CMS Reviewing Income

moomoomama27

Is this only for CMS or for all child support?

My DDS NRP didn't report a change and they said it didn't matter it could only be taken into account when the change was reported and not backdated. He is on the 2003 scheme I believe.

That booklet says income changes must be reported within 7 days us that only for CMS users?

shoe*diva79

moomoomama27 wrote: »

Is this only for CMS or for all child support?

My DDS NRP didn't report a change and they said it didn't matter it could only be taken into account when the change was reported and not backdated. He is on the 2003 scheme I believe.

That booklet says income changes must be reported within 7 days us that only for CMS users?

The only change the NRP legally has to report is a change of address.

HoneyNutLoop

eve31 wrote: »

When I opened my case with CMS in April 2014 it was based on the most recent tax year 2013 (2012-2013) as the 2014 return (2013-2014) didn't have to be submitted until the deadline January 2015, so obviously the most recent tax year when I opened my case was 2013.

My ex did not want his assessment based on 2013 tax return as it showed his income of around £31,000. He has a one man band limited company sole director/employee and can control income he pays himself and puts in a personal pension. So for the April 2014 tax return he reduced his dividend and put 60% of the small salary and dividend a personal pension. Thus minimising his income for child maintenance and putting him in the reduced rate bracket.

In October 2014 he showed proof of excessive pension and that was deducted from his earnings then in January 2015 showed dividend reduction and got it all backdated to the opening of the case in April 2014. He stopped paying last November even though he paid maintenance throughout the year of someone on a salary of £13,000 this is now considered an overpayment even though he lowered his income to £22,000 because of the pension contributions being 60% of that £22,000.

As a result he hasn't paid anything for 6 months and has no intention of doing so, I am awaiting a tribunal but it could take another 9 months.

In my review in April 2014 they gave his weekly income which was the low figure from his 2014 tax return and said income was based on latest available 2013 tax. It doesn't match up obviously.

From April 2014 to April 2015 tax year he could of paid the same level of dividend he always has and put less in his pension and have a bigger income. This return doesn't have to be submitted until January 2016, when this does eventually become income to be assessed he can lower his dividend and increase pension again and get it based on the current information and get it backdated again.

I hope this all makes sense.

Ok, I haven't quite followed all of that. Firstly, is your ex self-employed, or is he a company director. People often think the two are the same or inter-changeable, but for tax and consequently child maintenance, they are quite different.

If your ex is a company director, he is not self-employed in the strictest sense. He is remunerated by his company. (He may not be an "employee" but he will be paid under the PAYE scheme of taxation unless he is solely paid in dividends). Therefore he can move to "current income" based on wage slips, although if there is a variation in place for dividends, that figure will be determined by either the latest available tax year info from HMRC, or if a more recent complete tax year is available than that provided by HMRC, this can be used as "current income".

So, for what you say, when you applied in 2014, his earned income was based on his 2013 P60's and his dividend income on his 2013 self-assessment tax return.

As his earned income is under PAYE as a director, if his earned income was lower in April 2014 than during the tax year ending 2013, he can provide wage slips to support a request to move to "current income". The evidence provided would need to confirm the change will continue for the foreseeable future, and is at least 25% different to the income provided by HMRC. To change the dividend income, he would need to provide his 2013/14 tax return, showing the amount paid during the whole year.

If he was paying 60% of his income into a pension, you could apply for a variation for diversion of income. CMS would then review whether or not that level of contribution was reasonable, primarily based on what level of pension this would provide for him in retirement. If he was older and hadn't previously made any provision for retirement, they might consider the contributions reasonable for his circumstances.

If the reduction in dividend was applied retrospectively, he must have either:
told them about the change at the time and nothing was then done about it; or
requested a mandatory reconsideration of the original decision,

or CMS identified they had made an official error.

I have assumed some of the above because your post indicates CMS retrospectively reduced the original calculation, leading to the outcome that your ex has overpaid. So, in order to bring the account back to zero, they have decided to further reduce the calculated maintenance to nothing until the overpayment is cleared? So he is not actually assessed to pay nothing, it is because of the overpayment?

Do you mean annual review in April 2015, as your case opened in 2014? At annual review, if it had pulled through historic income from tax year 2015 of £50,000, for example, don't you think that would have been a big red flag about an unreported increase in income? And if CMS find out someone on current income hasn't reported a 25% + increase in income, they can go back and recalculate what that person should have paid from the date the increase took effect.

Furthermore, once current income has been in place for 11 consecutive months, CMS will request up to date wage slips/latest tax return, to check the current position. This process is described in the leaflet I linked to previously in this thread. So, such as in your case, when 2013 tax year info was pulled through again at annual review, and the current income details continued to be used; as they had been used continuously since April 2014 CMS should have requested up to date evidence from your ex. This process gives another opportunity to ensure income is checked regularly and that any relevant change is picked up.

If they haven't done this "periodic income review check" on your case, it might be time to pick up the phone and remind them to do it.

In you case, if your ex reported in April 2014 current income of £22,000 before his private pension contributions were taken into account, then you would expect his info for tax year 2014/15 to be in that ballpark. If the figure is more than £27,500, he has an unreported change and that should be investigated further.

With regard to your final paragraph, and not having to file his self assessment return for his dividends til Jan 2016 - that's true. But, he can only move from historic to current income based on a full years return. So in April 2016, if it pulled through his 2014/15 tax return for his dividends, he could only get it moved back to current income by providing his 2015/16 tax return.

HoneyNutLoop

moomoomama27 wrote: »

Is this only for CMS or for all child support?

My DDS NRP didn't report a change and they said it didn't matter it could only be taken into account when the change was reported and not backdated. He is on the 2003 scheme I believe.

That booklet says income changes must be reported within 7 days us that only for CMS users?

Yes, it's only for CMS cases, and only if the existing calculation is based on current income, rather than income supplied by HMRC.