A question from a step dad if you can help please?
Me and my partners position -
Up until a few months ago there has been a minute of agreement in place with a maintenance figure for my partners two kids which was calculated 5 years ago, The Father lost his job last year and stopped paying maintenance and didn't realize he was liable for missed payments, That is a different story. He was advised (and requested by us) to go through CMS in order to override the minute of agreement and get a fresh calculation. He done this and we received a calculation.
The calculation was done based on based on 2019/20 tax year when he was out of work for 60% of the time. The calculation stated his gross weekly was circa £400 per week (20k p/a). However he has since changed jobs in May and his solicitor stated he is now earning £950 per week (50k p/a) We have sent that solicitors evidence to CMS
CMS have stated they have asked the father already and will ask him again to provide current gross weekly income but he has not done this (because obviously the maintenance figure will almost double)
We have requested a mandatory reconsideration which they have accepted and are now looking into it.
My questions are -
Can CMS gain current gross weekly salary info from HMRC or is it just annual P60 info?
Can they contact his employer for this information?
If the they do not receive his current gross weekly salary, when it comes to the annual review next year will the amount he should have been paying from now be backdated? Legally he is meant to alert CMS within 7 days if his earnings raise more than 25% of the figure used on the calculation which he clearly inst doing.
Thanks in advance for your help
FlexRay - A step dad to two boys who have had 4 overnight stays and 7 Facetimes with their father in 2020 so far...
when CMS check HMRC info for the annual review, it's based on old information, like income over last tax year. it's up to the dad to provide CMS with the correct/latest income info, in form of payslips etc. I lost a job in april so I gave CMS evidence, like termination letter, P60 form. they accepted. now am not paying maintenance because I am out of work.
CMS will only back-date from the date the dad registered with CMS. if he has missed payments for past 6 months, then they could back-date to that period.Usually when they write to a parent, they give them 14 days to respond with income info. if they don't receive, they can revert to a default maintenance decision, or at worse they can take enforcement action, such as telling his employer to make CMS deductions direct from his monthly wages. this will include an extra 20% collection fee. on each payment. nasty.
I don't think he can get away with it. The reason the CMS uses previous annual salary is thats the only way to do a calculation..
It cannot obtain live monthly info as there are so many factors that impact monthly pay which can or cannot be factored into cms calculation such as overtime/sickness/pension/parental leave/paternity pay/ taxable allowances etc.. not all are legally allowable for cms calculation and it is cost prohibitive to manually work this out each month so it is done on an annual basis and yes it is backdated as arrears which then need to be paid.
There is also an obligation on those who pay cms to notify of any changes to salary of 25% promptly.
Those subject to cms and are sensible will put the funds aside to make said payments much like an annual tax bill for those who are self employed..
Those who do not will be chaed by cms including enforcement action which may result in deductions from salary plus 20% collections costs if not able to clear arrears..
Some of the areas of contention are where the paying person stops work and works cash in hand so cms cannot collect or where they stop work and have a new partner who funds them (I'm sure there are other examples too)..
The area of contetion from the paying persons side is that often cms is used as a means to restrict contact (or creates tension), or that currently reasonable costs to see children are not deductible in their totality but merely decuted from annual gross salary which leads to a nominal deduction.. These can lead to paying person to find ways to delay or avoid payment until they no longer can in order to bring both parties to the table and informally negotiate an informal amount that can be agreed upon.
he won't be able to get away with not disclosing salary. CMS will keep checking his tax records every year, with the annual review. if he has permanent job, anything from bonuses to over-time work will get flagged up. they will back-date and make his life a misery. also during review, receiving parent can ask for variation or mandatory reconsideration, if they dispute the maintenance amount. some paying parents have been dragged to a tribunal or been investigated by their fraud team.
I would have agreed with everything said here until my recent annual assessment in April.
I moved from Limited Company Director paid by minimum salary and balance in dividends, to PAYE from April 6. I did not disclose to CMS immediately as I thought it would complicate, given the timing, and my intention was to get reassessed as a director and then inform them of the new job from April 6 to trigger a re-assessment(higher).
So when they sent a letter asking if I agreed with X in unearned income(dividends) from last year I confirmed yes and expected to be assessed based on that. When the assessment came, it was double what I expected, £700 instead of £350.
They had seen my new job(started April 6) and added this PAYE salary to my Dividends from the previous year. I only managed to escape because the dividends were more than 25% of new salary and therefore I asked for a variation based on that. Otherwise would have been stuck paying for a year.
The moral of my message is that experience has told me you can never second guess exactly what CMS will do. In theory and in line with the other posts, they should have assessed me on last years income, but they must have seen the new salary income and used that, not waiting to the end of the following year. So to answer the original question, if they do the same in this case, the new salary would be used.
yes it can be quite tricky dealing with them. i also transitioned from LTD Director to regular PAYE job. last trading day of company was 31st March. Told CMS early that I would be starting new perm job 1st april. company messed me around and new job terminated after 2 weeks (during covid crisis). told CMS I lost my job and not earning any income. they said i'm still assessed as a Director and I could be earning from my company still, and that I should close down the company and have evidence of that.
I told them my company can not simply be closed down right away. accountants need to sort it out and their very busy. in the end i sent them evidence that I have de-registered for VAT, and also showed them some emails from accountant that I am no longer trading and company in process of being shut down. so they decided I am to pay NIL maintenance after losing my new perm job.
Basically I need a little it of luck, and hope CMS say the right things to the father in the hope he discloses his current salary.
I know for fact if they check through previous years (which they state they do to make an informed decision) he was earning more than 50k...If the calculation comes back higher than he is currently earning i'm sure then he will be pretty quick to disclose his current income haha
You are correct Yoda64. I forgot to mention in my post that in my case, I was originally reassessed based on the last years information on record, but then my ex went for a mandatory reconsideration and variation based on unearned income. It was this that triggered the letter to me asking to confirm dividends for previous year and when they took into account the new PAYE job, that I assumed they did not yet know about.
This is a positive for FlexRay however, in that even if it is not picked up in the initial assessment, a mandatory reconsideration will likely unearth the new amount.