Lecture Notes

Another service offered by Child Support Solutions is a lecturing and presentation service for solicitors and other professionals.  Bob has delivered presentations concerning the CSA to solicitors, barristers, accountants and professional organisations such as Resolution (The Solicitors Family Law Association). What you will find here is a selection of four of my lecture notes presented over the years. These are technical lecture notes and assume a knowledge of child support and family law.  They are substantially expanded upon during the presentation.  If you are a professional interested in securing a presentation please call us on 03456 588683.  Please note these lecture notes are strictly copyright.

Introduction

The Child Support Act 1991 came into force in April 1993 and represented a complete revolution in the law concerning maintenance. It set up an administrative bureaucracy under a new government agency, the Child Support Agency whereby child maintenance was calculated by reference to a strict formula. Following criticism as to its inflexibility and high level of assessments being produced amendments were brought in by the Child Support Act 1995 and in 1996 a “Departure” scheme was brought into effect.

Despite these changes criticism of the act continued. The system remained inefficiently administered with lengthy delays and numerous mistakes in the assessments. On the 1st July 1999 the Government published a white paper setting out a complete overhaul to the system which was carried through by the Child Support Pensions and Social Security Act 2000.

For those who have received this paper last year you should note that there has been several amendments to the Legislation and SI which I have been able to take into account in this summary.

CSA Dictionary

CSA Child Support Agency
CSA91 Child Support Act 1991
CSPA Child Support and Pensions Act 2000
CSM Child Support Maintenance
MCSC 2000 Child Support (Maintenance calculation and special cases) Regs
NRP Non-resident Parent
PWC Parent with Care
QC Qualifying Child
RC Relevant Child
SOS Secretary of State

Is it in force?

The changes will be brought into effect on 3rd March 2003 however some parts of it are already in force in particular:-

  • It is now an offence to knowingly give false information the CSA or to fail to give information when demanded. They may be liable to a fine or imprisonment. Reasonable excuse is a defence (Section 14a(4)).
  • Inspectors appointed by the SOS may acquire information needed “for any purpose under the act” (Section 15(2)), to enter premises and to make “such examination and enquiry as … appropriate” (Section 15(4)).
  • Where there are arrears which SOS has tried to enforce by distress or by County Court Order without success then an application can be made to commit (Section 39a(2)(a)) or for an Order for disqualification from driving (Section 39a(2)(b)). This is a summary procedure in the Court local to the defendant. It is important to bear in mind that the CSA has always had the power to apply committal but it is intended that far more applications of this nature will take place. Disqualification is a new weapon.

If an application is made for disqualification then the Magistrates must enquire as to:-

  • Whether the NRP needs his licence to earn a living
  • His means
  • Whether he has not paid due to “wilful neglect or refusal”

The Court can then consider whether to commit or disqualify and can disqualify for up to two years or indeed suspend disqualification. SOS may make representations as to how much should be paid before the disqualification is lifted to which the defendant may reply (Section 40b(6)).

New legislation in child support can be stated briefly as follows:-

  • The Child Support Act 1991 – Amended so substantially as to be new!
  • The Child Support And Pensions Act 2000 – primary legislation that sets out in skeleton the new regime, substantially amending the Child Support Act 1991.
    The Child Support (Maintenance Calculations and Special Cases) Regulations 2000 (SI 2001 number 155) – the detailed regulations as to how the calculation is to be worked out, what the CSA is to do in certain situations, what are earnings, what is shared care etc etc.
  • The Child Support (Variations) Regulations 2000 (SI 2001 number 156) – this makes provision for variations to adjust the amount of child support payable in certain defined circumstances.
  • The Child Support (Maintenance Calculation Procedure) Regulations 2000 (SI 2001 number 157) – these provide the detail to enable the CSA to work, who is and who is not a parent with care, whether reduced benefit directions may be given, what to do with multiple applications etc etc.
  • The Child Support (Collection and Enforcement and Miscellaneous Amendments) Regulations 2000 – 2001 (SI number 162) – this primarily amends the relevant legislation with the new buzz words and provides the necessary authority for the disqualification from driving order.

There are several other regulations all making amendments on other regulations and legislation to reflect the new buzz words but the above reflect the major legislation.

Calculation under the new formula

The current complex calculation which takes account of things like housing costs, travelling, Council Tax etc is swept away and replaced instead by a simple basic rate calculation as follows:-

  • One QC 15% of net weekly income.
  • Two QC 20% of net weekly income.
  • Three or more QC 25% of net weekly income.

These figures apply to all cases where the NRP has no children living with him and earns more than £200 per week. It is however not quite as simple as that and in order to accurately consider the situation we must rewind a little.

CSM is calculated as a weekly amount at one of four rates subject to a further two considerations. (Who said it was going to be simpler!).

1. Basic Rate

This is exactly as stated above. The basic rate applies unless one of the other rates, reduced, flat or nil applies. It can however be reduced if the NRP has “relevant” other children. These other children must be living in the same household as the NRP. They need not be the NRP’s natural children. It does not matter whether they are being maintained or not. If this circumstance applies then before basic rate is worked out the NRP’s net income is first of all reduced by 15% for one relevant child, 20% for two and 25% for three or more. The remaining amount after deduction is then subject to the basic rate calculation.

2. Nil Rate

The nil rate is payable by those people appearing in a list at Regulation 5 of the MCSC 2000. The list includes prisoners, students and a child within the meaning of Section 55 CSA91.

3. Flat Rate

A flat rate of £5 is payable if the nil rate does not apply and

  • NRP’s net income is £100 or less; or
  • he/she or a partner receives certain benefits, pensions or allowances as prescribed by MCSC Regs 2000 Reg 4 (note this does not include WFTC which is counted as an income in most circumstances – see below)

4. Reduced Rate

The reduced rate applies when neither the flat nor the nil rate applies and the NRP’s net weekly income is more than £100 but less than £200. This rate is aimed to ease the transition from the flat rate of £5 per week to the full basic rate payments which at £200 per week for three or more children will be £50 per week. The reduced rate formula takes into account relevant other children. This is perhaps the most confusing element of the calculation and will be dealt with below.

5. Shared care – contact

Finally, basic reduced or flat rate maintenance assessments are affected by shared care calculations. Pursuant to Schedule 1 paragraph 8 CSA91 flat rate calculations are reduced to nil if the care of a QC is shared for at least 52 nights during any 12 month period. (By the MCSC a reduced period may be used on a pro-rata basis, 26 nights in 26 weeks, 10 nights in 10 weeks etc.)

For the purposes of basic rate and reduced rate calculations where the NRP has staying contact the maintenance calculation as worked out is reduced as follows

  • 52 nights (average of 1 night per week) to 103 nights by one/seventh
  • 104 nights to 155 nights by two/sevenths
  • 156 nights to 174 nights by three/sevenths
  • 175 nights or more by one half plus £7 further reduction for each child.

If different QC’s stays different amounts of time the fractions are averaged out pro-rata.

It should be noted that where a QC is at a boarding school or in hospital the person who would otherwise have the care of the child overnight during that time shall be treated as providing the care during the period in question. This enables a notional continuation of shared care, and indeed the PWC for these purposes would remain the PWC (MCSC 2000 Reg 7(6)).

6. The maintenance cap

Initially it was intended that the percentages of the basic rate would apply to all cases over £200 no matter what their earnings, in other words there would be no cap. After a force 10 gale of protest the government backed down. Net income is capped at £104,000 per annum net, £2,000 per week. This equates to approximately

£170,000 per annum gross. Therefore the maximum amounts payable under the new legislation are:-

  • £300 per week for the first child
  • £400 per week for two children
  • £500 per week for three or more children.

Where the NRP’s income is more than £2,000 net per week the PWC may make an application to the Court for a top-up Order. Such applications are likely to be even more rare than at present and it is difficult to envisage circumstances in which the Court would consider adding to the above figures except in the most “mega money” cases.

The reduced rate and examples

The reduced rate is a fairly complex provision. As stated the idea is to provide a gradual phasing of maintenance between the flat rate at £5 per week for those that are earning less than £100 per week and the basic rate which for two QC and an NRP in receipt of £200 per week would be £50 per week. The reduced rate is therefore applicable only on an income of between £100 and £200 per week and is £5 per week for the first £100 with the remaining income being subject to deduction at the rate of 25% if there is one qualifying child, 35% if there are two qualifying children and 45% if there are three qualifying children.

To put this into figures the following table demonstrates the amount of maintenance payable by an NRP without any children living with him in receipt of various incomes going up depending upon the number of children he has to support.

As can be seen there is a very smooth effect lifting the maintenance from the flat rate of £5 per week to the basic rate payments at £200 per week or more. Nonetheless nothing can alter the fact that a parent suffering a 45% deduction on monies earned between £100 and £200 per week upon which they have already paid Tax at 21% and NI at 10%.

The combined effect of all of these deductions means that this earner who is only marginally better off for working rather than in receipt of benefits is going to have deductions from his gross pay at a rate of 62.05% including direct taxes and child support. The issue about child support and discouragement to work is unlikely to be addressed for these particular earners.

NRP Weekly Earnings
£100
£130
£150
£180
£200
£250
1QC
5
12.50
17.50
25
30
37.50
2QC
5
15.50
22.50
33
40
50
3QC
5
18.50
27.50
41
50
62.50

Other children

If however the NRP has one or more relevant children living with them the percentages are reduced as follows:-

1QC of the NRP 2QC of the NRP 3 or more QC of the NRP
Number of relevant other children of the NRP
1
2
3 or more
1
2
3 or more
1
2
3 or more
(%)
20.5
19
17.50
29
27
25
37.5
35
32.5

The tables below illustrate the effect:-

£130 1QC 2QC 3QC
1RC
11.15
13.40
16.25
2RC
10.70
13.40
15.50
3RC
10.25
12.50
14.75

 

£180 1QC 2QC 3QC
1RC
21.40
27.40
35
2RC
20.20
26.60
33
3RC
18
25
31

Finally by way of comparison the table below indicates the amount payable at Basic Rate.

£200 1QC 2QC 3QC
1RC
25.50
34
42.50
2RC
24
32
40
3RC
22.50
30
37.50

Default rate

There is one other rate of child support that is worth mentioning. Pursuant to Regulation 7 where the SOS has insufficient information to make a maintenance calculation a default rate can be set that will apply until the NRP co-operates. This rate is based purely on the number of QC’s as follows:-

a) One QC £30 per week
b) Two QC’s £40 per week
c) Three QC’s or more £50 per week

As can be seen this is based upon a net income of £200 per week and there will be many NRP’s that will be better off ignoring the CSA and accepting the default calculation than cooperating with the CSA. It should be noted however that the SOS will not stop the calculation procedure once the default calculation is in place (in contrast to the current position). It must be remembered that the SOS can obtain information directly from employers, from the Contributions Agency and from the Inland Revenue. If as a result of enquiries the SOS finds the calculation should have been higher he can make a calculation and backdate it. If he finds it should have been lower he will reduce the calculation but there will be no backdating.

This provision is quite clearly open to abuse. Unless the CSA sharpens up its act considerably they are likely to make speedy default assessments and an NRP that simply pays them will, if the current situation is anything to go by, simply have his money accepted by the CSA without any further action. For many PWC’s this will be a very unfair result.
Calculation of net income

As we now know the percentage what is the net income itself? Net income is defined by the schedules to MCSC 2000 part (ii) (employed) or part (iii) (self-employed) as followed:-

(a). Employed earners

Net income is gross pay including bonuses and overtime but excluding benefits in kind and miscellaneous income (eg tips, expenses repaid etc). less:

  • Income tax
  • Class 1 NI contributions
  • Full pension contributions (75% in the event of a pension mortgage)

CSA is entitled to estimate “average earnings “ where the CSO deems appropriate.

(b). Self employed earners

Net income is taxable profits as per Inland Revenue Returns or gross receipts, less:

  • Income tax
  • Class 2 and Class 4 NI contributions
  • Full pension contributions (75% of a pension mortgage)

Contributions towards pension schemes can only be taken into account if the scheme falls within the Pension Schemes Act 1993 and has been approved by the Revenue. Note that the regulations prescribe no maximum amount.
It should be noted that unearned income is deliberately ignored for calculation purposes which includes investment income, benefits in kind (company car etc) and the income above the cap although there are variation provisions which we will go into later.

It should further be noted that an oddity remains from the previous legislation. The current legislation indicates that no account is taken of a new partners income however that is incorrect. When it comes to tax credits pursuant to part 1(v) of the MCSC 2000 where WFTC is payable and the amount which is payable has been calculated by reference to the weekly earnings for the NRP and another person WFTC will belong to the NRP if his income is higher than that of his partner when WFTC was calculated. If it is the same only half of the WFTC will be taken into account, if it is less than none of it will. The important thing here is that WFTC is, where the partner is working, likely to be received by her rather than the NRP (more a matter of practise than of law). It does seem very strange that a benefit that is meant to lift a family off the poverty line and encourage them to work is taken into account in order to calculate child support.

Another oddity relates to income from board or lodging which is ignored for child support purposes unless it is the only or main source of income of the earner concerned. Therefore you have an income that is not counted for some people but is counted for others.

Also included in income are employment credits and disabled persons tax credits.

Finally, any pension income paid “periodically” under an occupation or personal pension or retirement annuity contract will also be taken into account.

Transitional provisions and the court – how to proceed now

If a CSA application is issued now, an assessment should theoretically be carried out on the current rules and move onto the new rules later on. In practice however any applications now made to the Agency will end up under the new system with immediate effect. For those currently subject to a CSA assessment it is likely that they will move to the regime in 2004 but will be subject to considerable phasing over a period of up to five years. The amount of phasing will be subject to the income of the paying parent. If the father earns under £100 per week the new assessment will be phased in at the rate of £2.50 per week each year. If the income is between £100 and £400 per week the phased will be £5 per week and if the figure is over £400 per week the phasing figure will be £10 per week. What this would mean in say a situation where the current assessment amounts to £110 per week with the NRP earning say £500 per week is that the new assessment in the sum of £75 would reduce upon conversion to from £110 to £100 and after one year would reduce to £90 per week, after two years to £80 per week before finally on the third anniversary reducing to £7 per week.

The maximum period of phasing will be five years. Last minute manoeuvres by the PWC to increase and the NRP to decrease are therefore to be expected as there is going to be a very long period phasing.

There is however a real question for those currently outside the system, should they go in now, should they go in after 2002, do they want to reach an agreement and if so do they want to make an order now or again after April 2002? Different considerations will apply.

The CSA is able now and will be able under the new legislation to takeover child support in any case where the PWC is in receipt of a prescribed benefit (Section 6). However pursuant to Section 4 no private application can be made to the CSA where there is in force a “written maintenance agreement made before 5th April 1993, or a maintenance order made before 3rd March 2003 in respect of that child or those children and that the person who is, at that time, the NRP”.

This raises a very important point, if a Consent Order is made before 3rd March 2003 that Order will prohibit the CSA’s involvement. The Court will continue to retain jurisdiction to vary the order, consensually or otherwise.

However, all orders made after 3rd March 2003 will only hold the CSA off for 14 months as once the order has been in operation for 12 months either party may “opt out” by giving two months notice.

Hence, if a client wishes to contract out of the new CSA formula completely, a Court Order must be obtained by 3rd March 2003. Note, it is the date of the Order itself that is relevant, not the date the agreement was reached. I well remember the flurry to obtain Orders prior to October 1988 when the taxation treatment changed. I anticipate something similar this time around but it may not be quite so consensual. It is going to be very important to make the right decision in these circumstances.

I would once again emphasise, if you want to keep the CSA away from your case you will need to have a Consent Order in place by 3rd March 2003. If you achieve this the CSA will not become involved unless the PWC falls on benefits.

Avoiding the new CSA

When the new regime is up and running problem will occur as a result of the ability of the PWC to make an application the CSA 14 months after a Consent Order has been made. Problems are bound to arise in particular where has been a clean break ordered on divorce or on the case of unmarried parents, agreed capital provision on consent child maintenance under the Children Act 1989.

If you wish to avoid the impact of the new regime you may wish to consider:-

  • A Segal or Connell Order. These orders enable the Court to order maintenance providing for the needs of a family as a whole by way of a global sum which is to be reduced by whatever the CSA calculates to be the maintenance payable in respect of the children. A Segal is a temporary order and a Cornell is of course the long term position. Such orders can however only be made where the PWC has a substantive maintenance entitlement and not where there is a clean break (Dorney Kingdom vs Dorney Kingdom 2000). Where time is short do not forget to consider a consent interim or even nominal order for periodical payments which can be varied when an overall settlement is reached (or not) after 3rd March 2003.
  • A charge could be kept on property transferred to the PWC whereby, if she makes an application to the CSA, any excess of child maintenance over and above the order is clawed back in favour of the NRP. It is questionable however whether a Court would regard such an order as being in the best interests of the children.
  • An application for school fees order could be made by the NRP against the PWC by consent and expressed only to be operative where the maintenance calculation exceeds the specified figure. This obviously only works when the children attend fee paying schools.
  • A compensatory periodical payments order in favour of the NRP by which the PWC could be ordered to pay periodical payments equal to the excess of the maintenance calculation over the maintenance order. If there is a clean break you may have to try and stretch the District Judges imagination with some kind of compensating lump sum order payable by instalments.

Is it possible the CSA’s jurisdiction could be challenged under the Human Rights Act 1998?

There are certainly several areas of child support practice that are questionable in terms of access to justice, equality of arms and a right to a fair trial. These in reality only tinker with the system. For the adventurous gambler how about:-

  1. The operation of an agency assessing maintenance by means of a formula is in itself the denial of a fair trial. Section 23(1)(d) MCA1973 remains on the statue books supposedly enabling a spouse to apply for periodical payments for his/her child yet the CSA1991 precludes such an application being made without repealing this provision.
  2. Pursuant to Section 2 of the Child Support Act the SOS must consider the welfare of the child but only when exercising any “discretionary power”. Is this contrary to the welfare of the child and thus in breach of the HRA?
  3. The variation jurisdiction enables the SOS to “agree” a variation if, inter alia, it is “just and equitable”. He is therefore required to act in a judicial capacity even through there is no hearing of any kind.
  4. Is the imposition of a quasi criminal penalty namely disqualification from driving in relation to civil obligation a breach of Human Rights? Remember however that there is a defence here of “necessary and proportional”.

I am not a Human Rights lawyer but it is easy to see that there is a lot here to get your teeth into if you are that way inclined and are feeling flush!

Whilst in the area of Court Orders etc do also remember that if NRP has other children his total limit on his child support liability is 25% of his net income if all children are being dealt with through the CSA. For the more proliferate NRP this may be attractive. If your client is a PWC in these circumstances and the NRP is unaware of the position a Consent Order could be arranged.

Always concentrate your mind, school fees are not effected one way or another by a CSA calculation. If this looks like the kind of case where school fees are likely to become subject it might be a good idea to ensure a recital is in a Consent Order for the intention of the parties as to liability for future school fees where a calculation is in force.

Variation

1. Background

The Child Support Act 1991 and the regime brought into force in 1993 was considered far to inflexible and in 1995 amendments to the scheme were proposed which did nothing with regard to flexibility but did superficially appear to provide some comfort to those who had made capital settlements prior to 1993 and those individuals who had a long distance to travel to work. In accordance with that act a Departure Scheme was drafted in 1996 which allowed for further flexibility although in absolutely defined circumstances. The government likes the way the Departure system works and has therefore broadly repeated it, although as with everything in the new scheme it is given a shiny new name, “variations”.

2. Applying for a variation

An application can be made either after a calculation has been made or indeed before it is made. Once received the SOS must consider the application on a preliminary basis and can dismiss it without bothering the other side. The rejection would basically be that the grounds applied for do not hold water. It should be further noted the SOS can reject an application at any time if the applicant has failed to abide by a “regular payment condition” pending the outcome of his deliberations.

3. Grounds for variation

There are three principle types of “variation cases”, special expenses, property or capital transfers and “additional” cases.

(a) Special expenses

(i). Contact costs.

All necessarily incurred contact costs can be put forward in a variation application by the NRP. They must satisfy the minimum amount which I will come to later and include:-

a) Travel tickets
b) Fuel
c) Taxi fare where necessary
d) Cost of car hire where necessary
e) Cost of overnight stay where appropriate and can include the cost of breakfast
f) Further costs such as tolls and parking fees.

It should be noted that the contact must be to a set pattern.

(ii). Illness or disability of a relevant other child

An application for a variation may be made as a cost for looking after a disabled child most particularly personal care and attendance, communication needs, mobility, domestic help, medical aid (where not provided by NHS), heating, clothing, laundry, diet, day care, rehabilitation, respite care or adaptations to NRP’s home. This list is comprehensive. The regulations provide that a disabled child must be registered blind or treated as blind, or in receipt of attendance allowance, DLA or mobility supplement (or would be if it were not for the fact that they are an inpatient).

(iii). Prior debts

If the NRP has debts incurred before he became an NRP in relation to a qualifying child and at the time where the NRP and the PWC were a couple he may apply for a variation in respect of debts incurred:-

a) For the joint benefit of the NRP and PWC
b) For the benefit of the PWC were the NRP remains legally liable to pay whole or part of the debt
c) For the benefit of any non-qualifying child of the NRP/PWC when the child lived with them, providing the debt was incurred when that child was a child
d) For the benefit of any qualifying child
e) For the benefit of any child who at the time of the debt was incurred lived with the NRP and PWC and the PWC is the parent.
f) If the loan was for items, that those items remain with the PWC.

There is a whopping list of loans that do not qualify such as fines, overdrafts, credit cards, business debts.

It should be noted that the NRP cannot apply in respect of loans upon which he has assumed responsibility as part of the ancillary relief settlement unless the debt concerned is the mortgage on the former matrimonial home.

(iv). Boarding school fees

A variation application may be made by the NRP where he pays boarding school fees for the child. Note the only part of boarding school fees that are allowable are the fees for boarding, not for education. When the amount is not readily ascertainable the element of boarding will be capped at 35%. Whereas most of the variation system is directly lifted from the current departure system. This however is a brand new ground and has almost certainly been included because there are going to be far more children at boarding school that fall within the auspices of the CSA following the introduction of the higher limits. It should be noted that the effect of this ground cannot be allowed above 50% of the non-resident parents net income.

(v). Mortgage payments

Where the NRP pays a mortgage or loan relating to the purchase of or repairs or improvements to a property owned by someone other than the NRP and the property concerned was the home of the NRP and the PWC when they were a couple and remains the home of the parent with care and the child providing the NRP has no legal or equitable interest in and no charge or right to have a charge over the property a variation application can be made in respect of those payments.

Again this in another new ground. The current departure system allows for such an application to be made as a “debt incurred before he became an NRP”. The invention of this new ground would suggest clear approval for this kind of arrangement, giving the SOS a “green light” to use this method of variation and by the back door in effect instructing the SOS to be very careful about granting variations concerning mortgages as part of the “debts” ground.

Finally it should be noted in respect of all special expenses claims there is a threshold of £15 per week where the NRP earns of £200 or £10 per week where he earns under £200. He can however aggregate his claims to exceed the threshold.

(b). Property or capital transfers

Where the NRP transferred a property as part a matrimonial settlement, even if he has the benefit of say a Mesher or Martin Order, the value of the physical transfer to the PWC can be taken into account in a variation application. This in reality is simply lifted directly from the departure regulations. Only transfers made prior to April 1993 will qualify.

(c). Additional variation cases

These cases are available to the PWC dissatisfied with the amount of the assessment.

a) Assets

Where the NRP has a beneficial interest in an asset or has the ability to control an asset that has been transferred or has become “subject to a trust created by legal implication” a variation can be agreed by the SOS. Assets included money whether on deposit, in cash, interest in land, shares, unit trusts, gilt’s and other financial instruments or a chose in action and can include assets located outside Great Britain. It should be noted that such an application cannot be made in relation to any asset which is worth less than £65,000 (after deduction of any amount owing on the asset), compensation for personal injury, the home of the NRP (or any child of his), any asset used in the course of his trade or business and finally any asset that the SOS is satisfied as being retained by the NRP for uses “considered reasonable”.

b) Income not taken into account under diversion of income

This comes in two parts, where the NRP is due to pay a nil or flat rate because he is in receipt of benefits or his income is less than £100 and where the PWC can prove that the NRP has undisclosed income amounting with his declared income to over £100 per week the SOS can agree to a variation and aggregate the income found with benefit or allowances already in payment.

The parent with care can also apply for variation where the NRP has the ability to control the amount of income he receives including earnings from income or self-employment and the SOS is satisfied that the NRP has unreasonably reduced the amount of his income by diverting it to other persons.

The final variation ground is that of lifestyle inconsistent with declared income. Again this is for the PWC to apply. Superficially this may appear to be law transferred from the current legislation but it does represent a change as under the current legislation the SOS must be satisfied that the lifestyle is “significantly” inconsistent with declared income. The word significantly is now dropped and the SOS now has to be satisfied that the “income which would otherwise be taken into account for the purposes of the maintenance calculation is substantially lower than the level of income required to support the overall lifestyle of the NRP”. Assuming the SOS is satisfied he must then put a figure on the top-up to the declared income necessary to support the lifestyle and can then carry out the maintenance calculation on that basis.

Effect of variation

Maintenance calculations affected by variations are as follows:-

1. Special expenses

The amount of special expenses are deducted from the NRP’s income to calculate his net income.

2. Property transfer

The weekly amount of the property transfer is deducted direct from the maintenance calculation.

3. Additional cases

The NRP’s net income is increased by the amount found to be appropriate unless as a result that takes the NRP’s income above the capped amount in which case the amount is restricted to the capped amount (the maximum).

New methods of enforcement

As discussed earlier inspectors can be appointed to obtain information needed “for any purposes under the act”. They may enter premises and make “such information and enquiry as is considered appropriate”. Solicitors offices are not exempt.

In addition to the usual methods of enforcement the CSA has namely Deduction from Earnings Order as a matter of administration, Liability Order followed by distress, Garnishee or Charging Order, and if necessary by committal, an application can now be made for disqualification from driving. An application is made to the Magistrates Court where the liable person lives and when considering the matter the Magistrates must enquire as to:-

a) Whether the NRP needs his licence to earn a living.
b) His means
c) Whether the failure to pay has been due to “wilful neglect or refusal”

When disqualifying the Court may disqualify for up to two years or suspend disqualification subject to various conditions usually on the basis of payments that are at a set rate until a certain sum if paid off.

Note, the Magistrates do not have to set the same sum as the Liability Order, they can set a different amount. The Magistrates have no provision to award their figure plus the maintenance assessment currently due. The two must be treated separately.

Do not forget that the CSA is the only authority that can obtain a Liability Order against the NRP however once a Liability Order is granted the PWC can appoint her own solicitor to enforce it like any Court Judgement. This is particularly important bearing in mind the CSA’s lamentable record in this area.

Last but no means least, the complex calculation of interest on child support arrears is now done away with (in reality the CSA have not been able to charge interest since 1994) but instead the SOS can charge penalty payment on arrears amounting to 25% of the amount of CSM payable from week to week.

Conclusions

The new legislation is going to make child support easier to calculate however with the many variation grounds, driving licences to be saved together with phasing, top-ups and school fees orders there is going to be plenty of grist to the family lawyers mill.

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The Child Maintenance and the Payments Bill was proposed before the House of Commons on 5th June 2007 and published on 18th June 2007.  Like its forerunner, the Child Support Social Security and Pension Act 2000 it does not seek to replace the Child Support Agency Act 1991 but rather to comprehensively amend it.  The result really is a hotch potch legislation made in 1991, amended in 1993 at introduction of the Child Support Agency, amended again in 1994 and in 1995.  Re-amended in 1997 and in 1999, then again 2000, again in 2002 and in 2003 and now to be amended again.  The amendments that took place in 1995, 1996, 2000 and the current amendments are so comprehensive as to virtually delete the entirety of the old Child Support Act 1991.

The Child Maintenance and other Payments Bill is therefore primarily amending legislation.  Much of its provisions therefore replace familiar sections within the Child Support Act.  However there are some major changes. Some of these changes are more functional in nature, such as disbanding the Child Support Agency, setting up CMEC and doing such things as transferring jobs from the Child Support Agency to CMEC.  At the same time CMEC has the approval to contract out any of or all its functions.  CMEC would also have the obligation to report to Parliament annually on its work, an obligation that was not imposed upon the Child Support Agency by act of Parliament.  The Government may yet regret this decision.  Looking at the major changes, all of these are pretty well known to us nonetheless bear repeating:-

 

  1. Pursuant to Section 15 it will no long be compulsory for a parent in receipt of benefits to make an application for Child Support to CMEC and there will be no reduced benefit directions.

 

  1. Pursuant to Section 20 the use of a Deduction from Earnings Order is to be the basic method of payment. This means that unless there are good reasons for not imposing a Deduction from Earnings Order to collect this should be imposed.  For those clients we have that are currently hiding child maintenance obligations by paying through a bank account this is likely to lead them to some difficulties, it must be far more difficult to conceal your payslips every month from your wife!  A restricted right of appeal will exist.

 

  1. By Section 22 CMEC will have a new power namely a Regular Account Deduction Order. This means that where somebody has failed to pay Child Support CMEC will be able to issue a Deduction Order to take regular payments from a bank account without the necessity of going to court.  This power can also be used against joint accounts although CMEC must first give advanced notice to the account holders and consider representations before making the order.  It should be noted that such an order can be made by CMEC even it there is an appeal pending however, CMEC should not do so if it believes that if the appeal were to succeed the amount of maintenance would be affected or alternatively if it seems otherwise unfair.  There will be a right of appeal against such a decision to the magistrates’ court.  Furthermore pursuant to Section 23 (adding a new provision “Section 32E” to the Child Support Act) a Lump Sum Deduction Order can be made against bank accounts again without the necessity of going to court.  The money is initially frozen and the non-resident-parent given time to appeal.  If they do not the money goes to CMEC, if they do the final decision is made by the court.

 

  1. Pursuant to Section 25 of the Act a new Section 32M is to be inserted into the Child Support Act 1991 which will allow for a liability order to be made by CMEC itself, in other words an administrative liability order. Once it makes such an order it will be then able to register the order within the County Court or instruct bailiffs.  Uniquely an appeal against an administrative liability order does not lie to the magistrates’ court; it lies to the Appeal Tribunal.  The wording for enforcement in the County Court is tightened up to give the County Court even less discretion than it previously had.

 

  1. By Section 27 of the Act a new Section 39B is to be inserted into the Child Support Act allowing the Commission to make an order administratively itself disqualifying someone from holding a Passport or ID card for a period of up to one year. Pursuant to Section 39E such a decision will be able to appealed within 28 days of the order being issued by CMEC.  The appeal lies to the magistrates’ court the passport must be surrendered to CMEC.  Failure to do so will be an offence (level three fine) and extra time of disqualification may be ordered by the court on conviction, not exceeding two years in total.  Beware however, when the non-resident-parent attends court on their application to lift the Passport disqualification they had better not turn up with any cash because pursuant to 39F a person attending such an appeal can be searched and any money found can be seized for the purposes of paying Child Support!

 

  1. By Section 28 a new Section 39J is added to the Child Support Act 1991 allowing CMEC to apply to the magistrates’ court for a Curfew Order, however this can be granted only on the usual grounds, wilful refusal or culpable neglect to pay and CMEC has to show other enforcement methods have failed, in particular a Charging Order (Section 39J (2)). The Curfew can be daily, or one day a week for a curfew period of any time between two hours and twelve hours in one day but lasting no more than six months.  Again, at the Curfew Order Application a search can be made of the defendant and any money can be removed from them to pay towards their Child Support arrears.  Failing to abide by a Curfew Order can result in imprisonment.

 

  1. Pursuant to Section 29, Section 40 of the Child Support Act is amended to allow CMEC to apply for a Warrant of Commitment to Prison. Significantly CMEC will actually have to do more to prove that it could not collect the debt than the CSA currently has to, CMEC will have to prove that it has sought to recover the amount including the making of orders.  Previously the CSA only have had to considered other methods of enforcement, not even to have rejected them.  Once again on commitment to prison somebody can be searched and then money taken to pay towards Child Support.  A Suspended Committal Order can be made.

 

  1. Section 28 amends Section 40B to provide the disqualification of holding a Driving Licence, same grounds as for imprisonment, same stop and search rules. A Suspended Order can be made.

 

  1. Section 29 brings something new in; it inserts a new Section 41C into the Child Support Act allowing the Agency to set off Child Support liabilities in certain prescribed circumstances. Those circumstances are not yet put forward but almost certainly this will enable the Child Support Agency to set against some ones Child Support arrears money that may be owed to them by the parent-with-care in other proceeding and definitely I would say against Child Support under the old Child Support Agency and indeed to CMEC.

 

  1. At Section 30 we have something brand new, the introduction of Section 41D to the Child Support Act which enables the Commission to accept payment of part of maintenance in satisfaction of an entire liability, in other words for the first time ever it is going to be possible to negotiate on arrears owed to the CMEC. There are however likely to be some fairly tight regulations on this point, at the moment whilst the public are looking they are likely to be virtually impossible to satisfy but when the public are no longer looking I am sure that they will be liberalised to such an extent that a small payment will be able to get rid of thousands of pound previously owed to the old Child Support Agency.  Likewise Section 41E gives CMEC the powers to write off arrears.  Such an ability has never existed within the Child Support Agency and you end up with silly provisions such as Unenforceable Debt which remains on the CSA debt book.  CMEC will now simply be able to write off such debt.  I would image the power to write off arrears will be very sparingly used, literally to address anomalies within the legislation, in effect getting rid of bulky debt that is legally uncollectible anyway.

 

  1. Section 32 introduces a new Section 49A to the act which enables CMEC to transfer arrears owed to a third party; almost all of this is subject to forthcoming regulations which should make “interesting” read.

 

  1. It now becomes compulsory for a non-resident-parent to notify CMEC of a change of address and a criminal offence if they fail to do so.

 

  1. By Section 37, Section 42 (2) of the Child Support Act is to be amended to provide a new paragraph ‘g’ making parents who share their children between them, one child living with each parent for instance, a special case.

 

  1. A new Section 43A is to be inserted into the Child Support Act to enable arrears to be recovered from a deceased’s estate and pursuant to Section 49B CMEC will be able to disclose debt details to credit reference agency’s thereby black listing someone.

 

  1. Pursuant to Section 41 pilot schemes for the new system are to be instituted in certain localities. We do not know where yet.

 

  1. Here is an interesting one, at Section 42. Section 55 of the Child Support Act is to be amended so a child becomes someone who is not yet 16 or who has not yet attained the age of 20 (in other words Child Support will continue to be payable between the ages of 16 and 20 as opposed to 16 and 19 now).  A child between 16 and 20 may still qualify for Child Support in circumstances that have yet to be “prescribed”.  No matter what however, if a child enters into marriage or Civil Partnership (even if it is a void one) they are no longer a child within the meaning of the Child Support Act.

 

  1. By Section 43 all old interest on very old Child Support assessments is to be extinguished as are any very old fees outstanding. This will apply only in a few cases and will not be very much money but the CSA used to charge interest and fees and there are a few cases where there are still fees outstanding on accounts.  These are to be written off completely.

 

  1. A great deal of the rest of the Act relates to Lung Cancer payments, appeals to Tribunals on this and extremely boring lists and lists of the transfer of Child Support Agency powers to CMEC. Principally all of the familiar legislation we have are going to be transferred over to CMEC.

 

  1. Further interesting provisions are however hidden (as usual) in the Schedules to the Legislation, in particular at Schedule 4 CMEC will use gross pay only and the basic rate will be 12% for one child 16% for two and 19% for three or more but only on the first £800 per week. Any gross income over £800 per week will be subject to a lesser deduction of 9% for one Child, 12% for two and 15% for three.  This basically roughly reflects taking into account the increase in taxation for earners earning over £40,000 per annum.  The maximum amount of earning to be taken into account is now £3,000 per week gross.

 

  1. There will be a reduction in respect of the non-resident-parent that has relevant children living with him, 12% for the first, 16% for two and 19% for three.

 

  1. The minimum rate will become £7.00 per week.

 

  1. The wording for provisions in relation to other children for which the non-resident-parent has a liability to support has been changed to allow CMEC to split maintenance where the non-resident-parent has a child maintenance “arrangement” as opposed to an order, reflecting Parliaments intention to encourage “out of Child Support Agency” settlements. Note however the child must live in the United Kingdom.  Unlike the Child Support Agency it seems CMEC will not respect foreign court orders.

 

  1. Shared care is to be changed slightly, as you know to date the Child Support Agency has looked at shared care in the past; it cannot look to plans for shared care in the future. Under the new legislation CMEC can look at shared care as it is planned to be in the future.

 

Under additional provisions-

 

  1. These can be found at Schedule 5. In particular when the Child Support Agency ends CMEC will make an enquiry of parents to see whether they wish to remain in the statutory scheme or not.  It seems therefore that the Child Support Agency will not be advising people that they are leaving the Child Support Agency system, rather the Child Support Agency will advise CMEC and CMEC will then contact the parents concerned.  There is going to have to be a lot of communication between the CSA and CMEC to accomplish this.

 

  1. The Reduced Benefit Direction rules are to be abolished completely.

 

New Statutory Instrument.

 

  1. In the meantime there have also been a few miscellaneous amendments by Statutory Instrument, in particular now a brand new power for the Child Support Agency to obtain a Liability Order against a non resident of the United Kingdom. Other consequential amendments made to enable the Child Support Agency to use the Bailiffs against the property of a person who is not resident in the United Kingdom and even to commit somebody to Prison or disqualify them from driving when they are not resident in the United Kingdom.  It remains to be seen how imprisonment and driving disqualification is to be enforced where the Agency do not have a clue where the non-resident-parent is!

 

  1. An interesting additional amendment is to deal with the “Smith” problem. An amendment is to be made to MASC and MCSC to define taxable profits as profit calculated in accordance with part two of the Income Tax (Trading and other income) Act 2005.  Furthermore, a self employed person is now going to be asked to produce their Tax Calculation Notice rather than their Tax Return.  Similar amendments to MCSC.

 

 

  1. The Income Tax (Trading and other income) Act 2005 defines taxable profits as much lower than that previously defined by the House of Lords in the case of Smith which the Government took the view did not accord with the meaning of the Legislation.

 

  1. Despite the regulations I have just referred in para’s 25, 26 and 27 above please understand these regulations apply to old law and new law, not to CMEC. CMEC will almost certainly use the same method of calculating the self employed earners income but it is important to realise that at present no CMEC regulations have been published.  The regulations will provide the meat on the CMEC bones, it however seems that with the decision to again substantially amend the Child Support Act and transfer most of the regulations we know and love over to CMEC in fact there may not be much by way of regulatory impact here, what this also almost certainly means is that CMEC will operate the full calculation and variation system currently operated by the Child Support Agency, largely unchanged.

 

  1. Briefly therefore it seems that CMEC will struggle with the same Child Support legislation that we currently know and love but will have improved enforcement powers since it will be able to clerically not only make deduction from earnings orders (which it will make as a matter of course rather than as a matter of default) but it will be able to make its own liability orders without recourse to the courts, third party debt orders without recourse to the court, in effect direct debits without either recourse to the courts or the non-resident-parent and any parent that appeals against any or all of these provisions (which will be to the magistrates courts in all cases except for liability orders which will be appealed to tribunals) CMEC will be able to stop and search the non-resident-parent at court (or tribunal) and take whatever cash they are carrying on them towards their Child Support.

 

  1. With the ability to accept part payment towards arrears and the ability to write off arrears completely (subject to regulations which will follow) and of course the option to transfer the collection of debt to third parties (could such a third party be the parent-with-care – it does not seem to exclude that possibility – are we seeing the end of Keogh?) interesting times await.

 

Finally, I hope you all enjoy reading this as much as I enjoyed spending the hours preparing it!

 

BP

The long sad saga of the Child Support Agency continues starting in 1993 with a government department carrying a considerable amount of goodwill behind it; to what most commentators now agree has been the worst performing government department ever.  The tales of woe, incompetence and ridiculous rules has kept the Agency in the news for 16 years marking an entire generation of failure by a miserable government department devoid of public support.  The demise of the Child Support Agency is unlikely to be greeted by tears, not even crocodile ones.  The hope is that the shiny new CMEC will be able to deliver what the Child Support Agency has so lamentably failed to achieve.  The problem is the Child Support Agency has established a reputation that paying child support is optional and although they are now catching up, CMEC will have to struggle with this legacy of non-payment.

The Agency now celebrates its 17th year.  Most 17 year olds would be considering the prospects of learning to drive although whether any Instructor would wish to teach Miss “Oops-a-Daisy-Child-Support-Agency” is unlikely.

Mirror – Signal – Manoeuvre – Where are we?

  1. “Old” Law – Assessable ‘net’ pay Known as CS1, the old law algebraic system still exists, calculate maintenance requirement, calculate net income and deduct exempt income to get the assessable income upon which child support is paid subject to protected income calculation.
  1. New Law – Net pay based Known as CS2 (because there is going to be a new “New Law”) which is to be will be known as “CS3”. 15% of net pay for one child, 20% for two children, 25% for three or more children subject to reductions in respect of relevant children living with non resident parent and shared care.
  1. The New “New Law” – Gross pay based Set at 12% for one child 16% for two children and 19% for three children of gross pay reducing to 9%, 12% and 16% respectively on all earnings over £800 per week up to a maximum gross of £3,000 per week.
  1. CS1 is subject to departures, CS2 and CS3 are subject to variations.
  1. None of the departures or variations were ever meant to be particularly favourable to non resident parents and are of little effect as rather than reducing the assessment directly by the expenses that are claimable, they reduce the net income by the expenses that are claimable. This means that a man who pays air fares for his children travel backwards and forward from Glasgow to London say at a total cost of say £400 per month would find with two children that his child support was only decreased by £67 per month.  This reduction of liability may be welcome but if he is considering whether flights are possible for the future he must be made aware that this variation ground is not going to make a huge difference.  Subject to that caveat however the ground of departures (CS1) for non resident parent are travel to work costs, contact costs, illness or disability (of the non resident parent or dependant) and three pre 1993 grounds – this requires the matter to have commenced before 1993 and any financial commitments, transfer of property and costs of relevant children that form part of the household prior to 1993.  These three grounds are all but defunct now, 17 years on.
  1. On variations non resident parents can apply for contact costs, illness or disability of a relevant child, prior debts, boarding school fees (but for boarding only) and mortgages paid by the non resident parent on the property occupied by QC.
  1. Under both systems there is a threshold where the first £15 per week in respect of all these expenses are ignored. In reality as far as non resident parents are concerned departures and variations are merely window dressing.
  1. Departures and Variations are much bigger business when applied for by the parent’s with care. For the purposes of parent’s with care, departures are available on the grounds of assets capable of producing higher income, diversion, lifestyle, unreasonably high housing costs, unreasonably high travel costs and partners contribution towards housing costs.
  1. In relation to variations, parent with care variations comprise of assets, income not taken into account, diversion of income and lifestyle.
  1. The Child Support Agency can collect by Deduction from Earnings Order. If this is not satisfactory then Liability Orders can lead to Bailiffs, Third Party Debt Orders, Charging Orders, Orders for Sale and Committal / Driving bans.
  1. All debt charging after 13th July 2000 is enforceable via the court. The Child Support Agency policy is to reach arrangements to collect all debt within two years or enforce by Liability Order etc.

“Turn right at the next junction” – Where are we going now?

  1. The Government is moving to bring into force the Child Maintenance and Other Payments Act 2008. This did not create a new Child Maintenance Act; it merely amended the 1991 Child Support Act.  This piece of legislation had been so amended that by 2007 it barely contained any of the language or provisions of its original format.  This is to be amended yet again to create a startling hot-potch of legislation.
  1. Bits and bobs are being brought in over time. So far the following has been brought in to effect:-
  1. The Child Maintenance Enforcement Commissioner has commenced her work. The Child Support Agency makes the enforceable and enforcement decisions upon her behalf.
  1. The new website, cmoptions.org has been launched. This goes through your options which at the moment are a private agreement (of which the Child Maintenance Enforcement Commissioner has no interest), a standard Child Support Agency assessment or a court order.
  1. It is now a criminal offence to fail to advise the Child Support Agency of a change of address and, if you are subject to a Deduction from Earnings Order, a change to an employer
  1. It is no longer compulsory for parent’s with care in receipt of benefits to go to the Child Support Agency.
  1. Any maintenance paid by a non resident parent to a parent with care in receipt of Tax Credits is not taken in account when calculating those Tax Credits.
  1. The Child Support Agency can currently collect by Deduction from Earnings Order without going to court.  They can also now collect by Account Deduction Order – similar to a third party debt order but “in-house”.  It should be noted that Account Deduction Orders operate in respect of credit amounts in accounts held in the sole name of the non resident parent.  Joint accounts at present cannot be subjected to and order but this policy will be reconsidered in September.

“I can fail you for driving too slowly” – Changes not yet implemented

  1. The Child Maintenance Enforcement Commissioner will start to take over the Child Support Agency’s work in 2011 and will do so gradually completing the task by 2013.
  1. The number of child maintenance options will increase with a private agreement, a private agreement with online payments support, child maintenance service, maintenance direct and consent orders being the available options.
  1. There will be no phasing in of new assessments, the Child Support Agency will advise parent’s with care and non resident parent’s that the case is being closed with them and that they can go to the Child Maintenance Enforcement Commissioner. The Child Maintenance Enforcement Commissioner will then carry out a calculation should they be requested to do so which will be on CS3.  The new CMEC figure will become immediately payable; there will be no period of slow increases or decreases.
  1. From November 2011 all maintenance payable by non resident parent to parent with care will be ignored for any state benefits. This in effect sounds the total death of the Child Support Act 1991 since at its inception the reason for its existence was to collect maintenance from errant fathers to reduce the cost to the tax payer of state benefits.
  1. CMEC enforcement powers will be simplified, brought in-house and extended:-
  1. Deduction from Earnings Order will be the basic method of payment.
  1. CMEC will be able to make a regular account Deduction Order against bank account of an individual.
  1. CMEC will be able to make an in-house Liability Order.
  1. CMEC will be able to make an in-house Order disqualifying a person from holding a Passport or ID Card for a period of up to one year.
  1. CMEC will be able to apply to the Courts for:-

18.6  a – Charging Order.

18.7  b – Sale of a property subject to Charging Order.

18.8 c – Commitment to prison or disqualification from driving…  Significantly CMEC must prove that they have sought to recover the amount including the making of orders before taking this step.

18.9 d – Curfew Order.

  1. All in-house enforcement orders are subject to appeal rights to Magistrates Court by the non resident parent. They had best not attend with cash though due to “shakedown”.
  1. Child maintenance will be payable up until the age 20 “in prescribed circumstances” – those have not yet been prescribed.

“Sorry you failed” – CSA closure

  1. The Child Support Agency is to be closed down having transferred all cases to CMEC by the end of 2013.

Introduction

There are 3 different child support systems:-

  • CS1 – algebraic equation.
  • CS2 – current maintenance calculation 15% 1 child, 20% 2 children,

25% 3 children.  Subject to reduction for relevant child(ren) with non-resident parent and shared care.  See appendix for percentages.

  • CS3 – 12% 1 child, 15% 2 children, 19% 3 children based on gross.

These notes relate only to CS2 being by far the most common system about which you are likely to be consulted.  CS1 is a complex algebraic equation and CS3 has yet to be brought in.

CS2 – there are actually four rates, MCSC Regs 2000:-

  1. Nil rate – (Regulation 5) payable by students, children under the age of 16 in receipt of child benefit, prisoners, 16 or 17 year olds in receipt of income support, JSA, personal training allowances or in care home paid by local authority.
  1. Flat Rate (Regulation 4) – This is £5 per week is payable by most of those in receipt state benefits not mentioned in the nil rate above.
  1. Reduced Rate (Regulation 3) – The non-resident parents income is between £100 and £200 per week. The reduced rate is payable at £5 per week on first £100 and 25%, 35% and 45% on next £100 subject to reduction for relevant child(ren) and shared care.
  1. Basic Rate (Schedule 1, Paragraph 2 Child Support Act 1991), 15% for 1 child, 20% for 2 children and 25% for 3 or more children.
  • Calculations for child support are to be found in the Child Support Act 1991,

the Maintenance Calculation and Special Cases Regulations 2000 and

Child Support Regulations 2000.

Income

Income for the purposes of child support maintenance calculation is to be found at Schedule 1 to MCSC and is only:-

  1. PAYE income (Paragraph 3).
  1. Self employed earned income (Paragraph 7) as per tax calculation. In the event no tax calculation is available or is more than 24 months old then calculate using gross receipts less deductions on accounts.
  1. Income from board and lodging (Paragraph 10) but only where it represents the only or main source of income of the earner.
  1. Working Tax Credit forms part of income only if it is received by virtue of nrp’s income being the main income into the family (Paragraph 11).
  1. Child Tax Credit (Paragraph 13A).
  1. Pension income (Paragraph 17).

Frequently the parent with care (pwc) will disagree with the assessment of income in respect of Directors and self employed for the following reasons:-

  1. They believe the non-resident parent is receiving a significant amount of cash or is not declaring all of their income or is over-declaring their outgoings (self employed); or
  1. The nrp receives other forms income from their businesses.
  1. Non-Resident Parent has a big car / home / frequent holidays that cost more than declared income.

Appeals

  1. Appeal by parents with care in respect of mis-declaration of income are dealt with by an evidence based enquiry which if the outcome is not agreeable to the parent with care or the non-resident parent ends up in a tribunal hearing before a Judge, typically accompanied by a financial member (Accountant).
  1. Appeals in respect of other forms of income emanating from the business are typically dealt with by means of variation.
  1. Appeals of all of these nature frequently are accompanied by an allegation that the lifestyle is inconsistent with the income which is another variation ground.
  • Appeals against maintenance calculation – in this case a tribunal considers the evidence. Such appeals are extremely difficult to win from a parent with care’s point of view.  They are better proceeding on the basis of a variation.
  • Variations against directors, most especially Regulation 19(1A) which is

drafted to include dividends.

  • The other common application lifestyle.

There are however more grounds than just these and when considering a variation the tribunal is entitled to consider all possible grounds.

Assets (Regulation 18) Ground – nrp has assets – That’s it!

  • Not everything is an asset.
  • Cash or money.
  • Interest in land.
  • Chose in action (a debt owed).

De minimis Rule – £65,000

Defenses

  • Reasonable retention.
  • Personal injury compensation.
  • Asset used in trade or business (except for land producing its own

income).

  • Property which is the nrp’s home or child’s home.
  • If held jointly a share of asset presumed to be equal with all other joint

owners.

  • Additional defense, where the income from the asset used has been

taken into account under Regulation 19(1A) – to follow.

Outcome

  • 8% per annum presumed net income.

Income not taken into account (INTAC) – Regulation 19(1A)

Grounds

  • Ability to control amount of income received from company or business.
  • Receiving income from that company or business which is not otherwise taken into account by MCSC Regs.

(c) must be over £100 per week.

  • Introduced to simplify dividend cases.
  • Useful for assets defence.

Outcome

  • income not taken into account be added to net income.

Diversion of income (Regulation 19(4)(b)

Grounds

  • Ability to control the amount of income received.
  • Unreasonable reduction by diverting it to other persons or for purposes

other than the provision of such income for nrp.

  • Can include benefits in kind.
  • Can include wages paid to partner.
  • Can include Rent and wages paid to a friend.
  • Can include Rent and wages paid to parents.
  • Can include Disadvantageous transactions.

Outcome

  • Amount diverted to be added to calculated net income.

Lifestyle inconsistent with declared income (Regulation 20)

Ground

Income taken into account in maintenance calculation substantially lower than level of income required to support over lifestyle of non-resident parent.

  • Calculated by adding together non-resident parent income.
  • Disclosure – very full, bank statements, credit card statements, mortgage

applications, full enquiry.

Defenses

Lifestyle paid for by:-

  • Income used under Regulation 19(1A).
  • Income used under Regulation 19(4)(b).
  • Income used from assets as defined by Reg 18.
  • Income emanates from nrp’s partner.
  • Income derived from assets or the dissipation of assets owned by partner,

save and except where nrp is able to influence income above or assets above.

Outcome

Difference between lifestyle and new calculated income to produce new net income for calculation purposes.

Just and Equitable

Any variation on any ground must be just and equitable.  This enables a tribunal to look at the bigger picture and “make up” a defence on a per case basis.  Can only be used to reduce the variation.

Maximum

The maximum amount of income the Child Support Agency is £104,000 net per annum (£2,000 per week).  This results in basic maximums of £300 per week for 1 child, £400 per week for 2 children and £500 per week for 3 or more children.

After that top up applications can be made to the courts.

Interesting cases

 

Assets

  • CCS 8/2000, a farm may be view as a single assets or several different

assets to which each defense can be individually considered if that is      appropriate.  Just because one parcel of land does not mean that it cannot   be divided, likewise just because legally there are several parcels of land, if        they are under the same tiller then they can be treated as one.

  • CCS 1047/2006, always consider assets and INTAC / diversion before

lifestyle.  Lifestyle should always be considered last.

  • CS -v- CMEC (2010), land subject to divorce litigation is not within control.
  • CCS 1026/2006. The starting point for valuing company shares is the

shareholders funds.

INTAC

  • Chandler -v- SSWP (2008), a dividend is income even if it is paid into a

directors loan account and not used by director is income.

  • RC -v- CMEC & WC (2009), control of income, not control of company.

Joint control can be sufficient.

Diversion

  • CCS 3006/2007, diversion does not require positive conduct and a decision not to act can amount to diversion – leaving funds in the company.
  • R(CS) 6/05, taking a benefit in kind – i.e. company care is diverting income for another purpose.
  • CCS 114/2005, FQPM drew up set of accounts showing how Tribunal analysed nrp’s.  In effect FQPM redrew accounts.  Approved.

Lifestyle

  • CCS 2786/2005, average earning figures published by professional negligence bar association (facts and figures table for the calculation of damages) is a good starting point for fixing income to a particular lifestyle         in the absence of any other evidence any cooperation by nrp.
  • CCS 3499/2004, money held in directors loan account is generally capital

not income hence drawing against such money is a defence to lifestyle

– beware substantial could make it an asset.

  • CCS 4666/1999, excessive pension contributions are evidence of lifestyle.

And finally, CCS 2623/1999, standard of proof is balance of probabilities.  Allegations for variation are not tantamount to allegations of fraud.

Brief history

  1. The unhappy historical background to the Child Support Act 1991 was a Thatcherite belief that child maintenance was being used as a bargaining chip in divorce against capital interests in the former matrimonial home. It was the Thatcher Government of the 1980s that asserted Solicitors were deliberately trading the home to wife in exchange for a clean break and nominal maintenance for the children thereby leaving the State to pick up both the interest cost in respect of any outstanding mortgage and the costs of supporting the children via Family Income Supplement and Supplementary Benefit.  The creation of the Child Support Agency was to address this by collecting maintenance from all non-resident parents in sums sufficient to ensure the state did not have to provide any supplementary benefit.  This legacy Green Paper was picked up by John Major and became the cornerstone of the Child Support Act 1991.  Alas it produced considerable opposition, mainly from fathers who took the view that their clean break settlements reached in the 1980’s had been torn up as they were now expected to provide very significant maintenance for the children based upon the family claim for Income Support (by the time that the act came into force Income Support had replaced Supplementary Benefit).
  1. The Child Support Act 1991 gave birth to the Child Support Agency in 1993. By 1994 it was obvious it was not working and Parliament strted a lengthy process of tinkering that has been the hallmark of this unhappy history.  In 1995 it was being substantially amended again and by 1996 a system of “Departures” was brought into force to cope with issues concerning the “one size fits all” algebraic equation.
  1. New Labour came into power in 1997 promising a review of child support legislation but remaining committed to the idea of child support being administered by the State. This led to substantive amending legislation in 1998 which brought in the second CSA system being a considerable simplification.  Unfortunately, the Child Support Agency was so inefficient that although all the Regulations for the new system were published in 2000 it was not until 2003 that the Agency started administering the second system (CS2) and although CS1 was timetabled for complete elimination by 2005 that has never happened.  By 2007 it was completely clear that the Agency was a miserable failure and the Government decided to close it down and invent a new child support system with a new Government Agency and thus brought forward the Child Maintenance and Other Payments Act 2008 which envisaged the creation of the Child Maintenance Service in 2011.  As with all matters related to UK child support, that was considerably delayed and the Child Maintenance Service only began activity in December 2013 taking on new cases where there were three or more children, gradually moving through two and finally to taking on all new cases by July 2014.
  1. All applications for child support commenced after mid 2014 will be pursuant to the Child Maintenance and Other Payments Act 2008, but in a legislative situation very worthy of the chaos of child support, the governing legislation remains the Child Support Agency 1991 which has now been so amended that virtually none of its 58 Sections remain untouched by amending legislation.

Current maintenance rules

  1. We therefore have a situation right now where there are two child maintenance authorities assessing concurrently, the Child Support Agency that handles all cases prior to 2014 and the Child Maintenance Service that handles all cases after June 2014, with cases split during the first six months of 2014 depending upon the number of children.
  1. The much derided CS1 algebraic system remains in place, and parents who split up before 2003 are still being assessed on its provisions.
  1. CS2 remains alive and well with the CSA dealing with all cases opened between April 2003 and December 2013 (and some cases between January and July 2014) CS3 (administered by CMS) deals with all cases after July 2014.

A brief explanation of each system

CS1

  1. Calculate the maintenance requirement, find the net income of the parent with care and the non-resident parent, deduct the exempt income in respect of each (their allowable outgoings – an amount for the individual plus relevant children living with them, plus any housing costs) to determine the assessable earnings. From this calculate the maintenance payable and test it against the protected income.  Finally calculate 30% of N.  The lowest of the three calculations, assessable earnings, protected income or 30% is the amount payable.  Departures to deal with awkward cases.

CS2

  1. 15% of net income for one child, 20% for two children and 25% for three children less an amount in respect of any children living with non-resident parents and a deduction for shared care.  Variations to deal with awkward cases.

CS3

  1. 12% on first £800 of gross income for one child, 16% for two children and 19% for three children, (£800 to £3,000 per week 9% / 12% / 15%) less an amount in respect of any children living with non-resident parents and a deduction for shared care. Variations to deal with awkward cases.

Comparison between the three systems

 

Alison and Alan

  1. Alison is in receipt of benefits and has one qualifying child of her relationship with Alan living with her, Amy born in 2002. Amy stays fortnightly with Alan Friday to Sunday. Alan earns £350 gross per week, £300 net and lives with his second wife and her 10 year old son by her ex-husband.  The couple have their own baby child born last year.  Their mortgage is £300 per month and Alan’s second wife earns £200 per week.

Child support maintenance payable

 

CS1 CS2 CS3
Child support payable £75 per week £41 per week £42 per week

Brenda and Brian

  1. Brenda is in receipt of benefits and has one qualifying child of her relationship with Brian living with her, Bernice born in 2002. Bernice stays fortnightly with Brian Friday to Sunday. Brian earns £1,000 gross per week, £710 net and lives with his second wife and her 10 year old son by her ex-husband.  The couple have their own baby child born last year.  Their mortgage is £700 per month and Brian’s second wife earns £200 per week.
CS1 CS2 CS3
Child support payable £148 per week £73 per week £84 per week

Christine and Clint

  1. Christine is in receipt of benefits and has one qualifying child of her relationship with Clint living with her, Claire born in 2002. Claire stays fortnightly with Clint Friday to Sunday. Clint is a Director of his own small limited company and draws £710 every week.  At the end of the year his Accountant balances his Directors Loan Account with a £10,000 PAYE salary and £30,000 dividends.  His gross annual income is therefore £40,000 (£770 per week gross).  He lives with his second wife and her 10 year old son by her ex-husband.  The couple have their own baby child born last year.  Their mortgage is £700 per month and Clint’s second wife earns £200 per week.
CS1 CS2 CS3
Child support payable £148 per week £73 per week £68 per week
  1. Three important issues arise from this case study namely:-
  • CS1 maintenance is so much higher especially there is only one child to support. In this example the maximum payable is about £200 per week, significantly less than CS2 or CS3 but most non-resident parents earning less than £75,000 will pay that.
  • In Alan’s example there is very little difference in the amount of maintenance payable between CS2 and CS3 and that is because CS3 is simply a “housekeeping” change to CS2 to make the calculation simpler still. Unsurprisingly there are winners between CS2 and CS3 it is not always as close as this, we can see that in both Brian’s and Clint’s case, but it was Parliament’s intention not to raise or reduce child support rates from CS2 when bringing in CS3, it was to streamline the system of calculation and collection by making it simpler for the Child Maintenance Service to assess maintenance therefore ensuring faster collection and more effective enforcement.
  • Company Directors who are able to control their income in a tax efficient manner have a significant advantage over their PAYE and self employed / partnership counterparts. Both Brian and Clint receive £710 net per week yet Brian’s CS3 figure is £84 per week, Clint’s is 20% lower at £68.

All hail the King – CS3

  1. Your new clients arriving at your offices today, because they split up “last week” will, if unable to agree, make an application to the CMS be assessed under CS3. Even if due to a previous relationship they have a case under CS1 or CS2 the outcome of a new application will, pursuant to the transitional provisions be brought into CS3 administered by CMS. On a day-to-day basis this is the system that Family Law Solicitors should be familiar with.

Rates for CS3

  1. Child support maintenance via CMS is paid on gross income at 12% for one child, 16% for two children and 19% for three children on the first £800 per week of gross income. All remaining income up to £3,000 per week (that is to say the next £2,200) is calculated at 9% for one child, 12% for two children and 15% for three children.

Relevant children

  1. Any children living with the non-resident parent will cause a reduction amounting to 11% for one child, 14% for two children and 16% for three children. That percentage does not change throughout the entire calculation.

 

Shared care

  1. Where one or more of the qualifying children stay with the non-resident parent the amount of child support is reduced pro rata per child as follows:-
Shared care Reduction
0 to 51 nights per annum nil
52 to 103 nights per annum 1/7
104 to 155 nights per annum 2/7
156 to 174 nights per annum 3/7
174 plus nights per annum 1/2 less a further £7 per child

What is gross income for CMS purposes?

  1. Pursuant to Regulation 4 child maintenance is to be calculated utilising the latest available tax year from the Inland Revenue which can be up to 6 years old. The calculation of income is made utilising the HMRC figure for the annual qualifying income groups, divided by 365 and multiplied by 7 to reach a weekly figure (Regulation 35).

 

      What counts as income?

  1. Regulation 36 provides PAYE, pension (excluding state pension), taxable social security income and gross profits for the self-employed (Regulation 36 (2)).

Income as an Office Holder, including benefits and expenses received – Regulation 38.

Profit from partnerships – Regulation 39 (5)

Pension contribution to be deducted – Regulation 35 (3), Regulation 38 (5) and Regulations 40.

A flat rate of £7 per week maintenance is payable by all receiving an income under £100 per week no matter from what source – Regulation 44.

Those aged under 18, prisoners or the totally unwaged and nil income recipients are exempt and pay the nil rate – Regulation 45.

What if there is no income with HMRC?

  1. Pursuant to Regulation 42 the Child Maintenance Service is able to estimate income where there is insufficient evidence from HMRC. The father can participate in that process providing information himself but if he does not the Secretary of State is empowered to “take a guess” by using weekly income averages for the occupation / profession.

Shared care

  1. Shared care decreases the calculation as stated above pursuant to Regulation 46 and where there is a dispute between non-resident parent and the parent with care, the Child Maintenance Service will presume a 1/7 deduction (Regulation 47), if either party is dissatisfied with this they may appeal to a tribunal.

The existence of another maintenance arrangement

  1. Where the Child Maintenance Service is calculating the maintenance in respect of more than one parent with care in relation to the same non-resident parent, the amount of maintenance is divided between the parents with care in accordance with the number of children they have.
  1. The Child Maintenance Service recognises International Court Orders (Regulation 52) and more widely “prescribed” maintenance arrangements (Regulation 48 and schedule 5A (6)(B) to the Child Support Act 1991.

The CS3 variation system

  1. The Child Maintenance Calculation Regulations implicitly accept that there are special circumstances where the “one size fits all” procedure produces unfair results. Provided it is just and equitable to do so the Child Maintenance Service may make a variation to the amount calculated on application from either the parent with care or non-resident parent pursuant to Regulation 56.
  1. The non-resident parent can apply pursuant to:-
  1. Regulation 63 – Contact costs.
  1. Regulation 64 – Illness or disability of relevant other child.
  1. Regulation 65 – Prior debts incurred by the couple before separation. This includes the former matrimonial home, unless by obligation due to agreement or Court Order.
  1. Regulation 66 – Boarding school fees (but only the element that relates to boarding – not education).
  1. Regulation 67 – In respect of mortgages in properties which the parent with care and qualifying child live and where the non-resident parent has no legal or equitable interest in the property.
  1. The amount allowed by way of deduction from the non-resident parent’s income is subject to a “De Minimis” rule of £10 per week for each ground.
  1. In practice these grounds are of little use to non-resident parents and it is unlikely they will be much used in the future. Variations only reduce the amount of gross income and therefore their effect on the maintenance is only reflective of the percentage payable.
  1. Much more common are applications by parents with care and within CS3 the following variations can be made:-
  1. Regulation 69 – Unearned income, this includes property income, savings or investment income (i.e. income from dividends as a Shareholder) or miscellaneous income under ITTOIA – Income Tax (Trading and Other Income) Act 2005. Again only Inland Revenue income is used, noticeably whereas on the calculation of income the Child Maintenance Service must accept the Inland Revenue figures, in relation to this variation ground, this requirement is missing, it is therefore possible for the Secretary of State or the Tribunal to make a different assessment on the available evidence.  It is nonetheless anticipated that the Child Maintenance Service will always utilise HMRC income leaving the parent with care to appeal to a Tribunal if she does not believe the amounts declared to the Inland Revenue.
  1. Regulation 70 – Income not taken into account – Where the CMS is calculated as a nil or flat rate because the non-resident parent is in receipt of a pension, benefit or allowance, or is a person who is entitled to a nil maintenance calculation, pursuant to Regulation 70 (b) the Secretary of State can take any other declared income in excess of £100 per week into account and produce a maintenance calculation in relation to that income.
  1. Lastly, the parent with care can make an application for a variation pursuant to Regulation 71 – Diversion of income.

Here the CMS (or Tribunal) must be satisfied that:-

  1. The non-resident parent has the ability to control his income, whether directly or indirectly; and
  1. The non-resident parent has unreasonably reduced the amount of his income by diverting it to other persons or for purposes other than the provision of income which is capable of being taken into account pursuant to the Income Regulations or – significantly – Regulation 69. This can cover a case when a non-resident parent holds property but is not renting it out, or renting it out at below market rates.
  1. Those with knowledge of the previous Child Support system will recognise the conspicuous absence of “lifestyle”. Parliament felt that the lifestyle ground generated more far more heat than light, statistically the application was made often and granted occasionally. Nonetheless, this was a very useful ground for parents with care where the non-resident parent was hiding income, it was a lot easier to prove the lifestyle was inconsistent leaving the non-resident parent to explain the unexplainable.  This ground no longer exists and we can expect arguments about tortured interpretation of diverted income and the unearned income variation grounds.

Changes of circumstances

  1. Where income changes from the historic figures used during the currency of the maintenance calculation but before review date, pursuant to Regulation 23 this can only be taken into account if the change is greater than 25%. Note, this applied even in new cases.

Regular review

  1. Pursuant to Regulation 19 the child support maintenance is to be reviewed every year on its twelve month anniversary using most recent historic HMRC figures.

Winners under CS3

Company Directors

  1. The big winners here are certainly going to be Company Directors who pay themselves a minimal salary and top up their income with dividends which are not subject to taxation. For these people their gross and net income are almost the same, so instead of paying 15% for one child maintenance under CS2 for one child, they are instead going to pay 12% under CS3.  This will represent a 20% saving.

Parents subject to a lifestyle or assets variation under the old system

  1. There is no transitional provision, once the CMS takes over the case from the CSA all these variations will simply lapse. There will be no way to reinstate them in their current format, although as I stated before tortured arguments are expected.

 

Non-resident parents who are paying the maximum are marginal winners

  1. Under CS2 the maximums were £300 for one child, £400 for two children and £500 for three children. The new maximums are £294 for one child, £392 for two children and £482 per week for three children.

 

Higher earners

  1. Higher earners receiving £156,000 gross per annum (approximately £110,000 net per annum) will now stay within the CMS system and not be vulnerable to an uprating applications via the Court based top-up system.

 

Parents who deny the existence of shared care

  1. Parents with care who deny the existence or extent of shared care – the CMS will now restrict this to 1/7 leaving non-resident parents to appeal to a tribunal.

Conclusion

  1. CS3 is deliberately designed to be even simpler than CS2, it removes the obligation on the Child Maintenance Service to attempt to calculate tax and national insurance, it is able to simply rely upon the Inland Revenue figures and does away with the complex variation grounds of assets and lifestyle, although there are still knotty issues of unearned income and diversion.
  1. CS3 is planned to have an easier calculation system to enable it to calculate quickly and move onto collection. The biggest loser of all is undoubtedly going to be the PAYE father who sets his jaw against paying child maintenance since he is very easy to enforce against by means of a Deduction from Earnings Order and will then have to pay the 20% collection fee.

The Child Support Act 1991 represents perhaps one of the most notorious governmental failures in family law.  The original intention was to ensure that all fathers pay child maintenance for their children under the supervision of a government Agency which would speedily assess and then set up the collection of maintenance.  The cost of collection per £ would be similar to that of the Inland Revenue with similar manning levels.  The Child Support Agency began its work in 1993 and the initial high hopes were swiftly dashed on the rocks of an impenetrably complex algebraic formula (CS1) which the vast majority of Child Support Agency staff entrusted with assessing cases did not understand.  Training was delivered principally on the basis of “answer the computers questions and the assessment will be correct”.

 

The Agency swiftly gained a reputation for appalling errors following such ridiculous training.  Stories abounded of men turning up in legal offices and throwing change on the Lawyer’s table representing the entire income left after the Child Support Agency had deducted maintenance.  Over these years I experienced circumstances where the Child Support Agency added tax and national insurance to a father’s salary.  The Deduction from Earnings Orders specifying that £1,000 per month salary was to be deducted at £2,000 per week, in one case a client of mine actually received a letter telling him to pay maintenance for his own father!

 

But since the training was “trust the computer” and since virtually no one at the Child Support Agency actually understood how the calculations were made, once the calculations were made no matter how ridiculous, it was pursued.  If the computer permitted a letter to go out chasing maintenance for my client’s father the initial response was that he had to pay!  A ridiculous Deduction from Earnings Order received the reply that “he probably gets commission – or something!”.  Adding tax and national insurance to a father’s pay, the Child Support Agency just simply refused to discuss it at all and eventually a Judge had to make a decision that became frankly the easiest tribunal hearing I have ever conducted!

 

All the same such legendary failures actually led to investigations which revealed that the complexities of the calculation meant that it could not continue as it was.  A much simpler formulaic assessment was needed and in 2003 this brought in what was called CS2 – a system I think we all know and understand, 15% of net pay for one child, 20% of net pay for two children and 25% of net pay for three or more children with deductions for any shared care or relevant children living with the father and additions or changes in exceptional circumstances where variations applied.  This was in reality a completely comprehensive top-to-toe change of the assessment process.

 

I wish we could say that the whole matter was accompanied by a top-to-toe change of enforcement but I would be lying.  Unfortunately changes to enforcement were stuttering and frequently undermanned.  The Child Support Agency was to be superseded by the “Child Maintenance Enforcement Commissioner”.  Initially the Child Support Agency continued under the guidance of that Commissioner.  Indeed the appointment of a Commissioner was meant to bring new confidence to the Child Support Agency’s decision-making process but since parents were still receiving letters entitled “Child Support Agency” the lack of confidence continued unabated.  This was not helped by the fact that even this simplified version required the Child Support Agency to calculate the tax and national insurance payable on incomes.  Even though this was not difficult in respect of PAYE cases they frequently made errors and when it came to self-employed or Company Directors they were wrong more often than they were right.

 

After five further years of chaos Tony Blair ordered a further report into the state of child maintenance opining that “The Child Support Agency is not fit for purpose” – a position that led to the Child Maintenance and Other Payments Act 2008 enacting a new change to child maintenance to calculate it purely on the basis of gross income, thereby hopefully reducing the number of errors.

 

Attempts to speedily change the system were now frowned upon, the Child Maintenance Service which was to conduct the new system was not to be lumbered with the problems of the Child Support Agency, there was to be no physical link between the two, the Child Support Agency would close down their cases and parents with care would have to make applications to the Child Maintenance Service who would assess afresh.  The Child Maintenance Service was to be given five years to complete the process.  In fact it took five years to even begin the process because it was only in December 2013 that the Child Maintenance Service took on its very first cases, those involving three or more qualifying children.

 

Over the following six months the Child Maintenance Service gradually brought in provisions whereby it assessed all new cases commencing after the summer of 2014 and all current cases are now handled by the Child Maintenance Service with the Child Support Agency dealing with its rump arrears.  This is however a very big rump!  Almost £4 billion is owed.

 

Who are the Child Maintenance Service and how do they assess maintenance?

 

How to start a child maintenance case.  In order to start a child maintenance case you cannot simply go straight to the Child Maintenance Service a parent must first of all approach Child Maintenance Options calling them on 0800 988 0988 to discuss their case with them.  Child Maintenance Options will enquire as to whether they have tried to reach their own arrangements and if not suggest that might be the better approach.  Since most people have actually done so the position is that Child Maintenance Options main job is to generate a case number which is then given to the parent and then they are told to call the Child Maintenance Service, relate the number they have received and the Child Maintenance Service will then take on the conduct of the case.

The Child Maintenance Service is an arm of the Department for Work and Pensions and it charges a fee, £20 to the receiving parent who makes the application (or the paying parent if they want to make an application) and if the Child Maintenance Service is obliged to become involved in collection then a charge is made of 4% of the maintenance collected to the parent with care and 20% of the maintenance collected to the non-resident parent.  Hence therefore on a £100 per week assessment collected by the Child Maintenance Service the non-resident parent would pay a total of £120 which the Child Maintenance Service would receive and the Child Maintenance Service would hand to the parent with care £96 of that.

 

Child Maintenance Service Calculation.  The Child Maintenance Service decides the maintenance according to Child Support Maintenance Regulations 2012 by calculating it in one of five different rates namely:-

 

  1. The nil rate – Regulation 45. The nil rate is payable where the paying parent is a child, a prisoner, a person who is 16 or 17 years old and in receipt of Universal Credit or Income Support or on allowance in respect of work based training or alternatively a person who is resident in a care home where part or all of the costs of the accommodation is met by the Local Authority.  Unsurprisingly the nil rate is nil!

 

  1. The flat rate – Regulation 44. The flat rate is paid mainly by people in receipt of a list of benefits.  Common benefits are retirement pensions, disability benefits, JSA or war pensions.  The flat rate also apply where a person is in receipt of an income of £100 per week or less.  The flat rate amounts to £7 per week.

 

  1. The reduced rate – Regulation 43. This is payable in respect of individuals in receipt of a low income of under £200 per week.  The first £100 per week of the income is charged at £7 and the remaining income is set using the following table:-

 

Let nobody tell you this is simple!  Nonetheless, although the above percentages look complex the idea is that as you run through the income between £100 and £200 one starts at £7 per week in respect of all scenarios and ends up with a gradual incrementation up to the basic rates, namely 12% in respect of one qualifying child, 16% in respect of two children and 19% in respect of three!

 

  1. THE BASIC RATE. The basic rate is what the vast majority of paying parents are going to pay.  For all paying parents earning between £200 and £800 per week their child maintenance is 12%  of gross pay of one qualifying child, 16% of gross pay in respect of two qualifying children and 19% of gross pay in respect of three or more qualifying children.  If there are any relevant children living with the non-resident parent then the gross income is reduced by 11% in respect of one relevant child living with a non-resident parent, 14% in respect of two and 16% in respect of three.  The calculation is then to be carried out on the 12%, 16% and 19% figures referred to above.  Finally, a deduction is then made for shared care representing a 1/7 reduction for one night per week (52 nights per annum), 2/7 for two nights per week (104 nights per annum) and 3/7 at three nights per week (156 nights per annum).  Furthermore, when there is 50/50 shared care the child maintenance figure calculated is divided by 2 and £7 per qualifying child is deducted. 

 

  1. The upper rate. This rate is payable by any non-resident parent with an income between £800 and £3,000 gross per week.  The whole income is first reduced by a percentage depending upon whether or not there are any relevant children living with the parent and then all income over and above £800 shall be 9% in respect of one qualifying child, 12% in respect of two qualified children and 15% in respect of three or more qualified children. Finally, a deduction is then made for shared care representing a 1/7 reduction for one night per week (52 nights per annum), 2/7 for two nights per week (104 nights per annum) and 3/7 at three nights per week (156 nights per annum).  Furthermore, when there is 50/50 shared care the child maintenance figure calculated is divided by 2 and £7 per qualifying child is deducted. This produces the following table for the maximum weekly payments:-

How does the Child Maintenance Service process maintenance?

 

The process for assessing maintenance is somewhat odd but again is set up to be simpler to administrate from the Child Maintenance Service’s point of view.  The Child Maintenance Service therefore once it receives a valid application will then look at the latest information from the Inland Revenue concerning the person’s gross earned income figure and will then apply the calculation against that (Reg 35).  The Child Maintenance Service will then write to the NRP with an indication of the assessment payable, it will then fall to the NRP to ring the Child Maintenance Service if they have any objections to it, in particular whether their income has changed, if they have any children living with them or whether they have shared care or any other exceptional circumstances relating to a variation.

 

One issue here is that the Child Maintenance Service takes into account the latest information from the Inland Revenue up to 6 years old.  If the income has changed by more than 25% since the historic income used by the CMS the NRP can apply under Reg 37 producing evidence of the lower income.  If successful then the income used in the indicative assessment will be the new lower income.  Note that under all normal circumstances it is not incumbent upon a NRP to advise the CMS of a change to their income but if their income is assessed on the “current” income rules then they do have an obligation to advise the Child Maintenance Service should their income increase by more than 25%.  The problem we are finding is that a lot of NRP’s do not properly read the information and therefore a father who has not worked perhaps due to illness for several years and has moved to live with his parents could easily find himself with an assessment based upon his last year of healthy work, say five years ago when he was earning say £156,000 before he had his mental breakdown!  The Child Maintenance Service would then write indicating the assessment in respect of this father at £504 per week even if he is living with his parents and has not received any income for several years.

 

Less extreme kind of cases include those who worked for a few years and then commenced university or lose their jobs and are supported by a partner.  If the father does not object then the Child Maintenance Service will simply make an assessment and unfortunately frequently over the past five years even if the father does object they will make the calculation.  I had a client who was a law student and was in his final year who had not worked for three years and two years prior to his studies he had been in the Army, the Child Maintenance Service carried out an assessment based upon his income from four years earlier on his army income when he was earning £30,000 per annum.  He was assessed to pay £100 per week yet the only income he received was a student loan  The Child Maintenance Service unfortunately simply would not listen to him and indeed initially did not listen to me.  I eventually had to put forward an appeal all the way to tribunal before the Child Maintenance Service finally surrendered on the day of the tribunal and admitted they had been wrong all along.

 

What about if the parents share the care of the children?  The position in child maintenance legislation prior to CS3 was that every case had to determine  a parent with care and a non-resident parent.  But now according to Reg 50 a person is only to be treated as a non-resident parent if that person “provides day-to-day care to a lesser extent than the applicant” and pursuant to the upper tribunal case of JS -v- SSWP (2017) UKUT 296 (AAC) the shared care does not have to be equal – the amount of nights does not trump everything.  Nor is receipt of Child Benefit determinant one way or another. Such circumstances where each parent provides care for the children almost half and half in terms of overnights stays there may be no non-resident parent at all.  The issue is then determined looking at the qualitative nature of the care provided by both parents, you need to consider such things as, who does the school call if the child needs taking back home?  Who takes the child to routine doctor and dental appointments?  Who takes the children to emergency appointments?  Who takes the child to have their hair cut?  Does one of them always do the school run?  Although the number of nights is not the “trump” factor my view is (although the Upper Tribunal has not espoused this) if you cannot reach the minimum for 50/50 shared care, that is 175 nights then the prospect of qualifying under Regulation 50 as a person with no lesser care than any other is very unlikely but even in those circumstances I would say there is still an exception in relation to a child who is at boarding school.

 

What if the NRP has other children?  What precisely is a relevant child?  The definition of a relevant child is one that lives with the non-resident parent for which either he or his partner claims Child Benefit.  Although this is not normally much of a problem issues do occur with parents receiving an income in excess of £70,000 per year where they decide not to claim Child Benefit since “it would be nil anyway”.  The problem for those parents is that because they do not have a claim going for Child Benefit then the child living with them is not classified as a relevant child.  There is no way around this rule.  The father must make an application for Child Benefit in respect of the child to get the child counted as a relevant child and to have a reduction to his child support.  Even though the application will result in a nil award, a nil award is receipt of Child Benefit – albeit amounting to nil!

 

What about if the NRP has other children who are not living with him who he is supporting?  By Reg 48 if the father and mother of that child have reached an arrangement of their own, whether oral or in writing then provided the Secretary of State is satisfied that the arrangement is in being that child will then be introduced into the calculation as another qualifying child and the maintenance is theoretically split between the children.  So take a situation where a father is in receipt an income of £500 per week with one child to support, his child maintenance calculation will be £60 per week.  If he has entered into a voluntary arrangement to pay another mother of another child of his, say a payment of £30 per week (or for that matter any amount that he decides) and he satisfies the Child Maintenance Service that the arrangement is in being, then the case is theoretically assessed on the basis that there are two qualifying children which increases his total amount of maintenance assessed by the Child Maintenance Service to £80 per week but that amount is then divided between the two mothers and the applicant mother with the Child Maintenance Service receives £40 per week.  The father then continues making whatever arrangements he does with the other mother.

 

But what if the child lives abroad?  Although the legislation only respects his arrangements in relation to children that are resident in the United Kingdom.  If the child is resident abroad then Reg 52 applies and there has to be in existence a Court Order.  Any other agreement that is legally binding does not influence the situation in relation to children that live abroad.  It has to be a Court Order.

 

Variations – What are they and what do they do?

 

Britain’s child support law has to be seen in the context of a strictly defined and completely statutory regime.  There is no room for “going off the reservation” hence child maintenance appeals are not dealt with by the Courts but are dealt with by the Tribunal Service who likewise have powers that are restricted as defined by parliamentary enactments.  The problem with this arrangement is that people do not necessarily live a lifestyle that easily fits within the algebraic equations and legal provisions.

 

Parliament’s solution to this problem has been more legal provisions and more algebraic equations rather than any kind of realistic discretion.  Although the departure system brought in 1996 failed to make any great impression upon the more unusual cases nonetheless Parliament insisted the process be repeated and brought in variations in relation to CS2.  The name was retained in CS3 and the following variations can now be granted:-

 

VARIATION APPLICATIONS BY NON-RESIDENT PARENTS – “SPECIAL EXPENSES”

 

  1. Contact Costs – Regulation 63. The non-resident parent can apply for a special expenses variation in relation to contact costs, such as the purchase of rail or bus ticket, fuel fares and car hire.

 

  1. Illness or disability of a relevant other child. Where the child has long-term illness or disability then pursuant to Regulation 64 the non-resident parent can apply for a list of specific costs to be taken into account.

 

  1. Prior debts pursuant to Regulation 65. Where the non-resident parent is left holding a debt taken out for the joint benefit of the non-resident parent and parent with care or the child before separation subject to a lengthy list of exemptions at Regulation 65 (3)  The most commonly successful application on this ground relates to those fathers who continue to pay the mortgage on the former matrimonial home that has not been as part of a financial settlement or Court Order.

 

  1. At Regulation 67 there is also a separate ground for a variation in relation to mortgages, loans or insurance policies but these relate to the much more limited situation where the non-resident parent is left paying the mortgage on the former home of the family but has no legal or equitable interest. The most important distinction between Regulation 65 and 67 insofar as it relates to the paying of home loans as a variation ground is that pursuant to Regulation 67 provided the non-resident parent does not have any equitable interest in the property then the payments can be pursuant to a Court Order.  This may sound an attractive way of dealing with matters on a matrimonial split up, transfer the house to the wife and have the husband pay the mortgage thereby obviating his need to pay child maintenance, alas it does not work that way as we shall see.

 

  1. Boarding school fees – Regulation 66. Where the child attends boarding school then the non-resident parent is entitled to make a claim in respect of the fees that he pays to discharge them.  It should be noted that boarding school fees only include the boarding element but in those schools that do not offer a day place scheme frequently there is no express division between the elements of fees that are used for boarding and the element of fees used for education.  In those circumstances 35% will be taken as the actual boarding cost.  Note that only the fees actually paid by the non-resident parent are counted here, so bursaries and contributions by in-laws or whatever do not count.  Only the fees actually paid by the non-resident parent count.

 

Effect of Special Expenses Variation.  From the non-resident parent’s point of view the problem with all of these grounds is not only their very strict legal provisions but also the way the effect is calculated, it is not actually taken off the amount of child-support payable, instead any ground that is made is totalled up, a £10 per week threshold is applied (and that threshold applies separately in respect of each variation ground applied – except illness and disability).  The variation is then applied by putting a weekly figure to the variation amount and then deducting this from the non-resident parent’s gross income.

 

The following should be noted.  The non-resident parent actually pays these expenses from net income and not gross income but there is no “grossing up’.  Furthermore, once the figure is calculated it is then not deducted from the child maintenance, it is instead deducted from the non-resident parent’s gross income hence a non-resident parent with a gross income of £500 per week would have a child-support liability in respect of one child amounting to £60 per week.  If he was able to claim special expenses of £100 per week his gross income would be reduced to £400 per week and his Child maintenance would then be £48 per week, a reduction of £12 per week against his £100 per week special expenses!  In reality these grounds are not often used and do not make much difference to the child maintenance payable.  The same however cannot be said for the applications available to a parent with care.

 

VARIATION APPLICATIONS BY PARENTS WITH CARE – “ADDITIONAL INCOME”

 

The parent with care can make an application for a variation under Regulation 69 in respect of unearned income, 69 A in respect of assets and Regulation 71 in relation to diversion of income.

 

You may notice a missing Regulation 70, it does exist but this is a relatively little used one where if a non-resident parent is on a flat or a nil rate calculation but has a gross weekly income, in other words those cases where the non-resident parent is a prisoner or in receipt of benefits but actually does receive earned income.  In those cases that income can be taken into account.  In reality this is a very rare application indeed.

 

We move therefore to the most common applications:-

 

Regulation 69 – The non-resident parent with unearned income.  We have already discussed the fact that child maintenance is payable from earned income, self-employed and PAYE but a large number of parents these days are Directors of their own limited company receiving dividends and there of course remains a rump of people who receive substantial amounts of investment income and other miscellaneous income.  This ground enables that income declared to the HMRC to be assessed.  This in reality is a very easy application for a mother to make and very easy for the CMS to grant since it simply requires a second glance at the Inland Revenue information and the application of a new figure.  The total unearned income must however be in excess of £2,500 per annum.

 

Regulation 69 A – Assets.  This is a new provision, assets used to exist under the old CS1 and CS2 departure / variation schemes but was removed along with lifestyle as a ground in the belief that it generated far more heat than light.  Whilst it would be true that mothers frequently allege the father has miscellaneous and extensive assets without a shred of evidence and much CMS and Tribunal time is consumed with such allegations that are hotly contested, the reality is that the assets ground produced many increases of child maintenance where the mother was able to prove there were the assets or the father admitted them.  The minimum rule is £31,250 of equity.  Like all aspects of child maintenance it is completely formulaic and there a list of specific assets that are counted.  This has led to some embarrassing discoveries, in particular two cases that I conducted, one of my clients owned a yacht in Portsmouth and a flat overlooking the yacht.  The £200,000 apartment was deemed to be an asset because it was property, but the £300,000 yacht was not deemed to be an asset since it did not fall within the descriptions of what assets were.

 

In another far more embarrassing case I acted upon the behalf of a father who was assessed to pay the maximum amount of child-support on the basis of his holdings in gold bullion amounting to over £3 million.  This was the only asset this client had, he lived in a small rented flat and drove around in a battered old Ford Mondeo!  We were successfully able to argue that gold bullion was not an asset within the terms of the Variation Regulations.  Noticeably the new Variation Regulations still do not include yachts within the definition of assets (neither wine nor pictures nor jewellery) but now does include bullion (and bitcoin!).   So, check the list of assets at Reg 69A before advising your client.

 

Once the total assets are compiled the calculated equity is then subject to an 8% presumed income.

 

Regulation 71 – Diversion of Income.  This is where the vast majority of arguments now take place and has reputation of producing far more heat than light.  Here the parent with care has to prove that the non-resident parent has the ability to control his income and has unreasonably reduced the amount by diverting it to other persons or for purposes other than the provision of income for himself.  Again this is legalistic, so in one case I had recently that non-resident parent owned a variety of properties in Africa and Asia that were not rented out.  The mother alleged that the father had deliberately allowed all the tenancies to lapse once the divorce proceedings had been undertaken and it did very much look like this was the truth, but we were able to persuade the Tribunal that since he was not making any money from the properties and nobody was living in them there was no diversion since there was no recipient of the funds.  This case would now be caught within the Assets Variation Regulation under 69 A and was probably one of the many cases that occurred over the past five years that encouraged the reintroduction of the assets ground.

 

Effect of a variation under the additional income ground – once the additional income is calculated then that income is added to the non-resident parent’s total income and the child maintenance recalculated accordingly.  So for instance if a non-resident parent had a property worth £150,000 with a mortgage of £90,000 then an assets variation on the £60,000 would produce an additional income at 8% amounting to £5,200 per annum which would increase his £500 per week income to £600 per week.  His child-support on £500 per week for one child would be £60 per week and instead it increases to £72 per week as a result of the variation.  Taking into account more egregious examples a non-resident parent with an income of £200 per week as a Company Director but supplemented by £95,000 of dividends and / or diverted income would see his child maintenance for one child rise from £24 per week to £204 per week thats actually more than his actual PAYE income.

 

Collection and enforcement

 

I refer to each of these two separately because collection is the Child Maintenance Service’s in-house methods of extracting maintenance from fathers whilst enforcement is the utilisation of court powers by the Child Maintenance Service to force payment.

 

Collection

Deduction from Earnings Orders – where the Child Maintenance Service simply sends out an Order to the non-resident parent’s employer to deduct a weekly, fortnightly or monthly amount of money from the salary.

 

Account Deduction Orders – either Regular or Lump Sum.  This is where the Child Maintenance Service can deduct a lump sum or make a Regular Order for a Bank to deduct a weekly, fortnightly or monthly sum from the non-resident parent’s bank account.  You should note that following changes to the child maintenance legislation, the Child Maintenance Service can apply these against joint accounts and also partnership accounts.  The Child Maintenance Service needs to ascertain the money in the account belongs to the non-resident parent but if that cannot be readily ascertained then a non-resident parent holding the account is assumed to be equal to that with all other account holders.  Again it is worth remembering that like a Deduction from Earnings Order this is an “in-house” method of enforcement.  If the non-resident parent or indeed another account holder does not agree with the Order then they can make an application to the Courts.  It is however incumbent on those other account holders or the non-resident parent to make the application.  If they do not do so then the Order becomes effective and the money is paid out.

 

Enforcement

In order to utilise the court processes the Child Maintenance Service has to obtain a Liability Order from the Magistrates Court.  This can then be registered in the County Court and pursued by means of a Charging Order, Third Party Debt Order (although this is mostly covered by Account Deduction Orders, Third Party Debt Orders can of course order a third party that owes a debt, such as you or I to pay the money owed into Court).

 

County Court enforcement:-

 

  1. Once the Child Maintenance Service has obtained a Liability Order it can instruct private Bailiffs to enforce the Liability Order.  All usual Bailiff rules apply.  Child maintenance is not the equivalent of a court fine and therefore Bailiffs must gain peaceable entry.

 

  1. Third Party Debt O We have already mentioned that the Child Maintenance Service can in-house attach against accounts but that is not the same as a Third Party Debt Orders.  In very isolated cases it is possible that this method would have a use relating to owed debts by third parties.

 

  1. Charging Orders and Orders for S In reality these are the most common County Court enforcement method utilised by the Service.  Here the Agency makes an application for a Charging Order and once registered can then move on to enforcing a sale.  Although Judges are understandably reluctant to allow enforcement of Charging Orders in this fashion that is because historically such Charging Orders have been in relation to unsecured debts, effectively a Judge is reluctant to give a Creditor the opportunity of enforcing a security that the debt did not originally confer.  Such reluctance is not present in relation to child support and provided the CMS can prove that there is sufficient equity to either discharge the arrears or make a reasonable contribution towards them then the Judge will unhesitatingly make an Order for Sale if the property is an investment property and hesitantly but all the same will be inclined to make an Order for forced Sale even if the property is the home of the non-resident parent and a partner and for that matter other children.  The Judge when considering this matter has to bear in mind that he is enforcing the obligation to pay towards children.  Generally it is only the presence of other children that would cause a Judge therefore to hesitate on this method of enforcement.

 

Magistrates quasi criminal enforcement methods.  In the event that no other enforcement method has worked (or is unlikely to produce payment) the Child Maintenance Service can apply for criminal type enforcement namely the non-resident parents imprisonment for a term not exceeding 56 days per Liability Order, a driving ban or confiscation of passport.  Noticeably this is all drawn into one form of application and therefore all three penalties are available to the Magistrates when considering the matter but the laws of double jeopardy apply, which means that if the Magistrates decide that the confiscation of the passport is most likely to secure payment from the non-resident parent but it does not work then the CMS cannot return back to the Magistrates on the same Liability Order to try one of the other two methods.  In practice this means that driving license bans are as rare as hens teeth and as for passport confiscations – there has not been one yet not least because the CMS is not making many of these applications at the moment having lost a Court of Appeal case several years ago concerning the methodology of the application.  Although these issues have been resolved as yet no Passport Confiscation Orders have been made by the Courts.  There is no reason to believe these will be any more utilised than driving license bans.  The reality is that Magistrates believe (almost always at the instigation of the Solicitor appearing on behalf of the CMS) that the most likely method to be successful is the making of a Suspended Imprisonment Order and they are probably right!  Nonetheless, a number of fathers decide it is not worthwhile and do spend their 56 days in prison.  Noticeably unlike a criminal convict they are not entitled to any remission for good behaviour!  They serve the full sentence the Magistrates pass.  Many fathers find this however worthwhile, because of the CSA / CMS incompetence arrears under a single Liability Order can be so heavily delayed that they may total £5,000, £10,000, £20,000 or more, for many fathers serving 56 days at Pentonville is worth what they see as tantamount to writing off the arrears.  It is important to realise that this does not actually write of the arrears, the arrears remain both collectable and enforceable but pursuant to double jeopardy there can be no further applications to the Magistrates on that Liability Order and in such circumstances these NRP’s who have no assets or income effectively cannot be forced to pay up.

 

OLD CHILD SUPPORT AGENCY ARREARS

 

You have no doubt heard that the Child Support Agency has an arrears backlog of almost £4 billion and it is now in the final stage of winding down its operations which is the closing of accounts.  This is proving impossible in many cases due to the issue of outstanding arrears and recent amendments were made to deal with this.

 

  1. If the arrears are under £65 they are written off without any notification to either parent.

 

  1. In cases where arrears are less than £500 and the case was opened after 2010 the Child Support Agency will write to both the mother and father explaining that they are writing off the arrears outstanding.

 

  1. In cases commenced before 2010 where arrears are under £1,000 the Agency will again write these off informing both parents.

 

  1. Where arrears are above the limits stated in paragraphs 2 and 3 the Child Support Agency will launch a consultation procedure in relation to writing off the arrears. This will be as follows:-

 

  1. The CSA will write to the parent with care confirming the amount of arrears outstanding and asking whether the parent with care requires the arrears enforcing. If the parent with care does not respond within 60 days the arrears will be written off.  If she does respond indicating she wants the arrears enforcing the Child Support Agency moves on.

 

  1. If the parent with care requests the arrears to be enforced the Child Support Agency will then write to the non-resident parent demanding immediate repayment of the arrears or an instalment plan. If no response is received from the non-resident parent the Agency moves

 

  • In the event of no response from the non-resident parent the Agency will then consider whether enforcement is likely to be successful. The Child Support Agency’s enquiries will include looking for bank accounts with money, an owned property with equity or alternatively an employed income.  If any of the three are found the Child Support Agency will then commence collection in the case of a Deduction from Earnings Order and Account Deduction Order or alternatively investigate the amount of equity in the event of there being a property available.  If these investigations draw a blank (there is insufficient income to attach a Deduction from Earnings Order; insufficient money in the bank account to make a realistic contribution towards the debt or there is insufficient equity in the property to the same test), then the Child Support Agency will decide to write off the amount of debt owed and advise the parent with care of their preliminary decision.

 

  1. Once the preliminary decision is made to write off the debt the parent with care has the opportunity to respond to this letter indicating reasons why the amount should not be written off. These reasons are not for the purposes of emotional tugging, the parent with care must be able to demonstrate that the non-resident parent has assets that can be enforced against or the belief that other methods of enforcement such as imprisonment or confiscation of passport or driving license would cause the non-resident parent to make payment.  These cannot be simply be bald beliefs but for instance relying on a successful variation or departure in the past where the father had hidden money could prove persuasive.

 

  1. If the parent with care’s replies are not convincing the Child Support Agency will write off all remaining debts. If they are then they will start up enforcement.

 

What am I going to see walk through my doors?

 

  1. PWC’s complaining that NRP’s income has been substantially under-assessed and wants a maintenance increase. Here look out for limited companies, property portfolios or NRP’s with substantial investments.

 

  1. NRP’s who are substantially overassessed and wish to reduce the assessments as they cannot afford it. Here look out for whether the Child Maintenance Service has used old tax information or made a variation decision at the instigation of the PWC.  Consider an application for a special expenses variation.

 

  1. You are likely to be consulted by a PWC who has received a letter from the Child Support Agency proposing to write off a large arrears sum from many years ago.  Whilst a little heart tugging will not do any harm, you must focus on the methods of enforcement available to the Agency and provide evidence as to why you feel that enforcement can successfully recover the debt from the NRP.

 

  1. A NRP with outstanding debt. Perhaps the most complex of all the scenarios and if you are going to conduct this yourself you are going to need to obtain a copy of the Data Protection File to obtain the historical information.  You will need to then read through it to ascertain whether or not there have been any legal errors made by the Child Support Agency / Child Maintenance Service in conducting the case.  To be honest here you are best handing over such a case to these offices for the purposes of retaining our services to analyse the Data Protection File and advise on what we find therein.

 

AND SO – FINALLY

 

Child maintenance should not have been this difficult historically and it should not be this difficult now.  It turns out that the simple question “how do we ensure that children are financially supported?” does not have a simple answer and the jury remains out as to whether the Child Maintenance Service represents that answer.

 

Glossary: CMS = Child Maintenance Service;

NRP = Non-Resident Parent; PWC = Parent With Care;

QC = Qualifying Child; RC = Relevant Child

 

  • The parent first needs to call Child Maintenance Options on 0800 988 0988.

 

  • The CMS handles application – £20 fee.  

 

  • Maintenance is charged on weekly gross income – first £800 at 12% for one QC, 16% for two QC and 19% for three or more QC.  Upper rates on income between £800 and the maximum income of £3,000 are 9% for one QC, 12% for two QC and 15% for three or more QC.  

 

  • Reductions for other child living with NRP (RC) – 11% for one child living with NRP , 14% for two and 16% for three, Child Benefit must be claimed – reductions for shared care 52 to 103 nights – 1/7, 104 to 155 nights – 2/7, 156 to 175 nights – 3/7 and 175 plus – 50% less £7 per QC.

 

  • Regulation 50 provides that where each parent provides the same amount of care that is there no NRP and hence no maintenance calculation is possible.

 

  • The CMS always use historical tax return information in order to initially assess maintenance and at each subsequent annual review.  It is possible to use a higher or lower figure as a result either of variations or alternatively putting forward a change of circumstances which increases or reduces the income by more than 25%.  Note there is no 25% tolerance in respect of variations.

 

  • If the NRP has an arrangement to pay maintenance in respect of another child living in England then that child can be taken as a QC and the maintenance reassessed and split pro rata between the parents with care depending upon the number of children.  If the child lives abroad the arrangement will only be reflected in the calculation if it is a Court Order.

 

  • The PWC can apply for variation to increase maintenance on the basis of unearned income over £2,500 (i.e. dividends, interest from savings, return on investments), assets in excess of £32,500 (equity on asset is charged at a notional 8% gross) and diversion of income.  In all these cases any extra income assessed as a result of the variation is applied to the NRP’s income and then the maintenance reassessed on the basis of the higher income generated.

 

  • The NRP can apply for variation to lower maintenance on the ground of travel costs for contact, disability of a child, debts of former relationship or paying mortgage on property occupied by PWC and QC.  Whatever figure is calculated on the variation is deducted from the NRP’s income and then the maintenance re-calculated.

 

  • The CMS will offer direct pay and the NRP is entitled to request that.  If the PWC refuses then the CMS will not assist. If the NRP fails to pay by direct pay or if he elects to pay via the CMS then charges are 20% extra on the maintenance and the CMS also charges the mother 4% on the amount she is meant to receive.  The fee for issuing a Deduction from Earnings Order is £50 and the fee for issuing a liability order application is £300. The Courts can, and do order non-resident parents to pay court costs on enforcement, typical costs on an Order for Sale amount to approximately £5,000.  Although interest cannot be charged on child maintenance debt once the debt is registered in the County Court interest can be charged on a Charging Order for Sale.

 

  • The CMS can enforce without the need to go to Court by Deduction from Earnings Order, Regular Account Deduction Order or Lump Sum Account Deduction Order.  Deduction Orders against bank accounts can include jointly held accounts. The NRP or joint account holder has a right of appeal to the Courts against the decision.

 

  • The CMS may apply for a Liability Order and then utilise Bailiffs, apply for a Third Party Debt Order (if an individual owes the NRP money) or a Charging Order and an Order for Sale.  Orders for Sale are regularly granted that evict the NRP from his home.

 

  • In the event the above enforcement efforts fail or are not applicable then the CMS can apply to the Magistrates Court for imprisonment, driving license ban or passport confiscation.  This process has been subject to a five year hiatus but is restarting.

 

  • Maintenance is payable up to the QC’s 16thbirthday in all circumstances and thereafter only if Child Benefit is in continuing payment.  The CMS’s jurisdiction ceases as each QC reaches 20.