CMS Variation Order - Limited Company Director
Good afternoon everyone
I need to lean on some experience if we have any available on here?
In short, I run a Limited Company and pay myself dividends and basic PAYE, pretty much like the rest of the UK Directors. My ex has managed to gather information pertaining to 'undeclared income' and has asked for the CMS to send me a variation order.
FYI - We have a Child Arrangement Order which sees the children with me for 50% of the time however, on my sunday night, I have to return the children in the early evening. This in the eyes of the CMS means that it isnt a 50/50 split and I have to pay under a £100 a month.
This new variation order needs to be completed by myself and the request is based upon my 2019-20 'unearned income' as they term it, which is my dividends. This is the first year I've been able to take dividends and the 2020-21 has not been kind to us, turnover is down 40%.
What powers do CMS have to take my dividends into account? No business knows what dividend they can pay themself until the end of the financial year (OK, so you may get a gut feeling however 3 bad months can wipe a years profit), so if CMS then base forward payments on previous earnings, how can this ever work? And if I'm not able to take enough money, how can I pay it???
I am speaking to Barristers tomorrow to gain further advice however I need to start to 'upskill' in this area to protect myself and my company from this situation.
What experiences have you had in a similar situation?
if your using an accountant, you can ask them to send you a letter/email stating what your dividends was for 2019/20 tax year, and give that to CMS. If you don't co-operate, they can make your life difficult. they could take you to court, and demand that you give them your company accounts, and possible bank statements. They are very process driven and and are not very sympathetic to our own living costs.
if they are now going to put you in arrears with back-dated payments, you can speak to them and ask them to make it more afforadable. you can ask the arrears payments to be spread over 2 years.
have heard recently of lot of cases where CMS are sending bailiff around to peoples homes.
Our form of accountants are putting toegther a report that will show that the average salary over the 3 years is approx 40-50k, however from speaking to NACAS today, they will just simply take the 92k one off 3 year dividend into account and base payments on that!
So, a new tax return in April will show 8.5k and this will be supplied to CMS immediately as soon as processed and this apparantley will drive the payments down. All they seem to care abou tis last years tax return, unless a variation request is submitted.
It is time to step down as MD and sell the shares of the company I feel. SO sad after 10 years of hard work but I'll be damned if I'll work my arse off to line other pockets.
The 2012 Regulation is appalling.......they should be ashamed of themselves......you go spreading difficulty, it will come to bite you.....fate at its best....
I have a similar routine where the Sunday night keeps the 50/50 just of the table. I also run a company but with my wife and I having 50/50 shares. In April 2018 my wife was offered redundancy and accepted and since then we have worked together with her as a shareholder, director and employee of the company.
With me moving to work for myself I let the CMS know and they reduced my liability calculation as at that moment I was drawing a minimum salary and dividends when I had enough, without a tax return I only had the wage slips for the CMS which is what the calc was based on.
In May 2018 my ex rang the CMS stating that my lifestyle was inconsistent with income, The CMS put this to the FIU but it was rejected. In Nov 2018 she rang again stating the same, this time the FIU took the case and wrote me a letter asking for accounts and self assessments. I sent these accordingly. I heard nothing for 6 months, then I got asked to an interview, I attended and was asked questions about my clients and working practices. It transpired that they had contacted my old employer and asked them for not only information about when I worked there, but invoices and contractual information regarding the then current contract of services. The information that the employer had sent was factually incorrect in terms of working practice, but also against the contracts in place.
Another 5 months went by and I received a letter from the CMS saying that they had put a variation on my file for the full amount of the companies turnover, minus tax. The FIU have done everything in there power to ignore facts I have presented.
In my view the maintenance should be based on your self assessment only, which obviously still includes dividends.
I'm still going through the whole debacle with appeals 2 years on so good luck and if you need any support, let me know.