Gambling Income & Child Support

The Child Maintenance Service, the government organisation tasked with assessing and administering the statutory child support regime, frequently gets bad press for its bureaucracy and the intricacy of its rules and regulations surrounding the payment and enforcement of child support.

A recent Court decision has hit the headlines because the Court of Appeal has said that a father’s sole source of income can’t be classed as earnings upon which to calculate how much child support should be paid. The first two child support tribunals took the approach that if someone lives off an income then it can be viewed as ‘’income’’ but on an appeal by the father and by the Secretary of State for Work and Pensions the Court of Appeal disagreed.

You may question when income isn’t ‘’income’’ but the Court of Appeal decided that income for child support purposes should be considered in light of rulings on what is classed as income for tax purposes.

In this family, the father derived his entire income from professional gambling, namely bets on the horses and cards. Under income tax rules and regulations earnings from gambling are not treated as self-employed taxable income even if they are a person’s only source of financial support. The Court ruled that the definition of earnings to assess liability for child support is the same as assessing eligibility for welfare benefits or liability to pay income tax.

The Court ruling may make logical sense to the Department of Work and Pensions but where does it leave the parent who requires child support for their children when the other parent is earning a living from gambling or another non-taxed source?

Critics have long argued that assessing child support using a statutory rigid scheme leads to these types of anomalies and that these situations were avoided when the Court had the power to order child maintenance based on what a judge thought was the right amount to meet the child’s needs.

With any process there are always winners and losers and for some the Child Maintenance Service has simplified the child support process and made the collection of child support more straightforward, taking the worry out of relying on an ex-partner for child maintenance. For others, particularly where their former partner or spouse is self-employed or lives a lifestyle that doesn’t seem consistent with their taxable income the child support regime and government agency has made life more complicated than relying on the old Court system for assessing child support.

You may think that there are very few professional gamblers so the Court of Appeal decision won’t affect many children. However the rules do apply to other scenarios such as the investor living off capital gains rather than dividend income or the more common situation of a self-employed person’s reported income not appearing to reflect the reality of their daily expenditure.

As a children lawyer this case emphasises the importance of getting expert legal advice when parents separate and to not sort out financial matters on a piecemeal basis. Often a husband or wife will want to agree on a split of the proceeds of sale of their house so that they can each rehouse themselves leaving issues such as spousal maintenance or child support to be agreed later on. That can lead one parent as the financial winner and the other as the financial loser if, as a result of the child support rules and regulations, the child support payments are assessed at a lot lower figure than was anticipated when committing to the new house. As frustrating as it is to wait and sort out all financial matters together the gamble of dealing with child support in isolation just isn’t worth it.

For joined up advice on children law and child support please call me on +44 (0) 1477 464020 or email me at louise@evolvefamilylaw.co.uk