Diversion of Income

La_la_emap · 9 May 2017 at 11:30PM

I would like some advice please form anyone in a similar situation.

Under the CSA I used to receive £150 per calendar month. Under the new CMS arrangement the calculation has gone to a flat rate of £7 per week / £30 per calendar month as the paying parents income via the HMRC has been declared at £65 per week.

The paying parent has his own incorporated company (Nov 2016) and is self employed. However he works on a daily/regular basis for another company. He is not a PAYE of that company. In addition he has just taken delivery of a 2017 registered Jaguar XE. This seems a bit flash considering his income is supposed to be £65 per week. Could this be classed as diversion of income? Has anyone been successful in appealing a CMS decision? It seems very easy to exploit loopholes if the paying parent is self employed. He also sold a buy-to-let property in January of this year for £167K which to the best of my knowledge was not mortgaged.

I gave up full time employment in December and am struggling financially to raise my son alone and with now, little support, I currently work part time and do not claim any benefits using savings to support myself and my son. The paying parent abandoned his son from birth and whilst he had never been denied access, he has never requested it. It is evident over the last few years, since his son was born, that he is doing anything possible to not pay child support.

Any advice on a successful course of action appreciated? Thanks!

Caz3121 · 10 May 2017 at 12:02AM

La_la_emap wrote: »

I currently work part time and do not claim any benefits using savings to support myself and my son.

Given that there are challenges with self-employed NRP claims, you should consider claiming child benefit and child tax credits...these are not affected by your savings

MataNui · 10 May 2017 at 8:28AM

You say your ex has his own limited company and is self employed. I think you are probably confusing terms. In the case of CSA/CMS the distinction is important.

What you probably mean is that he works for himself through his own limited company. Would that be right?

If that is the case then there isnt anything you can do. Its not diversion of income. The company makes the money and the company pays him 65 per week. The only money they have for assessment is the 65 he is personally paid. The rest of the money belongs to the company, not him. CMS have no legal right to go after the company or even to request any details of the company income and neither do you. The car again is an irrelevance.

BUT

Saying that. 65 per week is quite low so i suspect he is making up the balance with dividends. If this is the case then HMRC will have a record of it (eventually) so you may find the payments increase next year. CMS go off tax records. You used to be able to pay yourself a lot in dividends but now its only 5k i think so it will appear on his directors tax return. Tax returns are for the previous tax year so are about 18 months late.

EIDT#
I just noticed you also make a reference to a BTL property sale. This could of resulted in a capital gain or would take his savings above the limit where its deemed that it would provide an income. I would definitely be questioning this with CMS. It does seem like they perhaps havent been very thorough.

justontime · 10 May 2017 at 8:49AM

If he has his own limited company he is not self employed he is employed by that company. It is likely that he is paid a minimal salary but he also receives dividends from the company as well. This may not be deliberate child support avoidance, it's just the most tax efficient way for a company director to take money from a limited company. You need to ask CMS to take his dividend income into account. I believe you do this by asking for a variation on grounds of unearned income.

If you believe he is hiding his income you could request a variation on grounds of diversion of income, but they will ask you for evidence. The posh car is probably leased by the company and if so it is unlikely to be evidence of diversion of income.

Bee_Happy329 · 17 May 2017 at 5:31PM

Is there anyway you could obtain a copy of his accounts? I know a lot of information on company's are available online now through companies house. If there is evidence he is being paid a dividend you will need to call the CMS ask for a variation form and send it with your evidence. Should that be unsuccessful the next step is you will need to appeal their decision. Appeals are then heard by the Appeals Trubunal Court who should investigate it in more detail. Beware this is a long process, it could take up to 12 months to get a hearing. If you can reach a private agreement it would be much quicker.

Robin-o'-the-Hood · 21 August 2017 at 2:16PM

According to Companies House the private limited companies my ex was MD of never filed any accounts in the short lives of these companies, so no info on dividends. Directors (inc. her) came and went. None of her companies had any independent web presence despite being communications businesses. Not sure what this achieved but it certainly prevented any maintenance being paid.

Diversion of Income

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