The decision follows a five-year battle by Helen Smith, 42, to force her ex-husband Robert, a car dealer, to pay more for the support of their three teenage children.
The Child Support Agency, which dealt with 280,000 cases last year, was set up to assess fathers' support obligations through a formula and make it simpler to collect payments, rather than leaving it to mothers to enforce orders through the courts.
But the family law solicitors' group Resolution told the Guardian that the Smiths' case highlighted the "nightmare" the system has proved to be where the paying parent is self-employed.
Mrs Smith, who split from her husband in 1997, had 33 different assessments from the CSA over the years. In 1999 the child support regulations were changed to make it simpler to work out how much fathers should pay by allowing them to use the figure of "total taxable profits" from their tax return.
But it was left uncertain whether capital allowances for assets bought for the business could be deducted, as they can be for tax purposes, in working out the final figure.
The difference in the case of the Smiths made the payment £361 a week without the deduction and £87.50 a week taking the deduction into account..
The Law Lords decided by 3-2 that the allowances cannot be deducted, overturning a court of appeal ruling allowing them to be taken into account. Mrs Smith's and possibly thousands of other cases will have to be reassessed, and she stands to win tens of thousands of pounds in backdated child support.
Full article: Self-employed fathers face higher child support payments - Guardian, July 2006.
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