I'm guessing it is but thought I'd check. My exh has his own business and I have just been told I will no longer be getting any child maintenance from him as his salary is £58 per week, meaning he has to only pay £7 a week. He's been paying £380pcm for 9 months while his salary has been this level (go figure!) and so the overpayments mean he doesn't have to pay me anything for over 2 years.
I guess that the way that he has massaged his income to this level is to pay all the salary to his wife so that he can avoid CMS payments. Is this allowed / legal? I guess it is, and hence nothing I can do?
Are you sure it's salary he's paying her? In most limited companies, most of the money is distributed as dividends. So it's possible that she owns all the shares in the limited company and so receives all of the dividends. Did he own the company before he married her? If it is a limited company you may be able to find some of this out from Companies House.
If he is diverting his income to his wife you need to apply to the CMS for a variation. If they agree that he is diverting income in order to reduce maintenance payments they can take it into account for child maintenance purposes.
Similarly if he has reduced his salary and is paying himself dividends instead, you can apply for a variation to take his unearned income (i.e. the dividends) into account.
Thanks prh4 - I've just been googling and came to the same conclusion which gives me some hope (hopefully not false hope).
I've just spoken to them again and they can't tell me what information he has submitted that gives his new income as £58 per week but they are going to raise a mandatory reconsideration. It's a start I suppose.
It's tax evasion unless he can prove that his wife is actively involved in the business.
I work for a family business. Myself, my parents & my brother earn £750 per month & the rest is paid in dividends. But although we didn't legally pay tax on the dividends the amount has to be entered on our self assessment & counts as income.
HMRC brought in rules to try & prevent this sort of thing. They are not foolproof but they will look at the circumstances & whether both directors for example are paid a similar amount.
You need to go on companieshouse.gov.uk which is free of charge and look up the limited company and see who owns the shares for a start and also download its accounts.
Also did you have a court sealed financial consent order on the divorce which sets out any spousal maintenance or a clean break and also sets out what is paid for the children and how his shares in the company are divided between you and him (if indeed he had the company then and it was one of the assets).
Thanks for all the other advice, they're currently doing a mandatory reconsideration and if (when) that comes to nothing I'll apply for a variation.
I'm going to keep fighting however draining it is.
I've looked on comp house and can't find his business so think he must be a sole trader so not paying himself dividends. I think actually what's happened is he left his paye role in Apr 2016 and all they've got is his tax returning ending Apr 2016 which is effectively useless as he's had a change in circumstances since then. It's how they go about deciding what his future earnings will be that is at fault.