Help!

Miko1806

I have been paying maintenance for 7 years to my ex wife for our 2 children, which i have done every month and increased every year in line with RPI as agreed in the court order.
I have since got remarried 3 years ago and have an adopted daughter with my second wife.
My business is just about to fail and i have approached my ex wife to advise her of the problem. She is refusing to accept I cant pay and has threatened me with solicitors and putting a charge on my business (what good that will be I am not sure) so I have approached the CSA for advice and an application.
Is this the right thing to do?
My earnings - actual profit before tax, last year was £18k and this year is likely to be even less. Previously I had been earning around £90k per annum but the recession has killed my business.
My second wife also has a business which is earning even less than mine.
Any advice would be gratefully received, thanks.

karenx

Obiously your ex partner will be a bit upset at first with a reduced amount of maintenance but really she has no choice in it now.
Have you checked on CSA calculator as to what payments would be now with your reduced income?
You can also speak to CSA about the reduction with having your own child now into the equation if it isnt already.
If your income is that low the CSA might make it a nil assessment, so if you can perhaps talk to your ex and explain what might happen she might rethink! Surly a lower amount would be better than nothing at all!

Miko1806

A bit upset is an understatement.
I have checked the claculator and the new figure based on my actual annual earnings is £145 approx. If i use my current drawings figure which does not reflect my profit, what i need to live basically, the new figure would be £352 a month.
I am not sure if they use actual annual earnings or my draw figure?
Thanks for the reply.

Miko1806

Forgot to say - I pay £490 per month at the moment to my ex wife, so either route is going to be a saving.
Can anyone advise which figure the CSA will work on, my actual net profit (earnings) or my drawings? The drawings figure is irrelevant now as I have been unable to get any further support from my bank so have been living on fresh air for 3 months.

Monty_Carlo_2

Miko1806 wrote: »

Forgot to say - I pay £490 per month at the moment to my ex wife, so either route is going to be a saving.
Can anyone advise which figure the CSA will work on, my actual net profit (earnings) or my drawings? The drawings figure is irrelevant now as I have been unable to get any further support from my bank so have been living on fresh air for 3 months.

It's worse than that- it's neither!

They will take your net profit and ADD BACK any depreciation on your books to give a profit for CSA purposes. This is what you will be assessed on, and in a business with capital assets- even if they're on finance- the liability will be a lot more than you'd think.

speedster

Monty_Carlo wrote: »

It's worse than that- it's neither!

They will take your net profit and ADD BACK any depreciation on your books to give a profit for CSA purposes. This is what you will be assessed on, and in a business with capital assets- even if they're on finance- the liability will be a lot more than you'd think.

rubbish.

csa go on profit and loss figures if SE or wages and possibly dividends if a LTD.

either way, an accountant with half a brain will get liability down to a bear minimum.

and on figures of 18k, the csa assessment wont be a vast amount.

Monty_Carlo_2

Sorry to disagree but it's not rubbish- it's all there in the rules, and it's happened to me.

The CSA do not allow depreciation for the SE and will add it back on to any profit.

There was a landmark legal case a few years ago with a car hire businessman NRP who claimed large capital allowances. He lost his case and the CSA disallowed his write off, giving him a much larger liability.

speedster

Monty_Carlo wrote: »

Sorry to disagree but it's not rubbish- it's all there in the rules, and it's happened to me.

The CSA do not allow depreciation for the SE and will add it back on to any profit.

There was a landmark legal case a few years ago with a car hire businessman NRP who claimed large capital allowances. He lost his case and the CSA disallowed his write off, giving him a much larger liability.

blatant capital like that, yeah, i can see that.

not exactly relevant to the OP though in this case.

his pre tax profit was 18k, so net would be about 14.5k 20% of that is £2800 ish, roughly £55 a week.

and that's before an accountant "looks" at the genuine expenses that can come off.

on figures of 18k pre tax, liability will be peanuts.

Monty_Carlo_2

The OP hasn't said what line of business he's in.

If he's a SE computer repairer working from home then yes, he'll be liable for round about £18k less pension.

If however he owns a load of machinery and vehicles, he may be in for a shock. That £18k can easily turn into £50k, and an accountant can't help you. Ask me how I know!

It's perfectly possible to make a loss on the books but a profit for CSA purposes; the trouble is the CSA can't explain their working because (in my experience) the caseworkers don't understand the difference between net profit, personal taxable profit, drawings etc.

It's a proper shambles!

Miko1806

Hi all, thanks for the comments.
I am a SE surveyor employing 3 people and work from a rented office.
In terms of assets I have 6 PC workstations, £5K worth of surveying gear and some leased phones and a contract hire car, thats about it.
I guess that makes things easier.
Oh and surprise surprise my Ex has now spoken with the CSA and now she wants to negotiate a reduced figure, wonder what they told her.

Kimitatsu

Because you have a private agreement, the CSA would impose an interim payment of £30 a week as you are self employed until such time as you can produce accounts and they can make an assesment. As lots of people on here will tell you, if you are a Ltd company they will only assess the salary you pay yourself unless your ex asks for a variation to take dividends into account.

At a guess thats what they would have told her.........