[2007] UKSSCSC CCS_2678_2007 (21 December 2007)

DECISION OF THE CHILD SUPPORT COMMISSIONER
1.	My decision is given under section 24(2) and (3)(d) of the Child Support Act 1991:
I SET ASIDE the decision of the Southampton appeal tribunal, held on 2 May 2007 under reference 203/06/00317, because it is wrong in law.
I REMIT the case to an appeal tribunal consisting of Mr R P F Colledge and Mr R D Weare. If those members cannot be conveniently assembled, I direct the regional chairman in Cardiff to determine how the tribunal should be constituted.
I DIRECT that tribunal, however it may be constituted, to determine as the only issue the amount of net income that should be included in the absent parent’s assessable income under paragraph 27 of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992. 
I understand that there is a further appeal before the tribunal (page 371 and following). It may be convenient to list that case to be heard at the same time as the rehearing.

REASONS
The appeal to the Commissioner
2.	This case concerns the formula assessment of child support maintenance in respect of Alexander. In terms of the child support legislation, his mother is his parent with care and the appellant on this appeal; his father is his absent parent and the second respondent. I shall refer to them in those terms. The Secretary of State supports the appeal. Both parents have made observations. 
The issue 
3.	The tribunal found that the absent parent had been working as a self-employed builder before he ceased trading, he said temporarily. The tribunal found that he had done so for the principal purpose of eliminating his assessable income for child support purposes. I have to decide the legal implications of those findings.
The legislation
4.	Paragraphs 26 and 27 of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 contain what may loosely be called anti-avoidance measures. Paragraph 26 deals with circumstances in which a parent works at below the normal rate. That is not the case here. Paragraph 27 provides:
‘Subject to paragraphs 28 to 30, where the Secretary of State is satisfied that, otherwise than in the circumstances set out in paragraph 26, a person has intentionally deprived himself of-
(a)	any income or capital which would otherwise be a source of income;
(b)	any income or capital which it would be reasonable to expect would be secured by him,
with a view to reducing the amount of his assessable income, his net income shall include the amount estimated by the Secretary of State as representing the income which that person would have had if he had not deprived himself of or failed to secure that income, or as the case may be, capital.’
The Commissioners’ decisions
5.	There are two relevant decisions on paragraph 27. 
6.	One decision is CCS/7967/1995, made by Mr Commissioner Sanders (pages 343-348). The absent parent in that case had been employed as managing director of a family company. He left that post. It is not clear exactly how this came about. Either he resigned on being told a new managing director was being appointed or he was dismissed. He declined an offer of alternative employment with the company. The tribunal found that he came within paragraph 27(b). The Commissioner decided that a refusal to take up an offer of employment was not ‘a deprivation of income or a deprivation of income that it would be reasonable to expect the person in question to secure’. In so deciding, he took account of a number of considerations. First was the context of the legislation, noting that income under paragraph 27 was not treated as earnings. Second was the practical difficulties for child support officers (now called decision-makers) in implementing the provision in such cases. Third was the language used. Refusing to take up an offer of employment was not a deprivation and ‘secure’ was not an appropriate word to use in respect of income or capital unless it had some existence or at least some certainty. Fourth was the nature of the provision. The Commissioner concluded by describing the application of paragraph 27 in that case as a penalty, for which he would have expected express provision.  
7.	The other decision is CCS/4056/2004, made by Mr deputy Commissioner Wikeley (pages 349-360). The facts were different from CCS/7967/1995 in that the absent parent had left his job to take a career break and look after his disabled son. The deputy Commissioner distinguished the earlier decision on the ground that it related to a refusal to take up an offer of employment rather leaving an existing employment. However, he acknowledged that Mr Sanders had intended his reasoning to apply to leaving employment as well, but found his reasoning unpersuasive in that context: the amount of earnings would be easy to identify and the provisions imposing penalties were different from the anti-avoidance measures in the child support legislation. 
The tribunal’s reasoning
8.	The tribunal considered both decisions and decided that the circumstances of this case were more akin to CCS/7967/1995, because
‘A self-employed builder in the circumstances of the respondent does not have an ongoing business. As each job ends he seeks another, and by not seeking another he certainly did not do anything to give up employment …’
9.	That analysis may be legally correct, but I regard it as unrealistic. For practical purposes, there can be continuity in self-employment, albeit that it may involve a degree of uncertainty. This may vary from case to case. Take these contrasting examples. A builder who has been in business for many years and receives a regular stream of offers of work is in reality in full-time and ongoing self-employment. That may change and do so quite suddenly, but for the time being there is continuity in the work. This is very different from the position of a landscape garden who has just set up in business and who is having difficulties obtaining commissions. In that case there is current uncertainty about future work and little continuity. It is difficult to predict the general run of cases, but I suspect that the certainty or uncertainty in obtaining work is relevant only to the parent’s motivation or purpose in not seeking or accepting further work.
10.	However, there is a further point. The difficulty in drawing the distinction between the cases suggests that one or other may be unsatisfactory. In the light of that, I have considered whether the reasoning in CCS/7967/1995 is sound. On examination, I do not consider that it is. Let me take each point in Mr Sander’s reasoning. 
•	As to the first point, it seems appropriate to treat income under paragraph 27 as ‘other income’. If it were treated as earnings, it would be subject to the various deductions appropriate to earnings. However, as wholly notional income, that would not be appropriate. Treating it as ‘other income’ was a convenient drafting device. 
•	As to the second point, there are many practical difficulties in implementing the child support scheme and paragraph 27 does not stand out as being particularly difficult. In some ways, it is easier. The decision-maker does not have to identify what has actually been happening, but to put a figure on the type of income that could have been produced. That is a more abstract exercise that is easier than unravelling incomplete evidence of what has actually occurred or drawing inferences in the teeth’s of a parent’s deliberate refusal to co-operate. 
•	As to the third point, I can see nothing in the statutory language that renders it inappropriate to cover a refusal to take up work. 
•	As to the fourth point, I agree with Mr deputy Commissioner Wikeley. The context of the penalty provision cited by Mr Sanders is very different from paragraphs 26 and 27 and not comparable. I do not consider that it is valid to reason by comparing the drafting of such different provisions. 
•	Finally, there is a valid point made by Mr deputy Commissioner Wikeley in paragraph 26 of his decision:
‘I note the force of the argument made by Ms Harris at the oral hearing – if the legislation provides for a person to be treated as having an income where he works at below the market rate, it would be odd if there were not provision to cover the case where a person deliberately gives up work altogether to avoid paying child support.’
11.	For those reasons, I consider that CCS/7967/1995 should no longer be followed.
Disposal 
12.	The tribunal misdirected itself on the law. However, that was purely a legal matter on the interpretation of the authorities. The tribunal’s analysis would not have been influenced by its view of the evidence or the parties. Neither parent has any legitimate cause to doubt that the same tribunal can now complete its task impartially on the interpretation of the law as I have set it out. That is what I have directed. 

Signed on original
on 21 December 2007	Edward Jacobs
Commissioner