Which HMRC Tax Year should the CMS use for calculations?

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We get asked this question a lot. It seems the CMS would have both paying and receiving parents believe that the CMS can use an HMRC tax year from any of the last 6 years at their choosing even if this doesn’t match current income of the paying parent.

This isn’t correct.

Why do the CMS want parents to believe this? we have no idea… but the complaints we see all revolve around a tax year being used where the maintenance calculation is substantially higher than current income, and because the paying parent complains they’ve been moved swiftly into the “unwilling payer” category and popped onto collect and pay – that’s the collect and pay scheme with all those lovely fees that the CMS are desperate to collect to help fund their debacle.

We digress…

This is the case law you want:

Summary of the case

  • Mr B is the paying parent.
  • Mrs B is the receiving parent.
  • On 2nd June 2014, the Secretary of State electronically requested Mr B’s income data from HMRC. This is known as a “HMRC figure” under the 2012 Regulations. HMRC provided a “HMRC figure” forthwith. However, it concerned tax year 2008/09 and gave an annual income of around £34,000. Mr B was aggrieved with this because he said his current annual income was only some £30,000.
  • Mr B took the matter up with HMRC. He obtained from them written confirmation (dated 3 rd June 2014) that their records showed his income for 2013/14 was indeed around £30,000. Mr B informed the Secretary of State’s child support officials.
  • The CMS couldn’t seem to get a more recent figure from HMRC and claimed it was the computer system’s fault
  • Mr B took it all the way to a tribunal.
  • Before the First-tier Tribunal, the Secretary of State argued the law only allowed a single request for a HMRC figure in respect of a particular application for a child maintenance calculation. This was because regulation 35(2) of the Child Support Maintenance Regulations 2012 provides “a request” is to be made which means “there is no provision within legislation for a further drawdown to be attempted at this time”
  • Mr B lost at the tribunal.
  • Mr B made an appeal to the tribunal.
  • Mr B appealed to the First-tier Tribunal which reluctantly dismissed his appeal. The Tribunal accepted the Secretary of State’s argument that one, and only one, ‘drawdown’ from the HMRC computer system was permitted. Come what may, that figure had to be inputted into the 2012 Regulations’ maintenance calculation formula on Mrs B’s application for a maintenance calculation.
  • Mr B asked for permission to appeal to the Upper Tribunal and permission was granted with the tribunal saying “there is a question of law at the heart of the appeal…which relates to the proper extent, if any, to which the Tribunal can go behind the HMRC figure obtained by the Secretary of State (the historic income figure) when making the maintenance calculation for the purposes of the 2012 scheme”.
  • When it got to the appeal both Mr and Mrs B had to say what their positions were.
  • The tribunal reports that: Mrs B is very unhappy. She says “I must express my disgust on how this is being handled” because the First tier Tribunal judge was “biased” in Mr B’s favour and made “quite irrelevant comments” about Mr B’s “interesting work”. Mrs B did not address the grounds of appeal. Mrs B also made a number of allegations about Mr B’s past conduct.
  • Mr B disputed Ms B’s allegations and noted that, in any event, they were “inappropriate to this case”.
  • The appeal Judge noted the following in response: “I acknowledge Ms B’s strength of feeling. However, the allegations made about the First-tier Tribunal judge are groundless. And whatever may, or may not, have happened in this past is not relevant to the issues I have to decide.”

Appeal Upper-Tier Tribunal’s Conclusions:

On this appeal’s undisputed facts, the Secretary of State had never determined Mr B’s historic income in accordance with the 2012 Regulations. Determination of historic income begins by “taking the HMRC figure last requested from HMRC”. Due to the statutory definitions used, the HMRC figure is not simply the figure supplied by HMRC. The 2012 Regulations do not contain a deeming provision that requires whatever figure is supplied to stand as the “HMRC figure”.

For the figure supplied by HMRC to count (to fall within the definition of “HMRC figure”), it must be based on information for the “latest available tax year”. The definition of “latest available tax year” operates by reference to the state of HMRC’s records as a matter of fact when the request is made. It is the most recent tax year for which HMRC “have received” the relevant tax-related income information. If HMRC make a mistake and supply an earlier year’s data, they have not supplied a “HMRC figure” as defined.

The 2012 Regulations do not prevent more than one HMRC request from being made in respect of a particular application for a child support maintenance calculation. I acknowledge that regulation 35 provides that “a request” is to be made. However, section 6(c) of the Interpretation Act 1978 provides that “in any Act, unless the contrary intention appears…words in the singular include the plural”. Section 23(1) of the 1978 Act applies section 6 to subordinate legislation, such as the 2012 Regulations.

I can identify no such contrary intention within the 2012 Regulations. As the Secretary of State’s argument implies, it would be absurd if he had to rely on income data that was clearly wrong, artificially inflating or deflating a parent’s child support maintenance liability. I see nothing in the 2012 Regulations to prevent subsequent requests for a HMRC figure from being made if there is a reasonable doubt as to the accuracy of the information initially supplied.

Here’s the real kicker:

I note that Chapter 4 of Part 2 of the 2012 Regulations provides for automatic annual reviews, using updated HMRC figures, of a parent’s gross weekly income. However, the existence of those provisions does not indicate a “contrary intention” for the purposes of section 6(c) of the Interpretation Act 1978. Why would Parliament intend that a non-resident parent should pay an artificially inflated amount of child maintenance liability, or a parent with care receive artificially deflated payments, for a whole year? Moreover, a supersession decision to give effect to an updated HMRC figure, provided as part of the annual review process, only takes effect as from the review date (regulation 20(2) of the 2012 Regulations).

The tribunal went on:

I also note that a child maintenance calculation decision may be revised on the ground of official error and that “official error” is defined by regulation 14(4) of the 2012 Regulations to include an error made by an officer of HMRC. Generally, a revision decision takes effect as from the date of the decision that is revised (section 16(3) of the 1991 Act). However, the revision provisions provide no support for an argument that regulation 35 needs to be read so that only one HMRC figure may be requested for the purposes of a child maintenance calculation applied for under section 4 of the 1991 Act. If it is shown that a HMRC figure was wrong because it was not in fact based on income data for the latest available tax year, what happens next? The maintenance calculation exercise will be re-done and that will involve reapplying regulation 34. On the face of it, that calls for a fresh request for a HMRC figure or, if the view is taken that the required information is not available, using current income instead. Either way, the availability of revision does not require regulation 35 to be read as preventing a fresh HMRC request from being made. I do not see how it is relevant to that issue.

The configuration of the computer systems used to support the Secretary of State’s child support operations is neither here nor there. The software programmer does not make the law, Parliament does. If there is a technical impediment to using the ‘drawdown’ interface more than once during a particular period, the Secretary of State will need to make a request by some other means, by letter or email for example.

and finally:

And so the First-tier Tribunal therefore erred in law. It misconstrued the 2012 Regulations by holding that the first, and only the first, income data supplied by HMRC had to be inputted into the child support calculation as the HMRC figure. That was an error of law. On the undisputed facts, no HMRC figure had been supplied at all and that meant Mr B’s “historic income” had not been determined in accordance with the 2012 Regulations.

Why is stuff like this so hard for the CMS to understand?

For the duration of the tribunals and appeals, which as we all know can take ages, these parents were given incorrect information by the CMS which no doubt caused further discord between them, possibly affecting the child(ren) in the case.

And why is it, some 2 years after the case we’ve just documented above are the CMS still telling parents the same old nonsense?

Is it because they’re incompetent?

Or devious?

Do they think that only a few parents will take them all the way to the Upper Tribunal and therefore the gains from the parents who don’t are worth the risk?

And is there any risk? the Upper Tribunal didn’t award damages or compensation to either parent involved and misled, so where are the consequences for the CMS continuing to process cases incorrectly and to the detriment of the children and families involved?

The initial calculation was performed in 2014 and yet it took until 2016 to have it resolved. How is that in any child’s interest?


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