Betting against child support: when gambling does pay
In the recent case of French v The Secretary of State for Work and Pensions & Anor  EWCA Civ 470, an appeal by a father against a decision in the Upper Tribunal that his income from gambling was earnings from gainful employment such that it could be part of a child support assessment, the Judges found in favour of the appellant. The Judges ruled that where an individual is found not to be a self-employed earner in relation to his gambling winnings, such 'earnings' should not be included in assessing his or her liability for child support.
Mr French was a professional card gambler, whose sole source of income for the last 25 years had been from gambling. The Court was told that he earned on average £19,000 to £23,200 per year, although he was ill over 2 years in the period in question and did not earn at all. In addition to card playing, the Court was told that Mr French bet on horses, boxing and football, regularly earning around £1,000 to £3,000 per year. On the basis of these winnings, the Child Support Agency (CSA) assessed the level of child support that he should pay to the mother of his child to be between £95 and £110 per week over the period, reduced to nil in the years he was unwell.
Mr French appealed the decision of the CSA on the basis that his gambling winnings should not have been taken into account. The First-Tier and Upper Tribunals having found against him, on 13 March 2018 Lord Justices Hickinbottom and Coulson sitting in the Court of Appeal found in his favour, relying on the earlier case of Hakki  ECWA Civ 530;  1 FLR 547. The relevant legislation concerning child support assessments from earnings as a self-employed earner did not extend to Mr French's situation in that his 'earnings' were not found to be 'taxable profits from self-employment' and he was not found to be a 'self-employed earner' as defined in the relevant Regulations. His gambling did not have a sufficient degree of organisation to amount to a trade, business, profession or vocation and he therefore had no income to be taken into account in the child support assessment.
The case has ramifications for clients subject to assessment by the CSA where all or part of their earnings is from gambling. It has long been established that winnings from gambling are generally excluded as self-employed earnings for the purposes of income tax. The fact that an individual is a 'professional' gambler does not mean that he or she is a 'self-employed earner' for the purposes of income tax or child support. The Judges noted that 'The fact that many gamblers may have (or think they have) a system which results in them winning more often than losing cannot constitute a sufficient degree of organisation to constitute a trade, profession or vocation.'
However, the case is distinguished from instances where gambling earnings could constitute part or all of the individual's income, therefore make them potentially liable for child support. The example was given of a poker player who appeared regularly on television advising people how to play poker and received a fee for doing so. He would no doubt be taxable in respect of his fees. If in the course of that business, he also made winnings from playing as part of his appearance, those winnings might also be considered part of his business. Indeed, in the case of Burdge v Pyne  1 WLR 364, Mr Burdge was the owner of a club which provided fruit machines, a card room and roulette. Mr Burdge regularly played and won at cards in his club. His winnings were held to be part of his trading receipts and were taxable.
For those of you lucky enough to be a dab hand at cards or good with tips on the horses, for specialist advice on how such winnings relate to child support, or for help on any other aspects of Family Law, including disputes over child contact arrangements or issues relating to finances in divorce, please contact Adam Cooper or another member of Blake Morgan's Family team.