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URL: http://www.bailii.org/uk/cases/UKUT/AAC/2014/142.html
Cite as: [2014] UKUT 142 (AAC), [2014] AACR 36
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DA v Secretary of State for Work and Pensions (CSM) (Child support : applications) [2014] UKUT 142 (AAC) (25 March 2014)
IN THE UPPER TRIBUNAL Case No. CCS/2934/2011
ADMINISTRATIVE APPEALS CHAMBER
Before Upper Tribunal Judge Rowland
The parents both appeared in person.
The Secretary of State was represented by Mr Stephen Cooper, solicitor, as agent for the Solicitor to the Department for Work and Pensions
Decision: The father’s appeal is allowed in part. The decision of the First-tier tribunal dated 4 October 2010 is set aside. His liability for child support maintenance from 10 February 2009 is to be calculated on the basis that, in addition to his salary, his net income included a sum of £26,520 p.a. taxable self-employed earnings, from which tax and National Insurance contributions must be deducted. No variation is made.
REASONS FOR DECISION
1. This is an appeal, brought by the father of the qualifying children with permission granted by Upper Tribunal Judge Mesher, from a decision of the First-tier Tribunal dated 4 October 2010, whereby it allowed the mother’s appeal against a decision of the Child Maintenance and Enforcement Commission (hereinafter “the Commission”, which then exercised functions now exercised once again by the Secretary of State) dated 10 October 2009, refusing to make a variation in respect of a child support maintenance calculation of £5 pw and substituted what might once have been described as a decision nisi, to the effect that, unless the father produced to the Commission certain documents and information within 21 days, a variation should be made under regulation 19 of the Child Support (Variations) Regulations 2000 (SI 2001/156) (hereinafter “the Variations Regulations”) “adding the sum of £26,520 net to the [father’s] revealed salary”. If the father did provide all the documents and information, the case was to be listed for a further hearing before the same panel of the First-tier Tribunal. The father did not produce all the requisite documents and information and so the decision took effect.
2. The background to the First-tier Tribunal’s decision was that there was a dispute between the parents as to the extent of the father’s involvement in a company of which he had previously been the sole shareholder. The mother’s case was that he still ran the company in substance. His case was that he was merely a part-time salaried employee. His bank statements showed his salary being paid into one bank account and then additional payments, made mostly as payments of some £2,000 each at approximately monthly intervals, being paid by the same company (misnamed in the First-tier Tribunal’s decision) into another account. It was these latter payments that the First-tier Tribunal took to have been an additional income. The father’s explanation for these payments, given when he provided the bank statements and reiterated in a later letter, was that he had previously bought some material handling equipment and had refurbished it – in his “spare time” – and had supplied it to the director of the company when the business was being set up, on the basis that he would be paid when the business could afford it. The payments shown in the statements were, he said, payments in respect of that equipment. He further explained that the director had transferred his shares to him as a guarantee of the repayments. Neither parent attended the hearing of the mother’s appeal, which took place on 4 October 2010 before a judge and a financially-qualified member of the First-tier Tribunal.
3. The First-tier Tribunal found that the father had received £22,100 from the company over a ten month period from November 2008 in addition to his salary. It took that sum to amount to £26,520 over a whole year and considered that a variation under regulation 19 of the Variations Regulations would be appropriate and would be just and equitable. (The First-tier Tribunal actually had before it bank statements in respect of a whole year, but it appears to have disregarded those showing payments received after the date of the Commission’s decision – no doubt with section 20(7)(b) of the Child Support Act 1991 in mind.)
4. It is unnecessary to set out in detail the tortuous history of the case since then. Suffice it to say that the father did not produce all the documents sought and there was another hearing before the First-tier Tribunal on 17 February 2011, which was at least in part a hearing of an appeal against the decision that the Commission made in light of the decision of 4 October 2010. The father sought permission to appeal against the decision made on 17 February 2011, which was refused by both the First-tier Tribunal and by Judge Mesher in the Upper Tribunal (on file CCS/1496/2011). However, Judge Mesher suggested that the father’s grounds of appeal really amounted to a challenge to the decision of 4 October 2010 and admitted a late application for permission to appeal against that decision.
5. The father’s grounds of appeal against the decision of 4 October 2010 are, first, that the First-tier Tribunal had wrongly concluded that he was trading as a limited company in relation to the relevant transactions and that therefore some of the documents he had been required to submit did not exist so that it was impossible to produce them and, secondly, that the First-tier Tribunal had erred in treating the relevant payments as income rather than capital. When granting permission to appeal, Judge Mesher expressed the view that there might be merit in the second ground of appeal and he also raised the questions whether the First-tier Tribunal had erred in finding that a second source of income was a ground for making a variation and should instead have adjusted the basic maintenance calculation and, if so, whether an amount in respect of tax and National Insurance contributions should have been deducted from the amounts received.
6. The Secretary of State submitted that the First-tier Tribunal had been perfectly entitled to find that the payments were income rather than capital but he accepted that a variation had been inappropriate and that an adjustment to the basic maintenance calculation should have been made instead although he submitted that the legislation appeared not to allow tax and National Insurance contributions to be deducted from the income. Finally, he submitted that the First-tier Tribunal’s decision should be set aside and the case should be remitted for rehearing. Neither of the other parties objected to that approach.
7. However, The Court of Appeal then handed down its decision in Gray v Secretary of State for Work and Pensions [2012] EWCA Civ 1412; [2013] AACR 5 and Judge Mesher invited further submissions in the light of that decision. The Secretary of State resiled from his previous submission to the extent of arguing that tax and National Insurance contributions should be deducted from the income and also submitting that the Upper Tribunal should substitute its own decision for the First-tier Tribunal’s decision, rather than remitting the case. The mother submitted that the father’s appeal should be dismissed and she asked for an oral hearing before the Upper Tribunal. It is clear that, understandably, she did not entirely understand the submission being made by the Secretary of State. The father did not seek a hearing but Judge Mesher directed one because he was not entirely convinced by the Secretary of State’s submission in relation to tax and National Insurance contributions in the light of Gray. The hearing took place before me in Manchester.
8. Neither of the other parties has commented in their written submissions on the father’s first ground of appeal. However, it does highlight the most unsatisfactory nature of both the First-tier Tribunal’s decision and also its statement of reasons, which was provided after the father had protested that some of the documents he had been required to provide if the decision was not to take effect did not exist.
9. Paragraphs 9 and 10 of the statement of reasons say –
“9. The Tribunal were mindful that it was possible that the payments may have another explanation but that explanation was not apparent from the documentation provided and of course the Tribunal heard no oral evidence.
10. In the interests of fairness, particularly as the information necessary to further explain the situation had not been specifically requested previously the tribunal couched its decision as to what might be termed an ‘unless’ order.”
At first sight, paragraph 9 suggests that the First-tier Tribunal overlooked the explanation for the relevant payments that was provided by the father when he provided the bank statements. However, it is clear, both from the use of the word “further” in paragraph 10 and from the documents that the First-tier Tribunal required the father to provide if its decision was not to be effective, that in fact the First-tier Tribunal was well aware of that explanation but doubted its truth and considered that, if true, it was not adequately supported by evidence, although it accepted that the material evidence had not been required to be produced under earlier directions. Thus, the documents that the father was required to provide included, for instance, the invoice for the equipment provided to the company and evidence as to the transfer of the shares.
10. The father provided evidence of the shareholdings which, with evidence already supplied, appears to show that the 100 issued shares were transferred by the director to the father between February 2007 and February 2008 and were transferred back again on 1 March 2008 – a date that, I observe, was before the making of the payments taken into account by the First-tier Tribunal. However, he was unable to provide an invoice or other documents relating to the transaction with the director or the company because, he said, there was merely a “gentleman’s agreement”. In the statement of reasons, the First-tier Tribunal said –
“13. The Tribunal prior to drafting these reasons now know that in particular there is no documentary evidence of either purchase of equipment inter companies or transfer of shares between the respondent and [the director]. Had the Tribunal been told that [sic] this abuse from the existence of ‘Gentleman’s Agreements’ they would have rejected that evidence on the basis that limited companies are artificial creations dependent entirely upon documentation for their economic and fiscal existence. They have no humanity to enter into informal undocumented agreements.”
11. In my judgment, it would have been better had the First-tier Tribunal simply issued a direction requiring production of the documents with an indication that it would make its decision without a further hearing after the time for sending the documents had elapsed. No doubt it wished to avoid the delay that that would have involved but in fact the procedure adopted merely caused more delay because it led the father to challenge the new decision made by the Commission instead of this one and the First-tier Tribunal took the view that it could not even consider whether there was any substance in the father’s objections to be required to provide the documents listed in the decision notice.
12. However, despite the unsatisfactory form in which the First-tier Tribunal’s decision was issued, I do not consider that it materially erred in law in making its decision in that form. If what the father says is true then of course he was unable to produce the documents, but the First-tier Tribunal had already considered his explanation and had taken the view that it was not prepared to believe him without documentary evidence to support what he was saying. It was entitled to take the view that, in the absence of documentary evidence, it would decide the case against him in the light of the evidence as to his involvement in the company that had been provided by the mother but would give him an opportunity to produce the documents that might have changed its mind. In substance that is what it did. Had the father provided an invoice and other compelling evidence of the arrangement he claimed existed and merely failed to produce some relatively unimportant document, there might be grounds for setting aside the decision. However that is not the position here.
13. Nor do I consider there to be any substance in the father’s second ground of appeal. It was for the First-tier Tribunal to decide whether or not to accept the father’s evidence and it was quite entitled to conclude that the payments, which were made by the company rather than by the director personally, were payments in respect of employment by the company rather than payments in respect of equipment supplied to the director by the father independently. Even if the First-tier Tribunal had accepted the father’s evidence, it would have been entitled to treat the payments as income rather than instalments of capital and to treat them as taxable earnings from self-employment, subject to appropriate deductions being made. Buying equipment and refurbishing it is capable of being a commercial enterprise generating an income, although of course allowance has to be made for the cost of the purchase of the equipment in the first place and other expenses. However, the point is that the First-tier Tribunal clearly did not accept the explanation for the payments and that it regarded the payments as being for services rendered to the company generally.
14. There is a question whether it should have made it clear whether it regarded those services as being provided by the father as an employee or as a self-employed independent contractor. In the absence of any accepted evidence of expenses, it made no difference whether the father had been an employee or an independent contractor if the First-tier Tribunal was correct to decide that tax and National Insurance contributions should not be deducted. However, I will therefore return to this question when I consider whether the First-tier Tribunal was correct in that regard.
15. Before then, I must consider the point that Judge Mesher raised as to whether a variation was appropriate or whether the additional income should have been taken into account in the basic maintenance calculation. The Secretary of State submits that the income should have been taken into account in the basic maintenance calculation. Understandably, neither of the parents has expressed a view on this technical issue. Because the income must be taken into account on one basis or another, this issue is of little immediate practical importance to them.
16. In my judgement, the First-tier Tribunal clearly erred in directing that the income be taken into account as a variation. It should have been taken into account within the basic maintenance calculation and, although the mother’s appeal was against a refusal to make a variation, it could be treated also as an appeal against the calculation on the basis that she had applied for it to be superseded when applying for the variation on 12 February 2009. As Judge Mesher pointed out, the First-tier Tribunal did not specify which of paragraphs (1), (1A) or (4) of regulation 19 of the Variations Regulations applied and, upon examination, none of them does. Paragraph (1) does not apply because the £5 pw flat rate had been applied under paragraph 4(1)(a) of Schedule 1 to the Child Support Act 1991, and not under paragraph 4(1)(b). Paragraphs (1A) and (4) do not apply because there was no finding that the father could control the amount of income that he received and he certainly had no formal right to control it, quite apart from the point as regards paragraph (1A) that earnings as an employed earner are not income that would fall outside the Child Support (Maintenance Calculations and Special Cases) Regulations 2000 (SI 2001/155) (hereinafter “the Maintenance Calculations Regulations”).
17. I come then to the question whether, for the purpose of the maintenance calculation, tax and National Insurance contributions should be deducted from the amount of the earnings received, notwithstanding that they were not deducted by the company or paid by the father and that they had not been found by HMRC to be payable .
18. There is now little doubt that, if the earnings were those of a self-employed earner, the proper amount of tax and National Insurance contributions payable in respect of the earnings should be deducted. That was made plain by the Court of Appeal in Gray, albeit without full argument. The main issue in that case was whether, in making a child support maintenance calculation, the Commission had been entitled to find that Mr Gray’s earnings from self-employment were higher than HMRC had accepted them to be for tax purposes. The Court held that it was. However, as in this case, the First-tier Tribunal had not deducted tax and National Insurance contributions from the relevant earnings because they had not been paid. In the Upper Tribunal, Judge Mesher had dismissed Mr Gray’s appeal (TG v CMEC (CSM) [2011] UKUT 510 (AAC); [2013] AACR 5) but had not considered it necessary to decide that particular issue because he took the view that it would not have affected the outcome.
19. Nonetheless, the Court of Appeal was invited to consider the issue. In paragraphs 29 and 30, Ward LJ, with whom Lloyd and Rafferty LJJ agreed, said –
30. Judge Mesher posed the question and inclined to answer it by following Judge Howell in DB v CMEC [2011] UKUT 202 (AAC) by allowing the deduction of actual income tax rather than notional income tax. Judge Turnbull took the opposite view in WM v CMEC [2011] UKUT 226 (AAC). In his skeleton argument Mr Buley questioned the correctness of Judge Mesher's approach. There was originally no application for permission to appeal that part of the decision and Black LJ had in any event limited this appeal to the ground I have already identified. Nonetheless we were invited to express our views about it. The second respondent was present in court but not represented; nor was the father. The mother's position, with which one could have sympathy, was that she would accept a reduction in the monies paid to her if only she could be assured that she would receive something soon and that she would not have to endure another round of battle. The father, whose battle is still against the adverse findings of fact made by the FTT, eventually realized he should not turn away a gift horse. So in the end we gave permission to appeal out of time on this point and I would allow the appeal to that extent. If the Child Support Officer is going to increase the profit above the level accepted by the HMRC then his responsibility is to deduct the income tax (and NIC) which would be payable on that level of profit. That is why I highlighted the definite article, "the", in paragraph 2A(2) to show that the deduction of tax must be related to the taxable profits which have been established to be the actual earnings of the parent. To borrow Mr Buley's phrase, it is as simple as that. Consequently I would allow the appeal and remit the case to the Secretary of State for a recalculation of the child support assessment but only so as to allow for a deduction of the income tax and national insurance on the notional surplus between the earnings found by the First Tier Tribunal and the earnings accepted by the HMRC. …”
20. It Is not difficult to provide a policy rationale for this approach. Earlier in his judgment, when considering whether the Commission was entitled to find that earnings were higher than HMRC had accepted them to be, Ward LJ had commented that it would be easier if the Commission had simply to use the HMRC figure and that it was unsatisfactory that two Government departments should reach different decisions. The counter-argument, of course, is that it is grossly unfair for the other parent to be bound by a decision to which he or she was not a party. Nonetheless, the implication of the child support authorities finding that a person’s earnings were higher than was accepted by HMRC is that they consider that that person has failed to pay the correct amount of tax and National Insurance contributions but remains liable to do so. Deducting tax and National Insurance contributions at least leaves open the possibility of HMRC making a new assessment that is consistent with the child support decision and everyone being left in the position they would have been in had the appropriate tax and National Insurance contributions been paid at the proper time. A related consideration is that there is no compelling argument for the person with the care of a child being given a share of the benefit derived from the non-resident parent’s wrong-doing at the expense of HMRC. It may be galling for the person with care to see the non-resident parent have all the benefit and it might, as Judge Turnbull suggested in WM v CMEC (to which Ward LJ referred), be possible for a variation to be made under regulation 20 of the Variations Regulations in some circumstances, but the person with care is no worse off than he or she would have been had the tax and National Insurance contributions been paid. It is HMRC that is out of pocket.
21. In any event, although the statutory references in paragraphs 29 and 30 of Ward LJ’s judgment were to paragraphs of Schedule 1 to the Child Support (Maintenance Assessments and Special Cases) Regulations 1992, the Court of Appeal’s approach must apply equally to deductions to be made from the “gross earnings” of a self-employed earner under paragraph 7(4) and (5) in Part III of Schedule 1 to the Maintenance Calculations Regulations for the purpose of ascertaining his or her “net income”, or from “taxable earnings” where earnings of a self-employed earner are calculated under paragraph 8 (see paragraph 8(2)(c) and (d), read with paragraph 8(4)).
22. However, in relation to employed earners, the language of Part II of the Schedule, relating to the earnings of employed earners, is slightly different. So far as is material, paragraphs 3 to 5 provide –
“3.–(1) The net weekly income of the non-resident parent as an employed earner shall be—
(a) his earnings provided for in paragraph 4 less the deductions provided for in paragraph 5 and calculated or estimated by reference to the relevant week as provided for in paragraph 6; or
(b) where the Secretary of State is satisfied that the person is unable to provide evidence or information relating to the deductions provided for in paragraph 5, the non-resident parent’s net earnings estimated by the Secretary of State on the basis of information available to him as to the non-resident parent’s net income.
(2) Where any provision of these Regulations requires the income of a person to be estimated, and that or any other provision of these Regulations requires that the amount of such estimated income is to be taken into account for any purpose, after deducting from it a sum in respect of income tax, or of primary Class 1 contributions under the Contributions and Benefits Act or, as the case may be, the Contributions and Benefits (Northern Ireland) Act, or contributions paid by that person towards an occupational pension scheme or personal pension scheme, then,
(a) subject to sub-paragraph (c), the amount to be deducted in respect of income tax shall be calculated by applying to that income the rates of income tax applicable at the effective date less only the personal relief to which that person is entitled under Chapter I of Part VII of the Income and Corporation Taxes Act 1988 (personal relief); but if the period in respect of which that income is to be estimated is less than a year, the amount of the personal relief deductible under this paragraph shall be calculated on a pro-rata basis and the amount of income to which each tax rate applies shall be determined on the basis that the ratio of that amount to the full amount of the income to which each tax rate applies is the same as the ratio of the proportionate part of that personal relief to the full personal relief;
(b) subject to sub-paragraph (c), the amount to be deducted in respect of Class 1 contributions under the Contributions and Benefits Act or, as the case may be, the Contributions and Benefits (Northern Ireland) Act, shall be calculated by applying to that income the appropriate primary percentage applicable on the effective date;
(c) ….
4.–(1) Subject to sub-paragraph (2), “earnings” means, in the case of employment as an employed earner, any remuneration or profit derived from that employment …
5.–(1) The deductions to be taken from gross earnings to calculate net income for the purposes of this Part of the Schedule are any amount deducted from those earnings by way of—
(a) income tax;
(b) primary Class 1 contributions under the Contributions and Benefits Act or under the Contributions and Benefits (Northern Ireland) Act; or
(c) ….
(2) For the purposes of sub-paragraph (1)(a), amounts deducted by way of income tax shall be the amounts actually deducted, including in respect of payments which are not included as earnings in paragraph 4.”
23. Where paragraph 3(1)(a) applies, paragraph 5(2) requires that there be deducted only tax actually deducted. Paragraph 3(1)(b) envisages net earnings being estimated by reference to information about the person’s net income where there is uncertainty as to amounts deducted. Those provisions reflect the fact that an employed earner’s earnings are usually received net of tax and National Insurance contributions that have been deducted at source by the employer under the PAYE regime, whereas a self-employed earner’s profit represents gross receipts less expenses but before the payment of taxes. When one is estimating what a person has actually received, it is therefore likely to be after the payment of tax and National Insurance contributions when a person is employed but before the payment of tax and National Insurance contributions when a person is self-employed. However, paragraph 3(2) makes provision for cases where it is an employed earner’s gross income that must be estimated and it then makes provision for the deduction of a notional or estimated tax and National Insurance liability.
24. Mr Cooper argued that the Schedule must be construed so that it achieves what is its clear purpose in a consistent manner as regards each type of income. He pointed out that it is headed “Net Weekly Income” and that paragraph 1 provides –
“1. Net weekly income means the aggregate of the net weekly income of the non-resident parent provided for in this Schedule.”
“Net weekly income” is the figure that determines a person’s liability for child support maintenance under Schedule 1 to the Child Support Act 1991, as in force in relation to this case. It would be inconsistent, submits Mr Cooper, if tax and National Insurance contributions were to be deducted from a self-employed earner’s earnings and not those of an employed earner.
25. I agree with Mr Cooper’s general approach but it seems to me that the question that arises in the case of an employed earner is whether the earnings that have been calculated are themselves gross or net of tax and National Insurance contributions. If net, then clearly no further deduction in respect of tax and National Insurance contributions falls to be made. Accordingly, the Court of Appeal’s decision in Gray does not automatically lead to the conclusion that tax and National Insurance contributions must be deducted from an estimated sum of employed earner’s earnings. One must first consider the nature of the sum that has been estimated.
26. In the present case, the First-tier Tribunal calculated the relevant part of the father’s annual earnings by reference to what he had received over a shorter period from the company from which he also received a salary. Such receipts ought, if attributable to additional earnings as an employed earner, to represent net earnings and, where earnings are calculated in that way, it may well be natural to assume that tax and National Insurance contributions have been paid in unknown amounts. The calculation would in those circumstances be one made under paragraph 3(1)(b) of Schedule 1 to the Maintenance Calculations Regulations and no further tax or National Insurance contributions would be deductable.
27. However, if it is known that no tax and National Insurance contributions have been deducted at source, a question arises as to whether there should be no deductions for child support purposes, at least in respect of tax, because the calculation is a calculation of net income under paragraph 3(1)(a), or whether the calculation is a calculation of gross income to which paragraph 3(2) applies so that deductions fall to be made under that subparagraph. Moreover, a lack of deductions at source may suggest that, in truth, the payments are not being made as employed earner’s earnings at all. The First-tier Tribunal failed to grapple with those issues. In particular, it did not address the question whether the estimated income of £26,520 p.a. that the father received from the company in addition to his salary was paid as employed earner’s earnings or as a self-employed earner’s earnings.
28. Thus, the First-tier Tribunal erred in law both in making a variation, rather than taking the additional earnings into account in the basic calculation, and in failing to make any findings as to the nature of those additional earnings. Since the latter error was material to deciding whether or not tax and National Insurance contributions were deductible from the additional earnings when calculating the father’s net income for child support purposes, I am satisfied that it was an error that requires the First-tier Tribunal’s decision to be set aside.
29. However, I am satisfied that I can properly re-make the decision rather than remit the case to the First-tier Tribunal and that I should do so on the basis of the First-tier Tribunal’s finding that the father did have earnings of £26,520 p.a. in addition to his salary and that those earnings are to be taken into account in the basic calculation of child support maintenance. I have not accepted the challenges to that finding made in the father’s two grounds of appeal and, even on the father’s own account, the sums received show an income that was plainly relevant to the child support calculation. It is true that the First-tier Tribunal did not give specific reasons for rejecting the father’s account, but it was effectively required to choose, on the papers, between the mother’s case that, for the reasons she advanced, it could be seen that he had far more to do with the company than he was disclosing and, on the other hand, the father’s case as to the true source and reason for the payments. It is plain that, to the extent that it was supported by evidence that the father had received additional payments, it accepted the mother’s case because it accepted her arguments and it rejected the father’s case because, if it were true, it would have expected it to have been supported by full documentation. In the circumstances of this case, where there is nothing very surprising about it having accepted the mother’s arguments, it was not, in my judgement, required to give further reasons. Although it has not featured among his grounds of appeal to the Upper Tribunal, the father also stated in a letter to the First-tier Tribunal dated 8 November 2010 – i.e., after his letter of 21 October 2010 providing documents in response to the decision – that he had not attended the hearing on 4 October 2010 “due to childcare issues as my partner works for an airline and due to Spanish strikes was stuck in Europe and unable to get home”. However, I am quite satisfied that, had he intended to attend the hearing, he would have either made other childcare arrangements or contacted the First-tier Tribunal to seek a postponement. I am reinforced in that view by his delay in raising the issue and the fact that, despite at one stage being represented by solicitors, he did not pursue an application to the First-tier Tribunal for the setting aside of its decision due to his not having attended the hearing.
30. Accepting, therefore, that the claimant received £26,520 from the company in addition to his salary, what was the nature of the payments? That is the sum that it was estimated he had actually received and it is quite clear that no tax and National Insurance contributions had been deducted because each of the payments recorded in the bank statements was a round number, quite apart from it being the father’s own case that the payments did not require tax and National Insurance contributions to be paid. Therefore, if the income was employed earner’s earnings, I am quite satisfied that this was a calculation of net earnings and that paragraphs 3(1)(a) and 5 of Schedule 1 to the Maintenance Calculations Regulations would require no deduction of tax and National Insurance contributions before the sum was taken into account as net income.
31. However, the sums paid to the father were paid separately from his salary and he was neither a director of, nor a shareholder in, the company at the material time. In these circumstances, the making of payments without the deduction of tax and National Insurance contributions appears to me to be more consistent with the arrangement being one under which the father was employed as an independent contractor rather than as an employee, albeit that he was simultaneously also a part-time employee. Accordingly, I am satisfied that the relevant payments were, in the father’s hands, receipts from self-employment. The First-tier Tribunal rejected the father’s case that he was providing refurbished material handling equipment because there was no material documentary evidence supporting the case and there is equally no documentary evidence of other expenses to be deducted. However, in the light of Gray, tax and National Insurance contributions fall to be deducted on the basis that the £26,520 p.a. was the father’s taxable profit from self-employment. To that extent, the father’s appeal is successful.