Child maintenance and possible diversion of income?

[yosemite78]

Not sure if I’m posting in the correct category. I thought about posting in ‘legal matters’ but it seems the law is useless when it comes to certain fathers not taking financial responsibility for their kids…

My ex is a company director and after a recent annual review with the child maintenance service he’s still only paying £81.82 per month for our child for the 4th year running (he doesn’t even round this up to £82).

I know he has a rental property but I can’t find out how much he gets for this but I’d imagine it’s more than he claims to earn per month. He also sold his own house early this year and bought another for £75k less and I know he is mortgage free. I have no idea if he injected this into his company or if he’s using this to live but does anyone know if child maintenance would look into this or not? When I told them two years ago about his second home they told me to report it to HMRC and weren’t interested. I’m pretty sure he’s not taking dividends from his business either but he keeps expanding and taking on more staff, I just don’t understand how he still can’t pay himself even minimum wage!

Does he ever have your child over night?

@ToKittyornottoKitty he barely sees him now, despite fighting for contact years ago! Totally his choice

You can put in a variation for the rental income and can ask them to get the Fraud Investigation Unit to investigate finances.

From experience, getting CMS to get FIU involved was tedious. I had to complain multiple times.

It's very easy to write off any rental property profit as tax - don't waste your time.

You are not entitled to any of his house sale money. At all.

You're allowed a percentage of his wages, Jugding by the figure you have given, he earns about 50K a year right?

The only thing you can ask them to check is the calculation for nights spent. There is a big difference in figure if he has no nights or if he has over 100.

If he’s only paying £81odd a month he will be on way less than 50k a year

Hi - similar situation here.

You need to raise separate variations for ‘unearned income’, ‘assets’ and possibly diversion of income (use the portal to report all of these variations as additional income).

In relation to the rental income (this would be ‘unearned income’ variation) - find a copy of the title to the property if you know the address (use the land registry website/costs a few pounds to get a copy of the title) which should show him as owner. Send this info to CMS and ask them to request his property income from his tax returns. Also tell CMS he has a limited company so they should pull any hmrc returns showing dividends.

In terms of the £75k that he has released from his main property, this probably would be classed as an asset wherever it now may be if not in his main residence. This would fall under the ‘assets’ variation if held as savings or possibly if he has loaned it to his company. Gather any evidence of sold price of where he previously lived, and his current property price and submit to CMS. A notional income (8 percent?) is applied to assets.

In terms of the limited company, check to see shareholdings (does he own 100 percent). If his accounts lodged with Companies House show that his business is successful, then he may be retaining profit within the business, making directors loans to himself, or diverting to a related shareholder or employee (relative?). These would be relevant for the ‘diversion of income’ variation. Although the lifestyle variation no longer exists, any evidence of an expensive lifestyle can be submitted to support the diversion of income claim.

My bad, I thought that was the weekly figure.

He’s obviously paying himself a very very low taxable income to be paying that a month

Not sure how any man that does that can look himself in the mirror each morning.

Agree!! Many men do this, it is disgusting.

According to HMRC he earns around £8000 a year. Can’t remember the exact figure as I don’t even waste my time reading this bull year after year!

It’s typical for directors of limited companies topay themselves about 8k through payroll as if gets you your NI contributions but it’s below the tax threshold. Typically they’d then take all additional income as dividends which obviously would be taxed and would presumably be considered income by the CMS? However, if he has money to live on he could well just be retaining company profits within the business? Can you talk to the CMS about how they deal with this normally? If he’s a 100% shareholder and the company has made 100k profit but he’s only paid himself 8k it seems like a massive loophole if the rest of the profit is not taken into account.

OP - this is what I mentioned on earlier post, raise it as a diversion of income variation if you suspect retaining profits within a limited company is happening. My understanding is that CMS will not really deal with diversion of income (it’s too complicated…) and so apply for the variation on diversion of income grounds with CMS, then mandatory reconsideration from CMS when they will (inevitably) reject the application, and then appeal the mandatory reconsideration to tribunal, for a judge to demand full financials from the paying parent and make a ruling. You don’t need a solicitor to appeal. Just make sure you get the mandatory reconsideration from CMS and apply to tribunal quickly within the time limits.

I was told very early on by CMS that this would likely end up at tribunal, since they didn’t have the expertise to consider the accountancy side of the limited company. So they encouraged me to appeal (which is ironic given you appeal against CMS so it costs the taxpayer money!).

Also remember even if any retention of profits, dividend split, minimal salary (8k or 12k) is allowed by tax law etc for tax efficiency reasons, the tribunal can consider what actual money was available to pay CM (if it wasn’t being paid only tax efficiently) and deem that it should have been taken into account as if it was earned.

My ex did this at one stage. He himself has come from a background of accounts. So he knows all too well how to play the system. I complained and eventually got my case to the FIU. I then took it further to the tribunal they were absolutely rubbish and wouldn't delve into existence bank accounts. Ex was claiming to be earning £88 per week despite having a car to run and mortgage. It's a joke and he eventually started earning again and paying a decent amount.

TIPS. Google your ex and collect as much info as you can from company house, house addresses and linked inn. You will need a strong reason to get FIU involved. Good luck!

Has any progress been made on this OP?
I'm at the tribunal stage and ex has been asked for full accounts. He didn’t turn up to the hearing, doubt he’ll turn up for the next one too!

I've set up this petition OP to ask the government to look at CMS calcultations when it comes to situations like this. Maybe take a look and sign and if you're happy share it? It seems ludicrous that HMRC will know how much he is earning for his personal tax as a director and landlord, but yet this isn't joined up to his obligations as a parent. https://petition.parliament.uk/petitions/751159