Cms calculation challenge

noodledoodle78

Hi I am hoping someone can offer some advice.
My husband submitted paperwork to the CMS to allow the maintenance claim to be calculated.
It included his 2015 tax return and a 2016 projected return.
He was made redundant in 2015 and the tax return included paye earnings as well as self employed earnings following his redundancyicon.

Cms then spoke to his accountant who confirmed he was now solely self employed.

Yesterday we received calculation paperwork based on his gross paye earnings and not the current subcontractor earnings.
He phoned to appeal this as the figures would be very different and was told they can only use his 2015 tax return.

How can we appeal this decision as the next set of returns aren't due until April and he simply can't afford to start making the current payments as the calculations are wrong and he will never be able to retrieve this back.

Any help would be appreciated.

MataNui

I cant answer what he can do about the current year but can give some important advise for him going forward.

You should NEVER have 'self employed' status if there is a CSA (CMS) liability. NEVER. Its a cast iron guarantee of future financial pain and possibly ruin.

You should always trade as a limited company. If he is earning approx £25k then he will definitely be financially better off plus he basically gets to decide what he wants to pay CMS, not the other way round. Up until very recently i was trading via a ltd company but got a perm job (coincidentally just after my CSA liability ended). My accountants fees were about £800 per year. That included the company accounts/tax return and my directors self assessment return. Having someone who knows what they are doing saved my thousands in tax and student loan payments last year and its incalculable how much i have saved in CSA payments over the years.

If he is earning less then i would say its still worth it. Self assessment tax and CMS work the same way and as you are learning its not always going to be fair.

shoe*diva79

It does make me chuckle how MataNui mostly comments on how much he saved paying the CSA - well actually you didn't, you used the system to deprive financial support for your child/children.

eve31

shoe*diva79 wrote: »

It does make me chuckle how MataNui mostly comments on how much he saved paying the CSA - well actually you didn't, you used the system to deprive financial support for your child/children.

Yep. Nothing to be proud of really. Especially as he says it's incalculable the amount he saved. He could of declared earnings of an average salary and controlled the amount he paid that way but still paid enough to financially support his children and had income over and above what was declared to save for himself. Sadly I infer from 'incalculable' is that he paid pittance in maintenance due to manipulating earnings to a fraction of minimum wage.

corf999

You dont know that! - If for example he is paid £500,000 a year - Isnt the maintenance payable far in execess of what a child needs and the spare money simply funding the mothers lifestyle.

After all the £3000 a week maximum child maintenance is far above the childs requirements.

DUTR

shoe*diva79 wrote: »

It does make me chuckle how MataNui mostly comments on how much he saved paying the CSA - well actually you didn't, you used the system to deprive financial support for your child/children.

Depends on the PWC really, I'd say I saved using the CSA (I'm paye).

eve31

corf999 wrote: »

You dont know that! - If for example he is paid £500,000 a year - Isnt the maintenance payable far in execess of what a child needs and the spare money simply funding the mothers lifestyle.

After all the £3000 a week maximum child maintenance is far above the childs requirements.

You don't know either. But I do know how the whole system works and how easy it is divert money and appear to earn way under minimal wage. It is perfectly legal and advised by accountants but can be abused by a NRP in a number of ways to divert income to a higher degree for the purposes of child maintenance.

I am pretty sure it's extremely rare someone on PAYE earning £500,000 being stung for those high levels of maintenance. The average person working through their ltd company is much more common and it's much more likely that they pay minimal child maintenance.

DUTR

eve31 wrote: »

You don't know either. But I do know how the whole system works and how easy it is divert money and appear to earn way under minimal wage. It is perfectly legal and advised by accountants but can be abused by a NRP in a number of ways to divert income to a higher degree for the purposes of child maintenance.

I am pretty sure it's extremely rare someone on PAYE earning £500,000 being stung for those high levels of maintenance. The average person working through their ltd company is much more common and it's much more likely that they pay minimal child maintenance.

Accountants are not there to help reduce CM contributions, they are there to assist with making tax claims more efficient, as it happens CM contributions are based on taxable income. if the taxable income is low then so is the CM contributions.
If parent A contributes more than parent B, it doesn't make them a better parent.

eve31

DUTR wrote: »

Accountants are not there to help reduce CM contributions, they are there to assist with making tax claims more efficient, as it happens CM contributions are based on taxable income. if the taxable income is low then so is the CM contributions.
If parent A contributes more than parent B, it doesn't make them a better parent.

I never said they were nor did I say that if a parent contributes more financially they are a better parent. So I am not sure why you quoted my post and added those comments.

I don't have an issue with minimising income tax through a ltd company as corporation tax is still payable on company profits. In addition CMS do take into account dividends when requested through a variation, but there are so many ways to retrieve income or retain income that won't be picked up by CMS and it is when these are used soley for the purposes of reducing liability for child maintenance that are wrong. Speaking from personal experience.

DUTR

eve31 wrote: »

I never said they were nor did I say that if a parent contributes more financially they are a better parent. So I am not sure why you quoted my post and added those comments.

I don't have an issue with minimising income tax through a ltd company as corporation tax is still payable on company profits. In addition CMS do take into account dividends when requested through a variation, but there are so many ways to retrieve income or retain income that won't be picked up by CMS and it is when these are used soley for the purposes of reducing liability for child maintenance that are wrong. Speaking from personal experience.

because that is how it comes across from other posts eg "that's nothing to be proud of"
Some have to understand and accept that there is more to parenting than just throwing money at the PWC and if those that contribute do not feel that the money is used as best as it could then it is only fair to them to reduce that amount (some get it to zero) , obviously that will vary from person to person, we are aware of your personal case, but you are not aware of the payers cases (only your own) .
By the way I'm not telling you off or seeking a fight.
Just get a bit sick of the usual clique rubbishing (usually blokes) for not wanting to contribute as much as the pwc would like when the PWC (usually women) are not equally as rubbish for not being able to pick a person to have a solid meanignful and lasting relationship with.

eve31

DUTR wrote: »

because that is how it comes across from other posts eg "that's nothing to be proud of"
Some have to understand and accept that there is more to parenting than just throwing money at the PWC and if those that contribute do not feel that the money is used as best as it could then it is only fair to them to reduce that amount (some get it to zero) , obviously that will vary from person to person, we are aware of your personal case, but you are not aware of the payers cases (only your own) .
By the way I'm not telling you off or seeking a fight.
Just get a bit sick of the usual clique rubbishing (usually blokes) for not wanting to contribute as much as the pwc would like when the PWC (usually women) are not equally as rubbish for not being able to pick a person to have a solid meanignful and lasting relationship with.

I'd take a meaningful relationship over maintenance any day, and place huge value on father daughter relationships. Nor am I materialistic. So I think you have got me wrong there. Unfortunately for my daughters their father is emotionally unavailable which is the saddest thing. Luckily they have other great male role models in my family. In addition to the lack of emotional and fatherly bond my ex is materialistic. I have brothers, uncles and my own dear father that are truly great examples of men and fathers. So I would never tar all men with the same brush. Not my style. The previous poster who minimised maintenance admitted it and I don't agree with it. I'm entitled to my opinion.