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Neutral Citation Number:
Reported Number:	R(IB)3/07
File Number:	CIB 4174 2003
Appellant:
Respondent:
Judge/Commissioner:
Date Of Decision:	26/01/2007
Date Added:	21/09/2007
Main Category:	Earnings and other income
Main Subcategory:	Calculation: self employed
Secondary Category:	Incapacity benefits
Secondary Subcategory:	other
Notes:	Income – Computation of Earnings Regulations – treating as capable of work –calculation of earnings from provision of board and lodging accommodation The claimant was in receipt of incapacity benefit and had an income from student lodgers. Regulation 16 of the Social Security (Incapacity for Work) (General) Regulations 1995 provides that a claimant should be treated as capable of work, and therefore not entitled to incapacity benefit, on each day of every week during which he does any work, subject to exemptions set out in regulation 17. The claimant appealed to the Commissioner against the decision of an appeal tribunal that her earnings from self-employment exceeded the limit for exempt work set out in regulation 17. The Commissioner calculated the claimant’s earnings on a week-by-week basis rather than averaged over a one-year (or shorter) period as would have been required by the Social Security Benefit (Computation of Earnings) Regulations 1996. He held that the Computation Regulations did not govern the calculation of the claimant’s earnings. The Secretary of State appealed to the Court of Appeal. The Court of Appeal allowed the appeal, holding that the Computation Regulations applied, and referred the case back to the Commissioner for redetermination. The decision of the Court of Appeal is reported as R(IB) 1/06. In issue before the Commissioner was the correct interpretation of regulations 12 and 13(2) and (4) of the Computation Regulations. Regulation 12(2) provides that a self-employed person’s “earnings” means gross receipts excluding disregards in paragraphs 1, 2 and 3 of Schedule 1. Paragraph 3 of Schedule 1 provides for a fixed disregard in the calculation of income from boarders. Regulation 13(4) provides that the earnings to be taken into account are the net profit, after deducting the actual expenses, while regulation 13(2) provides that there shall be disregarded or deducted as appropriate from a claimant’s net profit any sum, where applicable, specified in Schedule 1. The Secretary of State argued that the disregard in paragraph 3 of Schedule 1 was meant to cover the claimant’s outgoings and therefore it would be double counting to apply both regulation 13(2) and 13(4)(a). Held, allowing the appeal, that: 1. there is nothing in the wording of paragraph 3 of Schedule 1 to warrant the assumption that the disregard there specified is in respect of the claimant’s expenses (paragraph 14); 2. there is nothing in the wording of paragraphs (2) and (4) of regulation 13 read by themselves to imply that the paragraph (4) defrayals and the Schedule 1 disregards are not both to be taken into account (paragraph 15); 3. regulations 12, 13(1), (2) and (4) read with paragraph 3, as they are written, plainly provide that the income side of the claimant’s profit and loss calculation under regulation 13(4) does not include the Schedule 1 disregards and that the same disregards will be deducted from the net profit as calculated under 13(4) and although that effect may be anomalous, there was no scope for a purposive interpretation (paragraphs 16 to 18); 4. in the claimant’s case the application of the paragraph 3 of Schedule 1 disregards to her gross receipts in terms of regulation 12(2) alone resulted in weekly earnings below the limit in regulation 17(2)(a) of the 1995 Regulations, and therefore she was not to be treated as capable of work (paragraphs 19 to 23).
Decision(s) to Download:	R(IB)_3-07_bvam.doc