrect because para. 3 applied only where it was not reasonably practicable for the self employed earner to provide details to enable the decision maker to calculate the income in accordance with paras. 2A and 2B of Schedule 1.

6.	The Tribunal’s Decision Notice reads as follows:

“Appeal is allowed. The amount of child support must be recalculated in accordance with the findings of the Tribunal, which are set out below. If the parties are unable to accept the recalculation they may apply to the Tribunal (but only on the question of calculation) within 1 month of the decision.

1.	We accept the evidence of the appellant that prior to her separation from the respondent in December 2000 she had been in receipt of the sum of £200 per week for house keeping in addition to receipt of child benefit and invalid care allowance. 

2.	The respondent by his own evidence periodically sent money to his family in Pakistan. He did not keep a record of his receipt from the taxi business. 

3.	We calculate that the respondent (sic) income from his taxi business to the year ended 5 April 2001 would be £24,981 based upon petrol expenses of £1856 divided by £3.25 petrol cost per gallon given (sic) a total of 571 gallons. Allowing for consumption of 25 MPG this gives a total of 14275 miles in the year for business. The respondent charges £2.10 for the 1st mile and £1.30 for subsequent miles an average of £1.75 giving the total income determined above. 

4.	The CSA should recalculate the claimant’s assessment from the effective date using the revised income figure.”

7.	The absent parent’s primary ground for this appeal is that the Tribunal (which included a financially qualified panel member) wrongly assumed that 100% of the mileage done by a taxi driver generates income, whereas in fact only about 55% does so, the rest being “dead mileage” – i.e. when no passenger is actually in the car. 

8.	The Secretary of State submits that the Tribunal erred in law in (a) not basing the absent parent’s earnings on his self-assessment tax return and (b) assuming that all the mileage done generated income.

9.	By para. 2A and of Schedule 1 to the MASC Regulations self-employed “earnings” means the total taxable profits from self-employment of that earner as submitted to the Inland Revenue, less certain specified amounts. However, by para. 2B earnings shall be calculated by reference to the income from employment as a self-employed earner as set out in the tax calculation notice where either (a) the earner cannot provide the Secretary of State with the total taxable profit figure as submitted to the Inland Revenue, but can provide a copy of his tax calculation notice or (b) the Secretary of State becomes aware that the total taxable profit figure as submitted has been revised by the Revenue. 

10.	In the present case it is reasonably clear, on the evidence before the Tribunal, that the figure for taxable profits as submitted to the Revenue for the tax year ending April 2001 was the sum of £5554 shown in the tax calculation notice. In the absence of other evidence the Tribunal, applying para. 2A of Schedule 1, should have directed the maintenance assessment to be recalculated using that figure for earnings.

11.	However, by para. 5A(3) of Schedule 1 

“Where, in the opinion of the child support officer, information as to the total taxable profits of the self-employed earner which would satisfy the criteria set out in subparagraphs (1) and (2) of this paragraph does not accurately reflect the normal weekly earnings of the self-employed earner, the earnings of that earner can be calculated by reference to the provisions of paragraphs 3 and 5 of this schedule.”

12.	Para. 3 contains the more flexible provisions which applied generally before 4 October 1999, under which (broadly speaking) actual receipts and expenses of the business, as opposed to those submitted to the Revenue or shown in the tax calculation, are looked at. In my judgment para. 5A(3) permits the decision maker or Tribunal, where it considers that the figures submitted to the Revenue or shown in the tax calculation do not properly reflect the actual income earned from the business, to apply para. 3 and so (broadly speaking) use actual receipts and expenses. In taking that view I follow para. 14 of the decision of Mr. Commissioner Williams in CCS 718 2002 in preference to what appears to be the contrary view of Mr. Commissioner Jacobs in para. 9 of CCS 2901 2002 (where para. 5A(3) of Schedule 1 appears to have been overlooked). 

13.	The Tribunal, in directing that the absent parent’s gross receipts be taken as £24,981 per annum (based on petrol expenses) in effect appears to have applied para. 5A(3), as in my judgment it was entitled to do if it was satisfied on the evidence that the absent parent had not been declaring all his income for tax purposes. However, in my judgment the Tribunal did err in law in not at least putting to the absent parent during the hearing the calculation which it was minded to make based on his petrol expenses, so that he could have the opportunity to comment. There is no indication from the Record of Proceedings that this was put to him. If it had been, it is I think likely that he would have made the point about “dead” mileage which has been made on his behalf in this appeal, and which seems to me, as a matter of common sense and experience, to be likely to have considerable force. I would think that a taxi must almost inevitably be empty for a substantial part of the mileage. 

14.	The points of evidence which impressed the Tribunal were (a) the parent with care’s evidence that the absent parent had before the separation (i) paid her £200 per week and (ii) sent money to Pakistan (the latter being admitted to some extent) (b) the absent parent’s evidence that he did not keep receipts from the business and (c) the absence (in the Tribunal’s view) of a convincing explanation from the absent parent as to why (as he contended) he had been able to earn less since the separation. I should make clear that that was evidence on which the Tribunal was entitled to act in coming to its view that he had under-declared his income.

15.	The new tribunal must consider afresh whether, in reliance on para. 5A(3) of Schedule 1, to apply paras. 3 and 5 of Schedule 1 – i.e. whether the figure of £5554 per annum shown in the tax calculation was an under-declaration of income. If the Tribunal decides to apply paras. 3 and 5, it should make findings as best it can as to the absent parent’s receipts and expenses, so far as necessary for para. 3. It seems to me that it will be helpful to the Tribunal to have also the absent parent’s tax return forms and tax calculations for the years ending April 1999, 2000 and 2002, and I direct the absent parent to put those before the new tribunal. That is without prejudice to any direction for other additional evidence which a legally qualified panel member may make. 

16.	Both the absent parent and the parent with care asked for an oral hearing of this appeal. However, I consider that I have been able properly to decide it without the benefit of an oral hearing, and so I refuse the requests for an oral hearing.

                    (Signed)                                           Charles Turnbull
                                                                             (Commissioner)

                    (Date)                                              9 December 2002