Hakki v Sec of State for Works & Pensions v Blair

Citation

[2014] EWCA Civ 530; [2015] 1 F.L.R. 547; [2014] B.T.C. 22; [2014] L.L.R. 704; [2014] Fam. Law 1238

An authority dealing with whether poker winnings can amount to earnings for tax and CSA purposes, and whether “earnings” means the same thing in both regimes.
The father described himself as a professional gambler and received over £500 a week in poker winnings. Under existing caselaw settled since 1925, the father and Secretary of State asserted that those receipts could not amount to taxable earnings, which meant that they also could not be subject to a child support assessment.

(a) Earnings for the purposes of the Child Support (Maintenance Assessments and Special Cases) Regulations 1992 had the same meaning as earnings para 3 of the MASC Regulations (i.e. the tax regime): “the gross receipts of his employment”

(b) Contrary to what has been believed to be settled law since the 1925 authority of Graham v Green (Inspector of Taxes), gambling (poker) winnings can amount to taxable earnings where there is sufficient organisation to make his activity a trade or business. The bar for establishing such a level of organisation, however, remains very high.

(c) Where, as in the present case, there is insufficient organisation to amount to a trade or business, it is open for the parent with care to apply for a departure on the basis of “lifestyle inconsistent with means” pursuant to the Child Support Act 1991 s.28A to s.28I.

Stephen acted for the Mother, instructed by Wilson Solicitors LLP.

Commentaries on the case are included in the following articles:

•  Court says professional poker player is not gainfully employed? Accountancy 2014, 152(1450), 20

•  Child support Fam. Law 2014, 44(Sep), 1238-1239

•  Income tax on gambling: an international survey Ir. T.R. 2014, 27(4), 130-132

•  Is it ‘game on’ for strategies to side-step liability? (James Pirrie, Lexis Nexis Family Law, 7.5.14)

•  Poker champ’s lack of ‘gainful employment’ exempts him from child maintenance (Accountancy Live,  2.5.14)

•  When Can a Professional Gambler Be Taxable on Winnings?  (Taxation Web, 25.2.15)

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