THE CHILD SUPPORT COMMISSIONERSPRIVATE
Commissioner's Case No: CCS/2128/2001
CHILD SUPPORT ACT 1991
SOCIAL SECURITY ACT 1998
APPEAL FROM A DECISION OF AN APPEAL TRIBUNAL
ON A QUESTION OF LAW
DECISION OF THE CHILD SUPPORT COMMISSIONER
COMMISSIONER: MR J MESHER
DECISION OF THE CHILD SUPPORT COMMISSIONER
- The absent parent's appeal is allowed. The decision of the Manchester appeal tribunal dated 14 December 2000 is wrong in law, for the reasons given below, and I set it aside. The case is referred to a differently constituted appeal tribunal for determination in accordance with the directions given in paragraphs 10 to 12 below (Child Support Act 1991, section 24(3)(d)).
- The absent parent appealed against child maintenance assessments made in a decision dated 24 June 2000. The decision imposed an assessment of £38.38 from 27 August 1997, £26.88 from 6 April 1998 and £25.19 from 12 April 1999. A significant change of circumstances had occurred on or about 6 April 1998 when the parent with care ceased to be entitled to income support. She then ceased to be treated as having no income, and her actual income had to be examined. The decision-maker regarded the parent with care as self-employed in respect of her income from the rental of industrial units known as Heritage Park. The property was owned jointly by the absent parent and the parent with care. A court order dated 19 October 1995 required the rental income after 31 March 1996 to be divided equally between the parties until the property was sold, but it appears that the parent with care did not secure the payment of her share until around December 1997. The gross annual income for each party was £19,500. The decision-maker calculated the parent with care's net income by deducting the income tax and national insurance contribution liability appropriate to a self-employed person.
- The absent parent's appeal raised a number of issues, including that there had been no explanation of the calculation of rental income and that there should be an investigation of whether the full amount of rental income had been declared. The absent parent attended the hearing on 14 December 2000. The parent with care did not. The appeal tribunal dismissed the appeal. All that the statement of reasons said about the calculation of the rental income was that there was a re-assessment of the parent with care as a self-employed earner on 6 April 1998.
- The absent parent now appeals from that decision with my leave. One ground raised was that the parent with care's income had been treated as earned income when it was unearned income. When granting leave to appeal I said the following:
"The absent parent had challenged the calculation of the parent with care's rental income and its effect on the maintenance assessment from 6 April 1998. It is arguable that the appeal tribunal fail to deal adequately with that issue. Should the parent with care have been treated as self-employed (with notional deductions for social security contributions) or should the income have been counted under paragraph 15 of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992? Should the calculation of the assessment have been examined, in the light of a large increase in the parent with care's income producing only £12 difference in the assessment?"
- The representative of the Secretary of State, in the submission dated 21 September 2001, supported the absent parent's appeal. It was said that the appeal tribunal need not have examined the arithmetic of the assessments, and the £12 difference was helpfully explained. However, paragraph 14 was as follows:
"It follows in my submission that the tribunal should have made a finding as to whether the PWC was a self-employed earner. I submit that, if the PWC merely receives rents because of her part ownership of certain properties and does nothing that would count as the carrying on of a business then the rental income should be treated as income other than earnings that falls to be taken into account under paragraph 15 of Schedule 1 to the MASC regs subject to the disregards in paragraphs 2 and 23 of Schedule 2. R(FC) 2/92 gives some useful guidance on when properties let constitute a business."
- The parent with care had no comments to make on that submission. The absent parent supported that submission, but made a number of comments and also requested an oral hearing. That request was made in the light of all of his dealings with the Child Support Agency and the Department of Social Security. I refuse the request as I am satisfied that the appeal can properly be determined with a hearing. The Child Support Commissioners have no general powers or responsibility to investigate or oversee the work of the Child Support Agency. Our powers as judges are limited to determining particular appeals from particular decisions of appeal tribunals in child support cases. The matters mentioned in the request are outside the scope of what can be considered in the present appeal, which can properly be decided on the papers.
- I now conclude that the appeal tribunal did go wrong in law in the way identified in paragraph 14 of the submission on behalf of the Secretary of State. Its decision must therefore be set aside.
- The Secretary of State submitted that the case should be remitted to a new appeal tribunal for rehearing and the absent parent agreed. I have hesitated over whether I could substitute a decision on the facts, as to whether the parent with care's rental income should be taken into account as earnings from self-employment or under paragraph 15 of Schedule 1 to the MASC Regulations as other periodical payments received. Paragraph 14 of the Secretary of State's submission sets out the general position soundly. Commissioner's decision R(FC) 2/92, although it is about the question of whether a house that was let constituted a business asset, does give helpful guidance. The mere ownership of property and the receipt of rent and payment of expenses or liabilities would not constitute employment as a self-employed earner. That situation is more properly looked at as the ownership of a capital asset, which produces income. But there will come a point, depending on the circumstances of individual cases, at which the amount of administration and/or activity involved even in the letting out of a single property would amount to the carrying on of self-employment. I have concluded in the end that I have insufficient evidence about the exact nature of Heritage Park, the terms of its letting and the activities required of both the parent with care and the absent parent beyond receiving the rent, to make a final decision.
- I therefore refer the absent parent's appeal against the decision dated 24 July 2000 to a differently constituted appeal tribunal for determination in accordance with the following directions.
- There must be a complete rehearing of the appeal on the evidence presented and submissions made to the new appeal tribunal, which will not be bound by any findings made or conclusions expressed by the appeal tribunal of 14 December 2000. The new appeal tribunal must deal with the other elements of the absent parent's appeal apart from the question of the parent with care's rental income, unless he formally indicates that he does not wish to pursue them. However, it seems to me (without expressing any definite conclusion) that the appeal tribunal of 14 December 2000 was right about the jurisdiction to make an assessment and about the treatment of the parent with care's income while she still had an award of income support. The terminal date of that award might need investigation, as some of the evidence (eg page 26) is not consistent with the terminal date being 5 April 1998.
- On the question of the treatment of the parent with care's rental income, the new appeal tribunal should follow the approach set out in paragraphs 5 and 8 above. The parent with care and the absent parent may wish to give further evidence, in writing or in person, about the matters mentioned at the end of paragraph 8. The Secretary of State should produce a fresh written submission for the rehearing, setting out how the parent with care's income would be calculated if the rental income were taken into account under paragraph 15 of Schedule 1 to the MASC Regulations. That would include dealing with the proper calculation as at the relevant dates under paragraph 16 of Schedule 1, with any income tax which was "applicable" under paragraph 2 of Schedule 2 and the amounts which could be disregarded under paragraph 23 of Schedule 2. Those last amounts include council tax and water and sewerage charges, if the parent concerned is liable to pay those liabilities. If the Child Support Agency does not already hold evidence on those matters, the Secretary of State may wish to seek specific information from the parents or others.
- In the application for leave to appeal, the absent parent raised the question of whether the assessments made in the decision dated 24 July 2000 took into account that his son born on 22 May 1992 lived with him. The Secretary of State's fresh submission should deal with that question. It should also, for completeness, deal with the treatment of the absent parent's rental income from Heritage Park in the calculation of his net income.
- In view of the directions given above about a fresh submission from the Secretary of State, the case should be looked at by a district chairman before a date for the rehearing is fixed.
(Signed) J Mesher
Commissioner
Date: 27 February 2002
