Active discussions

Meet the Other Phone. A phone that grows with your child.

Meet the Other Phone.
A phone that grows with your child.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Include dividends in CMS calculations.

55 replies

CMSdividend · 26/03/2021 10:16

Hi, have n/c as ex knows old username and posting in AIBU for traffic.

I'm trying to get some evidence together of parents that have evaded supporting their children financially through setting up as limited companies, paying themselves minimum wage and claiming the rest of his income dividends. His company (of which he is the only employee) made a £50k+ profit last year.
My ex has just done this, was earning £50k+, I was receiving approx £650 per month. Now it's gone down to £34 a week. I'm going to have to sell the house, of which he'll also receive 30% of the £250k equity. I am not eligible for a mortgage.
I know I can appeal and will, but my appeal is likely to be unsuccessful. I have searched the .gov website for petitions and can't find one.
So, before I launch into campaign mode I'd like to know how many others on here this affects and whether you would help support a campaign if I was to start one?

OP posts:
Original poster
CMSdividend · 26/03/2021 11:55

Anyone?

OP posts:
Tinydinosaur · 26/03/2021 12:18

I don't believe for a second that he doesn't have to pay CMS on dividends, it's taxable income. He just hasn't declared it to CMS. And if he hasn't declared it to the taxman either then he's in for a world of shit.

Travellor · 26/03/2021 12:25

One caveat; has the company declared a dividend! If not, there is no income to report to HMRC.

Original poster
CMSdividend · 26/03/2021 12:39

No dividends were declared as far as I can. He reckons he has spoken to CMS and they wouldn't take his dividends into account but thank you @ChorltonWheelie for that link. I'm going to have more of a delve into the web. I don't understand if dividends are taken into account for most things (mortgage, credit card applications, tax credits) why are they not for CMS?

OP posts:
Hiphopboppertybop99 · 26/03/2021 13:04

Dividends are 100% taken into account for CMS calculations. They have to have been declared to HMRC though. Or the NRP has to declare voluntary to CMS.
If your ex has set his company up recently, it could be 1 - 2 years depending on what period his accounts run before they're declared to HMRC.
If you're going to appeal, ask the appeal to consider how he funds his lifestyle with the massive drop in income. Not something CMS can look at, and the appeal also doesn't have to, but it is something you can bring to their attention.

Worakls · 26/03/2021 13:12

My ex has threatened this too OP. He runs a limited company and I know he earns over £100k a year as he has the same contract role as when we were together. He pays me maintenance currently based on salary of £68k which I've not made a fuss about. He's now pushing for me to sell the house and has threatened that if I "piss around" he will declare his income as lower than mine and keep the rest of his money in his business until out youngest turns 18 (she is 5!). Not a nice position to be in is it. Honestly I feel sick with worry having no control over it. Sorry I can't be much help

Hiphopboppertybop99 · 26/03/2021 13:15

Also just to say, but you probably already know this, it isn't illegal to receive a small wage and take dividends. Many, many large and successful companies are set up this way.
What would you be petitioning for? And what would you want changed?

Basilthehamster · 26/03/2021 13:18

I have been waiting 14 weeks for my variation of income form to be reassessed.

Company director who claims he earns £160 a week. It’s ridiculous.

Basilthehamster · 26/03/2021 13:19

I would support a campaign.

Jobsharenightmare · 26/03/2021 13:20

This time of year is when some accountants advise people move money out of the business so they don't have to declare as much to HMRC. I don't know how you can prove what he has moved around.

Original poster
CMSdividend · 26/03/2021 13:24

@Hiphopboppertybop99 yep, completely understand that what he is doing is legal however, if dividends are taken as income for pretty much everything else financial then why not child maintenance?
I know that there are not just a handful of us who this has happened to. And I want this changed, not just for me but for everyone else as well. Financial abuse within relationships seems to carry out even if you're free of them.

OP posts:
BLToutanowhere · 26/03/2021 13:32

Going to be massively difficult to prove wrongdoing. It's common practice for director/shareholders, to pay themselves just enough to get NIC contributions and then pay dividends at year end.

The risk for those doing this is that they take the money out then can't declare the dividend. This can be clawed back if the company goes under.

HMRC also tax the daylights out of monies that directors treat as "loans" which magically don't get paid back rather than pay or dividends. (Section 455 tax). HMRC also have some hilariously one sided powers if they think people have been battering the tax system.

Hiphopboppertybop99 · 26/03/2021 13:32

@CMSdividend - They are taken into account though - if declared. If he is not declaring them CMS cannot prove this.
Have a look at the variation process (might be able to find info online) and ask CMS for an application form for a variation on your case, if you haven't done already. Unfortunately you have to be quite specific in what you want looking into. There are a few different ways his income can be looked at. And do make your appeal.

Original poster
CMSdividend · 26/03/2021 13:38

What if he doesn't declare them? What are the options then? Shop him to HMRC?

OP posts:
Original poster
CMSdividend · 26/03/2021 14:12

Just checked his accounts -he hasn't declared them.

OP posts:
queenofthenorthwest · 26/03/2021 14:27

Call the CMS and ask them about the variation.

I had to do this and he had taken £60k in dividends. They upped his payments.

He still hasn't paid a penny.

I want to see more enforcement about this from the government.
It is sickening that these people do this.

Mariearistocat · 26/03/2021 14:40

I agree that they should count towards child maintenance, however the issue that you have is that then the parent paying child support will just put the dividends in someone else’s name, therefore you are back to the original problem.

Hiphopboppertybop99 · 26/03/2021 14:44

@CMSdividend if his accounts show dividends have been paid and he is the only director / employee, then yes you can report to HMRC. Whether or not they choose to investigate is another story.
You can also tell this to CMS they should ask him about this.

Original poster
CMSdividend · 26/03/2021 15:53

I gave CMS a call, they confirmed that declared dividends should be taken into account. For a company that had (just checked) £61k profit Shock, £84.00 tax paid doesn't quite ring true. Minimum wage wouldn't cover his rent let alone anything else...... They have suggested a variation asking to look at dividends.

OP posts:
Vintagevixen · 26/03/2021 16:10

Sadly I'm a member of this club too.

XP has told the CMS he only earns £10 000 a year and is currently paying me £17 a week.

However he is director of his company with declared past income so I am currently going through appeal, but it is taking ages, apparently they had to move a load of staff over to universal income as so many people have claimed due to Covid.

It's shit, I hope I get some more eventually but it wouldn't surprise me if he managed to evade it somehow the slippery bastard.Luckily I work but I can't imagine how shit it is for people who are really desperate.

Hiphopboppertybop99 · 26/03/2021 16:35

Great, i hope you manage to get somewhere @CMSdividend.
Obviously as your Exp is now working as a 'company' the company profit and his income may be 2 separate figures. Out of the £61k profit you say the 'company' has made you may find that your Exp will take a low salary say around £10k and maybe £20k in dividends (just using figures for example) and the company accounts may show there is £30k retained profit in the 'company'. This is an example of why it is then so difficult for CMS. There is nothing illegal about this.

shhsecretsquirrel · 26/03/2021 16:37

Dividends are not a tax deductible expense. They are paid after tax is paid to HMRC. You seem to be able to get quite a lot of info on a very small company? Most micro companies don't show who dividends are paid to?

FFSAllTheGoodOnesArereadyTaken · 26/03/2021 16:41

I'm not affected by this but would definitely support a campaign.

Its sickening how people manipulate the system to get around paying towards raising their own children. I know it's legal but setting up finances so that you can buy yourself a lovely lifestyle but pay the absolute minimum to your own children is absolutely disgusting and I think more should be done to a. Prevent it and b. Investigate it and c. Punish those who do it.

ThatOtherPoster · 26/03/2021 16:44

@CMSdividend - just ring the CMS and tell them you want them to investigate his finances as you know (or strongly suspect) he’s paying himself dividends. I did this and they quickly found my ex was paying himself thousands that way, and they slapped him with a massive repayment schedule.

Honestly, they can find dividends. I couldn’t see them when I checked my ex’s public tax records, but the CMS found them instantly.

Ring them now.

Swipe left for the next trending thread