[2008] UKSSCSC CCS_1769_2007 (04 January 2008)

CCS 1769 2007

DECISION OF THE CHILD SUPPORT COMMISSIONER

1	The appeal is allowed. For the reasons below, the decision of the tribunal is wrong in law. I therefore set it aside. With the consent of all parties I have taken the decision that the tribunal should have taken. This is:

	Appeal allowed. I direct a variation of the child maintenance calculation 	made from the effective date of 16 08 2004 as a result of the appellant’s 	application. The variation is made only on the ground of diversion of 	income. It is not allowed on any other ground. The Secretary of State is to 	recalculate the child support maintenance to be payable by the nonresident 	parent on the 	basis that for the purposes of regulation 19(4) of the Child 	Support (Variation) Regulations 2000 he diverted income as directed in 	this 	decision.

	Each party has the right to apply to me, or if I am not available to another 	Commissioner, if that party considers that the amount determined by the 	Secretary of State in accordance with this decision is incorrect. Any 	application must state the reasons for which the application is made and 	must be made within one month of the party being notified of the 	calculation by the Secretary of State. 

2	The appellant (Mr W) is the father and nonresident parent of a child for whom he was directed to pay child support maintenance. He is appealing against a decision of the Leeds child support tribunal on 22 03 2007 under register number 007 06 00607. The tribunal decided an appeal to it by the mother and resident parent of the child (Miss L). It allowed Miss L’s appeal with regard to one aspect of her application to vary the maintenance calculation made against Mr W by the child support agency. A chairman granted permission to appeal to the Commissioner. The Secretary of State, who is responsible for the child support agency, is the first respondent in this appeal. Miss L is the second respondent.

3	I held an oral hearing of the appeal in Leeds on 12 12 2007. Mr W, who did not attend, was represented by his solicitor, Mr S Preston of Gordons, solicitors. The Secretary of State was represented by Miss W Jackson of counsel, instructed by the Solicitor to the Department for Work and Pensions. Ms L attended with her husband, who helped her put her case. It was agreed by all parties at the hearing that if I allowed the appeal I should also decide the full appeal myself, and not refer it to another tribunal.

REASONS FOR THE DECISION

Background to this appeal
4	  Mr W was directed to pay child support maintenance of £75.00 a week to L for their child with effect from 16 08 2004. That decision was made on 11 08 2006.

5	Miss L took the view that Mr W had not disclosed all his income and assets to the child support agency. She therefore applied for variation of the maintenance calculation on four available grounds: assets; income not taken into account; diversion of income; and lifestyle inconsistent with declared income.

6	The decision maker acting for the Secretary of State accepted the application as properly made but, having received representations from Mr W, refused to revise the calculation on any ground.

The tribunal proceedings
7	Miss L’s appeal against that decision was heard by a tribunal on 23 07 2007 after directions had been made on 23 01 2007 to the parties to provide information. Both Mr W and Miss l attended the oral hearing of the appeal. The Secretary of State was represented at the hearing.   

8	The tribunal allowed the appeal by Miss L, but only:

	“to the extent that the Tribunal accept that there has been a diversion of 	income by [Mr W] taking a benefit in kind in respect of the M6 car in the sum 	of £28,000 per annum.”

The tribunal started its hearing on 23 01 2007. After lengthy consideration at that hearing, it adjourned and directed that Mr W produce 9 specific kinds of evidence. Its hearing 2 months later was before the same tribunal. It received substantial evidence from Mr W and his advisers. The tribunal recorded the proceedings at the hearing on both days in a full record of proceedings. It gave an extensive statement of its reasons for its decision. 

Grounds of appeal   
9	Mr W filed fully argued grounds of appeal shortly after receiving the statement of reasons from the tribunal. Put briefly, he considered that the tribunal had gone wrong in law in its interpretation and application of regulation 19 of the Child Support (Variation) Regulations 2000 (“the Variation Regulations”) and had reached a decision that conflicted with the relevant rules about calculating income.
It had acted without evidence, without jurisdiction and in breach of natural justice. 
Further, it was wrong in law to rely on Commissioner’s decision CCS 3757 2004 as supporting its decision as that was irrelevant on the facts. The grounds also drew attention to extracts from the Hansard record of Parliamentary Questions to ministers about the inclusion of cars in the definition of earnings for child support purposes.  

10	In a written submission on the grounds of appeal, the secretary of state's representative supported the appeal. The secretary of state's representative agreed with some of the criticisms of the tribunal decision with regard to its application of regulation 19 to the facts. The submission also raised questions, but expressed no one view, about the valuation of the diverted income as £28,000. It agreed that CCS 3757 2004 did not assist the tribunal.  

11	Miss L did not comment on the grounds of appeal but asked for an oral hearing of the appeal. A Commissioner directed the hearing that I held on 12 12 2007.

Submissions of the parties 
12	At the oral hearing, Mr W’s solicitor affirmed the submission that the tribunal had erred in the way it had interpreted and applied regulation 19(4) of the Variation Regulations.  Its findings of fact meant that it had concluded that the condition in regulation 19(4)(a) was not met. The evidence was that Mr W had no legal control over the company of which he was a director. Control was exercised by his father, who was the major shareholder and senior director. It was therefore wrong in law for the tribunal to go on and apply regulation 19(40(b). Both conditions of the regulation had to be met for it to be applied. The tribunal was also wrong in principle to apply the regulation to a company car. A company car provided to a director or employee is a benefit in kind. Benefits in kind are excluded from the income to be taken into account for child support maintenance purposes by paragraph 4(2)(d) of the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000 (“the Calculation Regulations”). Further, even if the tribunal was right on those issues it was wrong in using the income tax rules to value the income said to be derived from the car as £28,000 a year. The effect of the income tax rules was to reduce Mr W’s income, not increase it. This was because he had to pay 40 per cent income tax on the £28,000, reducing his income by £11,200. At the most, any diversion could have the effect only of cancelling out that reduction of income.     
 	
13	For the Secretary of State, Miss Jackson affirmed the written submissions previously submitted. She did not accept the narrow interpretation put on the concept of control regulation 19(4)(a) in the submissions for Mr W. It was not limited only to the legal control of a company through shareholding. It referred to any form of control and not merely legal control. But it was open to question even on that wider interpretation whether the tribunal had found adequate facts on which to base its application of regulation 19(4). And she agreed that it was open to question whether the tribunal had taken the correct approach to valuing the diversion at £28,000. On the facts in the case, she agreed that Mr W was actually paying £11,200 by way of additional income tax. That was the cost to him of the arrangement. 

14	Miss Jackson also drew attention to an inconsistency in the documentation that had not been the subject of comment by the tribunal or in the written submissions. This was with regard to income from one of the subsidiaries of the main company of which Mr W was a director. After inviting the parties to comment on this, and checking the papers, I was satisfied that there was an explanation for the point that did not raise a new issue in the appeal even if it had not been set out in the tribunal decision.  I did not therefore take that matter further.

15	Miss L invited me to take a critical look at the tribunal decision as a whole. I reminded her that I was only able to look at errors of law made by the tribunal and not at the whole application before it. She accepted that, and put forward a strong factual argument in support of the tribunal decision on the issue of diverted income. Mr W had himself chosen the car that was the subject of the diversion order. And he had done so with the agreement of his father. It was a top of the range BMW worth £80,000. He had taken the decision to buy it, although it was purchased in the name of the company. He had always liked expensive cars, and he had the influence over his father, the only other director of the company, sufficient to ensure that he received the car he wanted. That, she suggested, meant that he had obtained the car as a result of informal control over the necessary fundings. With regard to the amount assessed, she considered that £28,000 was fair. That was what it would have cost him annually to buy the car, so that was the benefit he had received. 

16	In reply, Mr W’s solicitor did not dispute much of the factual information on which Miss L had relied. But he emphasised that this did not establish the grounds on which the tribunal had relied and the tribunal had itself failed to show how control was established. Indeed, the tribunal had failed to make clear what view it had taken on the issue. He also maintained the view that the provision of a company car was not properly caught within the Variation Regulations.

Miss L’s application for variation 
17	Section 28A of the Child Support Act 1991 empowers both the resident parent and the non-resident parent to apply to the Secretary of State to vary the rules under which a child support maintenance calculation is made. Section 28G empowers an application to vary an existing calculation either from the effective date of the calculation or some later date. The grounds on which applications can be made are set out in Schedule 4 to that Act. Paragraph 4 of that Schedule lists four specific cases as examples of a more general power given to the Secretary of State to prescribe additional cases for variation.  Miss L’s application in this case drew on all four of those additional cases. They are: assets (as defined in regulation 18 of the Variations Regulations); income not taken into account (as defined in regulation 19 of those Regulations); diversion of income (as also defined in regulation 19); and lifestyle inconsistent with declared income (as defined in regulation 20 of those Regulations).
In my view, given the facts as Miss L saw them when she made her application, it was fully appropriate for her application to rely at the same time on all four of those ground for variation.

18	The appeal came before me with regard to one aspect of one of those grounds only. No point was taken by or for the secretary of state's representative about any other aspect of the tribunal decision, save for the point raised by Miss Jackson in argument that was not pursued. Miss L also did not identify any errors of law in any other part of the tribunal decision. I need not therefore consider any aspect of the application and tribunal decision other than that about the company car.

Regulation 19 and diversion of income
19	Regulation 19 brings together two grounds for variation of a maintenance calculation despite their being identified separately in Schedule 4B to the 1991 Act. The concern here is only with the part of regulation 19 that deals with diversion of income. The rest of the regulation is irrelevant to this case.
The relevant parts of the regulation provide:

	“(4) A case shall constitute a case for the purposes of paragraph 4(1) of 	Schedule 4B to the Act where – 

	(a)	the nonresident parent has the ability to control the amount of income 	he receives, including earnings from employment or self-employment, 	whether or not the whole of that income is derived from the company or 	business from which his earnings are derived, and

	(b)	the Secretary of State is satisfied that the nonresident parent has 	unreasonably reduced the amount of his income which would otherwise fall
	to be taken into account under the Maintenance Calculations and Special 	Cases Regulations or paragraph (1A) by diverting it to other persons or for 	purposes other than the provision of such income for himself.

	(5) Where a variation on this ground is agreed to –

	…   

	(b) in a case to which paragraph (4) applies, the additional income taken into 	account under regulation 25 shall be the whole of the amount by which the 	Secretary of State is satisfied the nonresident parent has unreasonably 	reduced his income…”

20	The material facts about the car to which these provisions were applied by the tribunal are set out at length in the tribunal’s statement of reasons. The key paragraphs (with identifying details omitted) find:

“Mr W accepts that he drives a BMW M6 coupe. He accepts that he signed the order form with … on 1 11 2002. … His father indicated that he should on behalf of the company purchase this vehicle. Although it was ordered in 2002 it was not delivered until November 2005. He accepted that it was a company vehicle. The purchase plan clearly shows that the car was bought and financed through [the company] … Mr W accepts that the car benefit is £28,000 per annum, which is confirmed in his tax code … He indicated that he did not know that he himself could relinquish the care to the company. Although he indicated that he had had company cars in the past and was aware of the Inland Revenue rules relating to benefit son company cars, he indicated that once the car was paid off he was going to ensure that the car was disposed of and he had put in an order for a new Mini. 

[The company] have a personalised number place […] which had been placed on his vehicle. It is a company asset and the ownership of the plate is retained by the company in spite of the fact that Mr W stated it was a wedding present to him some years ago.” 

I add, as I have omitted the detail, that the registration number consists of Mr W’s initials with a short number before it. It is not a standard vehicle number and it uses initials that are personal to Mr W and not to the company or his father, the other director.

21	The use of the car (and number plate) by Mr W were benefits in kind from Mr W’s employment as a director of the holding company of the family group of companies. I note, as the tribunal did not comment on it, that motor vehicles are identified in the notes about tangible fixed assets in the accounts of the holding company for the year to 30 09 2006 as being subject to additions of £122,894 in value during the year. Disposals during the year were £180,717. The price of this car as shown on the partial copy of the Purchase Plan agreement was £75,491.86 plus VAT. A deposit of £5,000 was paid in 2002. Under the Plan an initial rental of £25,905 was paid in 2005, followed by monthly payments of £1,817. It is not clear whether the company also paid Mr W’s insurance or maintenance or car running expenses, or whether there was any arrangement about paying for private use of the car.

22	The relevant income tax rules about taxable benefits from cars are in Chapter 6 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003. The cash equivalent of a newly registered car in 2006-7 depended on the price of the car (and any accessories) and also its carbon dioxide emission figure. The cash equivalent for April 2007 to April 2008 for Mr W’s car is £28,000. I assume that means that the car was valued at £80,000 or more at purchase and the rate applied was the maximum rate of 35 per cent. The inclusion of that figure in Mr W’s tax code is confirmation that the car was supplied as part of his employment, a fact he accepted.  

A company car as a diversion of income
23	It was argued for Mr W that receiving the use of a company car was receiving a benefit in kind. Accordingly, it was argued, the amount received was not income for child support maintenance purposes. So Mr W was not avoiding or diverting income in receiving that benefit as such a benefit would not count for child support purposes in any event.

24	The tribunal relied on CCS 3757 2004 to find that the benefit of a car received by an employee could be a diversion of income otherwise receivable by the employee from the employment. That decision stands mainly as a useful authority about when a tribunal can draw adverse inferences from the failure of a party to produce evidence. That aspect of the decision is irrelevant here.  Towards the end of the decision the Commissioner deals briefly with whether taking a company car can be a diversion of income for the purpose of the Departure Directions that apply to older child support claims. The Commissioner comments with regard to the facts of that case that:

	“What the absent parent has done is to take a benefit in a form that is outside
the formula assessment instead of in a form that is within the formula assessment. I consider that that amounts to diverting income to another purpose for the purposes of [the relevant Departures Direction]…”

I agree with that as a statement of law. Diverting earnings from employment from a form which would be included as income in a maintenance calculation into a form that results in that income being excluded from that maintenance calculation is clearly within the mischief of what is now regulation 19 of the Variations Regulations. I reject the submissions that that aspect of CCS 3757 2004 is not relevant here as a matter of law. If Mr W, on the facts, has taken the company car as a benefit in kind rather than some other benefit that would be earnings, then the diverted income is within the scope of the Departure and Variations Regulations. Whether it counts as diverted income as a matter of fact depends on the other conditions of regulation 19, and not on this point.  If the tribunal was properly satisfied on the facts that Mr W received the car as a diversion of his income from his directorship into a non-assessable form, then it was entitled to apply regulation 19 to the benefit. 

25	Reliance was also placed on statement made by ministers in reply to Parliamentary Questions. I do not consider that any light is thrown on that matter by those answers. They are far too non-specific to be a proper form of Parliamentary record on which one can rely to interpret a particular phrase in legislation. 

The tests imposed by regulation 19(4) 
26	I agree with the submissions that to apply regulation 19 to the car and any other benefit received by Mr W, two tests must be satisfied on the balance of probabilities:

	“the non-resident parent has the ability to control the amount of income he
	receives…” (regulation 19(4)(a)) and

 	“the non-resident parent has unreasonably reduced the amount of his income
	which would otherwise fall to be taken into account … by diverting it …
	for purposes other than the provision of such income for himself…”
	(regulation 19(4)(b)).

The tribunal decision
27	The tribunal found as fact that “an employee does not have to accept a company car” and that “the company cannot force him to have it and he can make that choice in our view freely whether to retain the car for his use or not.” The tribunal went on to find that “in this case the taking of this particular company car instead of cash is diverting income…”.

28	The tribunal was not given any formal documentary evidence of the company car policy of the family company of which Mr W was a director, if there was one. As far as I can see, the questions of ability to control and of reduction of income by diversion were purely issues of fact to be determined on all the evidence, including in particular the oral evidence given by Mr W at both sessions of the hearing. 

29	The tribunal took its decision against the background of the accounts of the holding company of which Mr W was one of the two directors, and against the background that Mr W received the benefit of the car at a time when he, was, on medical grounds, receiving a 60 per cent reduction from his previous earnings as a director. This was because “the current position has changed significantly due to the reduced hours you now work, brought about because of your illness” (the letter from the accountants to Mr W dated 8 03 2005).  As the tribunal accepted, a previous tribunal had found the medical evidence for the drop in earnings to be credible (tribunal decision of 23 05 2005). This tribunal was also entitled to take note that Mr W’s earnings did not increase from that reduced level in subsequent years but that he did receive use of the car (not mentioned in the letter) later that year. It is clear from the documentation that the car did not replace a previous company car. There is no tax code for the benefit of a car disclosed in the tax returns and papers for periods before that in question here. So there was clear evidence that the car was received after the reduction in earnings was accepted. 

30	The argument put to the tribunal to explain why this did not show evidence that Mr W did not have the ability to control this aspect of his income comes in part from a letter from the family company’s accountants. This stated (on 5 06 2006) that the “car was ordered 3 years ago and the company was committed to buying the car. Had it not purchased the car, the company would have been subject to financial penalties, hence Mr W has been using the car since it was purchased.” That is in my view a classic example of a non sequitur. The conclusion does not follow from the initial point made in that assertion, even if that initial point is accepted as fact. The car was the company’s car and it, not any individual director or employee, would suffer any loss if the car were not used as planned. There is also no specific evidence that there would be any loss.

31	The tribunal was entitled on the evidence to reject that argument in reaching its findings of fact. It was also entitled to look at the reality of the situation with regard to ordering and using the car. The wording of regulation 19(4) requires that attention be paid to the practical position with regard to control over earnings, and does not restrict a tribunal to the formal situation about who controls the employer. The facts that Mr W had only a small shareholding in the family company, that his father controlled all the other shares and the holding company, and that Mr W had no formal say over what he received by way of emoluments as the second of two directors of the company establish the formal position but not the position in reality. 

32	For those reasons, I consider that the tribunal did have evidence before it on which it could rely, using both direct evidence and reasonable inference, to reach the conclusions it did reach. This was that Mr W did have control over at least that aspect of his income that included receiving the car and the consequences of receiving the car. And I consider that its decision makes clear what decision it reached and why it reached it. I therefore do not accept that the tribunal erred in law in concluding on the evidence before it that Mr W had the necessary control to meet the test laid down by regulation 19(4)(a). 

33	Under regulation 19(4)(b) the test to be applied is whether Mr W unreasonably reduced the amount of his income to be taken into account as a result of the diversion. This involves two linked issues: the existence of diverted income, and the amount of that income to be taken into account in the variation. Was there diverted income on the evidence? The effect on Mr W of receiving the car was that he had the use of a car worth about £80,000 and sustained an increase in his income tax bills of £11,200. No facts were found about the running expenses. There is also no evidence of any offsetting arrangements between Mr W and the company with regard to either the cost of the car or the expenses. Nor is there any direct evidence that Mr W either took a direct reduction of pre-tax income, or declined a direct increase in pre-tax income, as a result of receiving the car. 

34	The tribunal considered that regulation 19(4)(b) was satisfied and that the amount of income diverted was the same figure as that on which Mr W was subject to income tax because he received the benefit of the car as part of his earnings. I have explained how that figure was derived above. In other words, the tribunal found that Mr W should be regarded as having diverted £28,000 in the relevant year from his earnings to the benefit of the car. I consider that the tribunal did have evidence of unreasonable diversion, and that therefore this test was also satisfied. But I do not agree that it quantified that diversion properly. 

The amount unreasonably diverted
35	The amount that Mr W is to be regarded as having diverted is to be identified in accordance with regulation 19(5) and regulation 25 of the Variation Regulations. 
The net weekly income of the nonresident parent is to be increased by the weekly equivalent of the whole of the amount identified as unreasonably diverted.

36	I do not consider the £28,000 to be the proper measure of the diversion on the facts of this case. As Miss Jackson stated for the Secretary of State, the cost to Mr W of this arrangement on the facts in evidence was not the amount of the income tax tariff figure but the extra income tax paid. Mr W was entitled to deduct the income tax from his income when the child maintenance calculations were made. So the effect of his receiving the car was that his income tax went up and his net income, and shi liability to pay child support, went down. That was the direct effect on him of his choosing to take the company car rather than buy his own car. The reality was that he saved personal expenditure while at the same time he had a lower net weekly income for current purposes. So that was in principle a diversion of income. 

37	I agree that to calculate the diversion of Mr W’s income by reference to the tax code figure on which Mr W (or any similar individual) is liable to income tax at the rate appropriate to him or her, taken in isolation, is to look at the wrong figure. It is wrong for several reasons. Most important, that figure is set for policy reasons by Parliament to penalise users of certain cars on the grounds of the cars’ carbon dioxide emissions and give preference to users of certain other cars.  Those tax figures will be to the benefit or detriment of the individual employee or director depending on the choice of car as much as its cost. They do not reflect the measure of the income, if any, diverted by a car user. 

38	Regulation 19(4)(b) and (5)(b) require that the amount of income diverted from the employee’s income to be identified. It is not to be measured by the cost to the employer, or a notional objective cost, but by the actual amount diverted. Regulation 25 confirms that it is the weekly effect of the diversion that is the focus. In calculating that, the reference point is the effect on the individual’s net weekly income that would otherwise be taken into account under Schedule 1 to the Child Support Act 1991. 

39	That amount may in some cases include an amount of income by which an employee’s cash earnings are directly or indirectly reduced by being converted into a payment in kind. There is no evidence of that here. It may in some cases take into account any cash cost to the employee of having the car that affects weekly earnings, for example in terms of payments made to the employer. There is no evidence of that here. In some cases that cost may include a direct effect on net earnings caused by adjustments to income tax or National Insurance contributions that are deductible against gross earnings in calculating those net earnings. This arises because the provision about deductions of income tax from earnings in paragraph 5 of the Schedule to the Calculation Regulations refers to any amounts deducted by way of income tax or primary Class 1 contributions from earnings. There is evidence that this happened here.
    
40	The papers show clearly, as was identified and accepted at the hearing, that Mr W paid extra income tax at an annual rate of £11,200 for each year in which he received the use of the car and that he paid this amount specifically because he had the use of that car. Accordingly, his net weekly earnings were reduced by reference to the weekly amount of that yearly income tax liability from the first week in which he had the use of that car. In continuing to receive the benefit of the car, he continued to allow the deduction, and therefore diversion, of that amount of money from his net earnings. That, on the facts established in evidence in this case, is therefore the sum that the tribunal should have identified as the diverted income.

41	Was that amount unreasonably diverted? Regulation 19(5)(b) requires that the whole of the amount unreasonably diverted be identified. The tribunal did not focus on this point, but clearly assumed that use of this car by this director was unreasonably, and therefore the amount identified by the tribunal was all unreasonably diverted. I do not have to agree with that proposition here. 

42	The issue before me is whether the whole of the weekly equivalent of £11,200 or equivalent figure was unreasonably diverted, or only part of it. Mr W presented his case with medical evidence that he had had his previous earnings sharply reduced because he was unable to work at anything approaching the levels at which he had previously worked. His earnings were reduced by 60 per cent to, and left fixed at, a sum not much over £40,000 a year. But he was supplied, while engaged in that reduced activity, with a new car worth £80,000 or more, personally selected by him and carrying his personal number plate, but at no direct cost to him and with no evidence offered that this was used wholly and exclusively for business purposes or that it was selected wholly and exclusively for business purposes. Further, there is no evidence offered that he had a car supplied to him for work purposes before being supplied with this car. Nor is there any express evidence of business usage. In those circumstances, I see no reason to regard any part of the extra income tax that Mr W incurred by receiving the car as otherwise than unreasonably reducing his income.   

My decision
43	My conclusion is that the tribunal did not err in law with regard to regulation 19(4)(a) but that it did do so with regard to the amount of income diverted. Strictly, therefore my views on any error of law of the tribunal on that first issue are not a necessary part of this decision. However, I set them out in full because they were argued fully before me. But I agree with the appellant before me on the second issue. I must therefore set aside the decision of the tribunal for error of law in quantifying the income diverted by Mr W as £28,000. 

44	I was invited to take my own decision in place of that of the tribunal if I found it to be in error. Accordingly I do so. Having set out my views on the issues at length when discussing the tribunal decision, I do not propose to repeat those issues at this stage. I have indicated that I saw no error of law in the tribunal’s conclusion that Mr W did have control over his income in so far as that involved his acceptance of the car. Those views might have been expressed more clearly, but that decision was in my view adequate. For myself, having reconsidered the issue on the facts, I find on the evidence rehearsed above that I am satisfied on the balance of probabilities that Mr W had control over his income at least to the extent that he was not required as part of his employment as a director to have and use for business purposes only the car supplied to him by the company and also that there is no evidence that he was required to pay the company for the use of that car, or that its use was restricted to use wholly and exclusively for the purposes of the employer’s business. On those facts, it was his choice that his income was subject to an annual income tax charge of £11,200 because of that car. That choice falls fairly within the terms of “ability to control” under regulation 19(4)(a). And, for the reasons discussed above, I find as fact that Mr W unreasonably reduced his net weekly income by the entire amount of the weekly equivalent of that annual income tax charge. That is therefore the amount to be taken into account under regulations 19(5) and 25.  

Direction to the Secretary of State 
45	The Secretary of State is therefore directed to recalculate the maintenance payable by Mr W for his child in the light of these findings. The calculation will take effect from the week in which Mr W started to receive the benefit of the use of the car, shown in the papers as during November 2005. The adjustment required by regulations 19 and 25 of the Variations Regulations is that there should be added back to Mr W’s net weekly income the weekly amount of the annual income tax liability of £11,200 (or such other figure as subsequently applies from year to year) incurred by him because of his receipt of the benefit of the car in any week to which it applies from the effective date of the variation. 

46	The Secretary of State is directed to notify the Commissioner of the assessment made when notifying the parties to it, giving this decision number as the reference. 

									David Williams
									Commissioner

									4 01 2008
[Signed on the original on the date stated]