[2008] UKSSCSC CCS_2049_2007 (03 March 2008)

CCS/2049/2007

DECISION OF THE CHILD SUPPORT COMMISSIONER
  
1.	This is an appeal by the non-resident parent (Mr R), brought with my permission, against a decision of an appeal tribunal sitting at Manchester on 24 January 2007. For the reasons set out below I dismiss the appeal. 

2.	Mr R and the parent with care (Ms R) have two children, Chelsea (who is now 16) and Louis. Louis lives with Mr. R and Chelsea with Ms R. 

3.	On 22 September 2005 a decision was made that Mr R was liable to pay child support maintenance of £10.50 per week in respect of Chelsea and £10.50 per week in respect of Louis (who was then living with Ms R) with effect from 20 September 2005.  

4.	When Louis came to live with him, Mr R having remarried, Mr. R applied for a supersession of the assessment, and on 6 October 2006 a decision was made that Mr R was liable to pay £14 per week in respect of Chelsea with effect from 26 September 2006. 

5.	Mr R appealed on the grounds that he should not have to pay extra for Chelsea in circumstances where his step-son (i.e the son of his new wife) was also living with them. 

6.	In his grounds of appeal Mr. R also referred to the fact that he was claiming tax credits. This caused the CSA to re-examine the calculation, which had been based on Mr R’s only income being his income from employment. On 8 November 2006 the CSA submission writer contacted the Tax Credits Office, who in a telephone conversation stated that as at 26 September 2006 Mr. R was in receipt of £107.52 per week child tax credit and £17.59 per week working tax credit, making a total income from tax credits of £125.11 per week. It was submitted to the Tribunal by the Secretary of State that the calculation of child support maintenance needed to be corrected to take the tax credit income into account.  

7.	The Tribunal, in its Decision Notice, directed that the child support maintenance payable in respect of Chelsea should be recalculated to take into account Mr R’s income from child tax credit and working tax credit. 

8.	 On 6 February 2007 the child support maintenance was recalculated, pursuant to the Tribunal’s decision, in an amount of £33 per week with effect from 26 September 2006. 

9.	Mr R sought leave to appeal to a Commissioner on the ground that the child care element of working tax credit should not be treated as part of his income for child support maintenance purposes. In pursuance of a Direction which I made Mr. R supplied a copy of his final tax credits award in respect of the period from 13 August 2006 to 5 April 2007. That showed a total sum of £968.32 in respect of the child care element of working tax credit. 

10.	I granted leave to appeal on the footing that it appeared that part of the sum of £107.52 per week which had been taken by the child support decision maker, in the decision of 6 February 2007, as being in respect of child tax credit, might in fact be in respect of the child care element of working tax credit. I further stated that it might be arguable that the child care clement should not have been included in Mr R’s income for child support maintenance purposes, because the child care element simply compensates for child care costs incurred. 

11.	It now appears from further information supplied by HM Revenue & Customs (p.75) that, as at the date of the decision of 6 October 2006 which was under appeal to the Tribunal, the amount of tax credits which were in payment to Mr R were indeed the figures set out in para. 6 above. HMRC say that, due to the way tax credit payments are calculated, they are unable to specify how much of any individual payment was for child care. 

12.	The Secretary of State submits that there is in any event no basis for not including the child care element of working tax credit in Mr. R’s income, for child support maintenance purposes. I agree with that submission. Para. 1 of the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000 provides that net weekly income means the aggregate of the net weekly income of the non-resident parent provided for in the Schedule. Para. 11 of the Schedule provides, so far as material, as follows;

“(1)	Subject to sub-paragraph (2), payments by way of working tax credit shall be treated as the income of the non-resident parent where he has qualified for them by his engagement in, and normal engagement in, remunerative work, at the rate payable at the effective date. 

(2)	Where working tax credit is payable and the amount which is payable has been calculated by reference to the earnings of the non-resident parent and another person – 

(a)	where during the period which is used by the Inland Revenue to calculate his income the earnings of that parent exceed those of the other person, the amount payable by way of working tax credit shall be treated as the income of that parent.

		(b)	………………………………………….

(c)	where during that period the earnings of that parent are less than those of that other person, the amount payable by way of working tax credit shall not be treated as the income of that parent.

(2A)	For the purposes of this paragraph, “earnings” means the employment income and the income from self-employment of the non-resident parent and the other person referred to in sub-paragraph (2), as determined for the purposes of their entitlement to working tax credit.” 

13.	By para. 13A of that Schedule the income of the non-resident parent for child support maintenance purposes is also to include “payments by way of child tax credit to a non-resident parent or his partner at the rate payable at the effective date.” 

14.	It is in my judgment perfectly clear that, save in the exceptional circumstances mentioned in para. 11(2), the entirety of the amount of working tax credit, including the child care element, is required by para. 11(1) to be treated as the income of the non-resident parent. Whilst it might have been fair not to include the child care element, because it simply compensates for child care costs incurred, the legislation is perfectly clear that the entirety of working tax credit is included. I note that para. 11(1) is expressed to apply in respect of  payments of working tax credit to a non-resident parent “where he has qualified for them by his engagement in, and normal engagement in, remunerative work ….” That is to be read against the background that s.10 of the Tax Credits Act 2002 provides that “the entitlement of the person or persons by whom a claim for working tax credit has been made is dependent on him, or either of them, being engaged in qualifying remunerative work.” The intention behind the words in para. 11(1) which I have just quoted appears to be that, in the case of a joint claim for tax credit by members of a couple, working tax credit is only to be included in the non-resident parent’s income for child support purposes where he qualified for the tax credit because he worked, and not where he qualified solely because his partner worked. Those words cannot be argued to have the effect that in cases (and the present was such a case) where the amount of the claimants’ earnings did not affect the calculation of the child care element of working tax credit, the child care element does not count as income for child support purposes. The child care element of working tax credit is not a separate benefit. There can be no entitlement to it unless the basic condition of entitlement in s.10 of the Tax Credits Act 2002 is satisfied. 

15.	No route has been suggested to me whereby Mr R could escape from the clear effect of the legislation.

16.	Para. 11(2) deals with the situation where working tax credit has been calculated by reference to the earnings of the non-resident parent and another person (i.e. in effect the other member of a couple). That was so in the present case. It is clear from the letter from HMRC at p.75, and confirmed by the final tax credits award in respect of the period 13 August 2006 to 5 April 2007 (p.54) that the Mr. R’s earnings were greater than those of his wife. Para. 11(2) therefore does not help Mr. R, because the applicable provision was para. 11(2)(a).

17.	The letter from HMRC at p.75 states that on 16 October 2006 a revised tax credits award was issued. That was after the date of the decision of 6 October 2006 under appeal to the Tribunal, and therefore could not be taken into account by the Tribunal. It may be, however, that that revised tax credits award, and subsequent tax credit awards, require revision or supersession of the child maintenance calculations. The letter at p.75 further states that as at 26 September 2007 no tax credits were being paid to Mr and Mrs. R. 

	(signed on the original)	Charles Turnbull
		Commissioner
		 3 March 2008