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Neutral Citation Number:	2014 UKUT 299 AAC
Reported Number:
File Number:	CCS 3334 2013
Appellant:	ML
Respondent:	Secretary of State for Work and Pensions (CSM)
Judge/Commissioner:	Judge P Gray
Date Of Decision:	16/06/2014
Date Added:	04/08/2014
Main Category:	Child support
Main Subcategory:	calculation of income
Secondary Category:
Secondary Subcategory:
Notes:	Reported as [2015] AACR 4. Calculation of income – offsetting losses in one business against profits in another was permissible – application of paragraphs 8(2)(a) or 8(3)(a)(iii) of the 2000 Regulations Schedule to Child Support (Maintenance Calculations and Special Cases) Regulations 2000 The father, the non-resident parent, was a partner in a limited liability partnership and was assessed for child support maintenance purposes as a self-employed earner on the basis of his share of the profits. He unsuccessfully applied for a supersession of that decision on the basis that the assessment of his income failed to take into account his financial losses from another business. The First-tier Tribunal (F-tT) held that, under the Schedule to the Child Support (Maintenance Calculations and Special Cases) Regulations 2000, a person’s gross earnings are their taxable profits calculated in accordance with Part 2 of the Income Tax (Trading and Other Income) Act 2005, which did not cover losses. The issues before the Upper Tribunal (UT) were whether the losses from the new business should be deducted from the profits from the limited liability partnership and whether a deduction should also be made in respect of a loan taken out to purchase the father’s share of that partnership. Held, allowing the appeal, that: 1. the F-tT erred in law, as under the amended version of the 2000 Regulations the specific provision that such losses were not deductible was removed and the amended regulation 7 imported Part 2 of the 2005 Act which provided, at section 26, for the calculation of losses to be done in the same way as the calculation of profits. If one business had a profit, and another a loss, then the two must be added together to show the gross profits for child support purposes. This was not gross for income tax purposes, as it was net of deductible expenses (paragraphs 23 to 28); 2. a loan, to purchase a business or shares in a business, was not a payment of interest on a loan taken out for the purpose of the business within either paragraphs 8(2)(a) or 8(3)(a)(iii) of the Schedule to the 2000 Regulations: the decision in CCS/15949/1996 was followed (as the original 1992 Regulations mirrored the 2000 Regulations) (paragraphs 33 to 42), The judge re-made the decision of the F-tT and referred the case to the Secretary of State to reassess the child support maintenance payable by the father.
Decision(s) to Download:	[2015] AACR 4ws.doc