A case went to court last year surrounding the issue of whether a non-resident parent, who resides in England but does not pay UK tax, should pay child support. The basic rule from the CSA is that they can only make a maintenance eligibility assessment if both parents and the child in question live in the country. If they do not, child maintenance will have to be arranged through the courts, unless an informal agreement can be made.
The above rule followed another basic rule that the non resident parent (NRP) should be employed with earnings in this country in order for the CSA to make a decision- this was until 2012. The rule has now changed to enable the CSA to make a decision if the NRP is employed outside the UK, providing that they pay income tax in this country, or would be were there not any ‘double taxation’ agreements in place between the country of employment and the UK. Double taxation agreements mean that the employee pays a higher rate of income tax in the country that they work in, rather than potentially overpaying tax by paying it in their country of employment and in the UK.
In the case mentioned above which recently went to court, the parents had been divorced a long time ago and the child lives with their mother. The father lives in Kent but spends the majority of his time working in Brussels, working for a Belgian company. He also resides in Brussels and his income is subject to Belgian taxation. There is a double taxation agreement in place between Belgium and the UK. The mother of the child applied for child maintenance. The father has never shied away from his parental responsibilities and has always paid an agreed sum towards the child. The father informed the CSA that he was a resident in the UK not paying UK tax, as he was paying a higher rate in Belgium instead.
In light of the circumstances, the court decided that the father was not liable to pay child maintenance as he had no income to take into account. The mother appealed the decision to the first tier tribunal, who rejected it. She then appealed to the upper tribunal. However, by this time the Secretary of State had realised that he had made an error initially when making a decision and decided that the father was now liable to pay under the 2012 rule, as the father would have to pay tax in the UK if it wasn’t for the double taxation agreement between the UK and Belgium. For this reason, the mother’s appeal was granted.
The Upper Tribunal judge said that the Secretary of State had misunderstood the change in regulations and added that the first tier tribunal were wrong to simply assume that the Secretary of State’s decision was correct, surrendering its responsibility as an independent judicial body. Lastly, the judge said the case would serve as a reminder that the Secretary of State was not always right when it came to technical matters of the law.
To find out more about guidelines for non resident parents, call the CSA contact number.