Child Maintenance - Ex is employed by his own company

[evolucy7]

Hi, wondering if anyone has any advice or experience of this.

My ex has decided to set up his own company and as a result pays himself a wage. He is the only employee. This wage is what the CSA will use to calculate maintenance. He has decided to pay himself £120 per week as a salary, giving me £5 per week from him! Oddly enough the personal tax allowance. That is his only income and I am expected to believe he lives on this. This seems like absolute rubbish to me and is not consistent.

Does anyone have any advice about this, it seems slighty different to being self-employed. I could actually see him building up money in the business bank account which is obviously the profit of the company that he owns, and therefore his money from working, and yet somehow this appears to have nothing to do with what he should contribute towards his children.

I had been receiving £100 per week when he was employed by someone else so this is a huge decrease.

Any thoughts please?

Well my first thought is that you could well be stuffed.

His company is a seperate legal entity to himself, even though he's the only employee. So earnings paid to his company cannot be considered his income......until he pays himself.

So the key question is, can he live off the £120 a week. If he can then yes, legally he can just keep the money in the company bank account and the CSA will never consider this money.

If he cannot then at some point he will have to pay himself via a dividend. The CSA CAN take that into account if you apply for a variation. The problem is how do you know if he's paid himself one or not? He's hardly going to announce it is he?

Unfortunately the CSA just doesn't have the mandate & resources to deal with the self employed effectively.

This link may help you more:

www.csa.gov.uk/en/PDF/leaflets/new/CSL303.pdf

See page 46. basically unless you ask....they will never take dividends into account unless you ASK them to. But like I say...how do you know? If he's half a brain cell he'll not pay himself for a couple of years until the CSA move onto juicier targets and you've given up trying.

That is what I was concerned about!

However, he does not have a brain!

He can't live off £120 a week and pay for housing bills etc can he? He will use his personal savings and accumulate money in business bank account, but then he'd pay tax on profit so would he then pay himself a dividend instead is that better tax wise?

Thats the key until he pays himself...I will investigate this with the CSA, but concerned as to what happens if he pays a dividend say at the end of the tax year, if it is a reasonable sum it would dramatically change what he should have been paying from now until then, but it won't be backdated!

B**cks! He has done this on purpose!

I'm in the same boat. I get £7.50 a week from my self-employed ex, even though I KNOW he could not afford his huge mortgage on his declared earnings.

I have lodged a variation with the CSA, but I never seem to get anywhere.

Sometimes I don't even get the £7.50, and the CSA won't do anything until the arrears reach £500.

Oh yes, you can bet your bottom dollar that one of the reasons he's done this is to minimise his CSA liabilities. Another reason is tax.

That said, depending on what he does for this company, if its effectively a personal service company then he should be subject to IR35 regulations which means tax-wise its not much better than PAYE.

I dont envy your situation evo. Sorry.

It brings me back to the old question of why do some men think its clever to do this and effectively walk away from financially providing for their children. When we were together he said he wanted to start his own business but would not do it when he had a family to support!! So now presumably he does not think that he has anyone to support!

I will not let this lie...he has been warned

I have also looked into this one.

This is a real problem and the CSA have recognised that frequently self employed fathers hide their earnings behind limited companies and pay dividends not salary. You may need to push the CSA to get anywhere on this as they probably wont persue it themselves as it is difficult and time consuming.

As far as I have read if it is a wholly owned limited company then the CSA will assume that the turnover of the company minus reasonable expenses is the income of the owner. BUT you will need copies of the accounts of the company to prove what your ex makes. The CSA can obtain these, but only if they are filed and he probably wont have to make a statutory return for 18 months. The CSA can force him to provide details of the business and also dividends and will take them into account but it isnt an easy ride to get anywhre on this one.

If you have a consent order in place you can use the legal route to force disclosure, but it will be costly and time consuming.

Good luck!

Yes, I have direct experience of this evolucy - I have had limited success getting maintenance via the CSA. It's immensely frustrating isn't it?

Please feel free to IM me if you have any questions :)

Thanks...

elastamum, yes I spoke to my parents' accountant today who said that yes in reality it will probably be around 2 years before he has any accounts to see. Will the CSA use the same formula then turnover minus expenses as his income even if this is different to his wage from the company? Presumably this could be seen from the business bank account?

Janos, I am going through the process of requesting a variation if that what you have done?

the CSA will look at his business turnover if it is a wholly owned company and is very different from his tiny wages. They have started to wise up to people paying themselves peanuts to avoid supporting their children. Not sure what you can do re accessing his business accounts. dont have much experience of all this but have just enganged a solicitor to act on my behalf so am learning fast!

hello I've jsut been through all of this - ex 'self employed' so declared his £148p/w to CSA (£10.70 awarded to me p/w), in same job, was on £70k when we were together...in the interim has new BMW, football season ticket, gym membership etc, I had to apply for a variation. It's appalling and the CSA are hopeless. I had a few months of major stress, but thank god we have gone to mediational and a full financial disclosure has to be made. So back to paying as per his net salary.

Its so infurating, and unfair, after all 15% of net salary is not a lot...

SOrry I can't be of any help, it seems to be very common, and I think the CSA need to address this issue immediately.

I didn't get as far as that evolucy.

Essentially had to get my MP involved as CSA ignored my letters/complaints.

I found it incredibly frustrating as I'm sure you do too.

It's very sad the lengths some men will got to, to avoid supporting their children.

elasta - that's interesting to know.

Yes Janos my MP was the next step too, elastamum, it seems that it depends on who your CSA caseworker is and how bothered they are about it, maybe thats unfair they must be very busy, but the lady I spoke to today couldn't get off the phone fast enough and kept saying the variation forms were in the post first class over and over. I was actually told that if I had any payslips showing dividends that he may pay himself I should provide them!! No let me see, he thinks £5 a week is a good financial contribution for 2 children, and so he thought he'd give me some copies of his payslips that he hasn't given to the CSA?! ludicrous!

Definitely get your MP involved. Did you know they have a department exclusively to deal with queries/complaints from MPs? Says it all I think.

Things moved very fast once I wrote to mine and I was given compensation.

Really...can I ask on what grounds you received compensation?

MP sounds an interesting option. I an going to use the solicitor who did my divorce settlement to sort them all out. It will cost me but I cant stand the extra stress atm of doing it myself as my mum is terminally ill and I am trying to spend as much time as I can with her

evolucy - On the grounds of CSA mishandling (massive understatement) of my case. It wasn't much though.

elasta - if it saves you the extra stress then its worth it.

What I did was send a copy of all correspondence (which was about 4 letters) to my MP along with a covering letter, and same to the CSA

Once that happened they pulled their fingers out, so it's definitely worth it.

Ok thanks, it is the stress of it that really get to you as everyone had said!

has said - meant to say!

Sorry to hear about this. My ex used to have a really well paid job and gave us 350 a week, then lost it and decided to 'find himself' and is doing a full-time art degree so pays nothing. Which the law supports. He got a loan for his degree and works cash-in-hand jobs and gives me NOTHING towards our two children, even when I have asked for help with school uniform or school trips/dinners. I hate him!

Also, he has a rich gf and they spent 2 weeks in France in Summer. Arghhh! (I work every day and we struggle but I cope!)

Its rubbish isn't it, I know he has savings that he might be using to live off, his dad has given him money in the past and he will inherit it anyway, but the CSA told me that unless he has £65k then they ignore it! And yet if you have over £16k as a lone parent you don't get any help with anything, how is that fair, surely it should be the same. How can someone who has £64000 in the bank only be expected to pay £5 per week to support his children - outrageous! He probably hasn't got that much but hopefully you get my point.

Oh and yes K8y I know what you mean about 'I hate him' lol.
I'm tempted to tell he needs to but some clothes and shoes for them to wear when they go to his, as the shoes and coats always come back filthy and I can't afford to keep washing everything over and over! And as for the shoes he clearly never thinks about perhaps putting wellies on when walking in the mud (He has bought wellies for them at his house). In the past the children have come back with ruined sandals, broken zips on cardigans and a broken toy that they took with them.
I remember when he told me ages ago that he paid his contribution through the CSA for the childrens' clothes activities etc so he wouldn't pay anything else, well £2.50 per week per child, ooh let me see they can have half a swimming lesson each!

If he's a director of the company he will have to complete a tax return. So ask the CSA to assess on that which should show all his income (including dividends, company car and other 'benefits' which are considered salary).

Of course he may choose not to pay dividends on a particular year and hide other income and get that lower Tax Return assessed. Plus he may delay having his TR completed and submitted to hold things up or make the CSA assess on previous year's income.

You will have to push very hard to get an accurate or even half decent amount I would think. So all depends how hard you are prepared to fight and how much time you want to spend on phone to CSA complaining!

My ex hubby was paying me £350pm then after only 11months & missed payments (as he went on holiday abroad)!! I told the csa to check his passport as each payment that was missed he was on holiday.....the cheek!! Then the smart arse made a new family & proceeded to laugh in my face about how he now pays himself in dividends and had his accountant "sort his books" so I was left with an amazing offer of £1.77pw for 2 children!! So I told the csa to shove it up their arses.So he private rents,new family,director of a company 3 holidays abroad each yr and I'm 5yrs with not a penny and one child is disabled! So until csa sort themselves out I won't bother,funny how if you're a lone parent you get grief off benefits about why you dnt claim csa,well maybe if more was done regarding these vile men we wouldn't have to claim so much government money to help us provide for our kids!! The way of the world:single no money with kids,government don't dig deep enough to sort these liars so we can support our kids.Beyond a joke!