French v. The Secretary of State for Work and Pensions & Anor (2018) EWCA Civ 470

Facts

• The appellant
  father (‘F’) was a professional card gambler, who had derived his entire income
  from gambling for the past 25 years.
• The Child Support
  Agency (‘CSA’) made an assessment of child maintenance based on F’s gambling
  income from previous years. F challenged the assessment, arguing that his
  gambling income did not qualify as earnings from a self-employed earner under
  para. 1A(2) of Part I Chapter 2 Child Support Act 1991 (‘CSA 1991’). Thus, F
  argued, his gambling income should not be taken into account by the CSA.
• The First-tier
  tribunal held that F’s gambling winnings did qualify as earnings from gainful
  employment, and that the CSA had been correct in its assessment.
• The Upper-tier
  tribunal upheld the First-tier tribunal decision. F appealed to the Court of
  Appeal. The question before the Court of Appeal was whether F’s gambling
  winnings did constitute earnings from gainful employment such that they should
  be taken into account in the child maintenance assessment.

Held, allowing the appeal:

• F was not a
  self-employed earner for the purposes of Part I Chapter 2 of CSA 1991.
  ‘Earnings’ was defined in para. 2A(2) of Part I Chapter 2 CSA 1991 as “the
  taxable profits from self-employment” of the particular earner, less various
  deductions.
• Regulation 1(2) of
  the Child Support (Maintenance Assessment and Special Cases) Regulations 1992
  (‘the 1992 Regulations’) provides that “self-employed earner has the same
  meanings as in section 2(1)(b) of the Social Security Contributions and
  Benefits Act 1992 (‘the 1992 Act’), namely “a person who is gainfully employed
  in Great Britain otherwise than in employed earner’s employment (…)”.
  ‘Employment’ “includes any trade, business profession, office or vocation”
  (Section 122(1) of the 1992 Act).
• Four clear
  propositions could be extracted from these statutory provisions and the relevant
  case law, including Hakki v. Secretary of State for Work and Pensions and
  Blair [2014] EWCA Civ 530 (‘Hakki’):
  • For the purpose of CMS assessment the scope of self-employed earnings
    is the same as for welfare benefits and income tax;
  • Winnings from gambling are generally excluded from self-employed
    earnings;
  • As winnings from gambling are not taxable as self-employed earnings,
    they are not generally regarded as self-employed earnings for the purposes of
    assessing child maintenance or welfare benefits;
  • Such winnings are only self-employed earnings for these purposes if
    they are an adjunct to a trade or profession.
• This case was
  indistinguishable from Hakki, where the Court of Appeal held that Mr.
  Hakki’s gambling winnings were not self-employed earnings as they were derived
  from mere gambling, unassociated with any trade or profession.
• Here, F did not
  undertake any other income-generating activity linked to his gambling, which
  could in itself be characterised as a trade or other form of self-employment.
  Therefore, they could not be taken into account when calculating child
  maintenance.
• A gambler, however
  sophisticated, organised or successful, as a matter of law will never, on that
  basis alone, be carrying out an activity amounting to self-employment. It is
  only when gambling is linked to some other business activity, which in and of
  itself amounts to self-employment, that winnings from mere gambling may fall to
  be assessed as part and parcel of that business.