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  • FIRST POST
    • Bee_Happy329
    • By Bee_Happy329 11th Feb 17, 8:41 PM
    • 6Posts
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    Bee_Happy329
    Tax Avoidance to avoid child support
    • #1
    • 11th Feb 17, 8:41 PM
    Tax Avoidance to avoid child support 11th Feb 17 at 8:41 PM
    I'm on here to see if anyone can help me with my struggle using the child maintenance service. My ex is a self employed accountant who started using a Tax avoidance scheme when we split. We are also going through divorce proceedings. The problem is the scheme allows him to divert his earnings to them and they pay him minimum wage and the remainder of his salary as a loan which is never repayable. In doing this it is not subject to Tax. Since the CMS will only consider taxable earnings he pays £14 per week for 2 children and earns £50k a year. This seems incredibly unfair on the children. I have appealed the decision and it's taken the CMS an excruciating 12 months to even submit their information and responses to the Appeals Tribunal Court. I'm still waiting for the hearing in despair!!! In the meantime he has benefited by avoiding paying £7000 worth of child support for the past year. I've been told by CMS that they cannot say this is a diversion of earnings even though I have provided a financial declaration and bank statements from the ex (provided for the divorce) stating his earnings are £50k, apparently that's not enough evidence. This is crazy what do they want? Even though they have everything they need it still isn't enough because loans are not taxable. I'm now waiting for the appeals tribunal who will more than likely tell me the same!

    Has anyone gone through the appeal tribunal for child maintenance and been successful? Please share your experience and help is much appreciated.
Page 1
    • jimd-f
    • By jimd-f 12th Feb 17, 9:50 AM
    • 162 Posts
    • 75 Thanks
    jimd-f
    • #2
    • 12th Feb 17, 9:50 AM
    • #2
    • 12th Feb 17, 9:50 AM
    the appeals tribunal will look at the facts of the case and see if CMS have applied the law correctly.
    in your case they appear to have done so as they have used the income declared to HMRC-the CMS scheme assess people on their gross income before tax;loans from the company are not considered to be income
    you need to contact HMRC and try to get them to take action, which may eventually help you to get reassessed at a more realistic level.
    • DODO
    • By DODO 12th Feb 17, 11:26 PM
    • 1,529 Posts
    • 31,852 Thanks
    DODO
    • #3
    • 12th Feb 17, 11:26 PM
    • #3
    • 12th Feb 17, 11:26 PM
    Hardly ever post but felt I had to - not sure why you have been advised to appeal. Surely you need to apply for a variation based on diversion of income. Cant attach links but if you google it will come up I'm sure but best info is on citizensadvice.org.uk. Think it will only be backdated to when you ask for a variation so don't delay

    Good luck

    Sorry just reread and it may be you have asked for a variation


    IF all else fails contact your MP and get them to get involved - I got a response within 2 days of MP writing a letter to them asking to be kept upto date about my case.....
    Last edited by DODO; 12-02-2017 at 11:30 PM.
    • Bee_Happy329
    • By Bee_Happy329 13th Feb 17, 2:11 PM
    • 6 Posts
    • 2 Thanks
    Bee_Happy329
    • #4
    • 13th Feb 17, 2:11 PM
    • #4
    • 13th Feb 17, 2:11 PM
    Thanks both for your reply. I have applied for a variance and diversion however the CMS still stand by their decision. If all else fails my ex will have to pay through the divorce but still benefit from not paying the arrears. I have contacted the Tax hotline who seemed very interested in the scheme but whether this ever pays off I will not know. There is a loop hole in the law. Apparently tax avoidance is ok but tax evasion is illegal and it all comes down to the percentage of tax avoidance very confusing. His service boasts 93% take home.
    • HoneyNutLoop
    • By HoneyNutLoop 13th Feb 17, 2:41 PM
    • 512 Posts
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    HoneyNutLoop
    • #5
    • 13th Feb 17, 2:41 PM
    • #5
    • 13th Feb 17, 2:41 PM
    You may wish to acquaint yourself with this Upper Tribunal decision, which focuses on the interplay of the latest child support scheme's requirements on the calculation of income and a different tax avoidance scheme, as it may offer some insight on factors the Tribunal may consider in your case:
    http://administrativeappeals.decisions.tribunals.gov.uk//judgmentfiles/j4981/CCS%200271%202016-00.doc

    There are further Upper Tribunal decisions on the subject of diversion of income as well as director's loans, but they all relate to cases administered under prior child maintenance schemes, so may not be relevant/applicable in your case.
    I often use a tablet to post, so sometimes my posts will have random letters inserted, or entirely the wrong word if autocorrect is trying to wind me up. Hopefully you'll still know what I mean.
    • Bee_Happy329
    • By Bee_Happy329 7th Jun 17, 4:33 PM
    • 6 Posts
    • 2 Thanks
    Bee_Happy329
    • #6
    • 7th Jun 17, 4:33 PM
    • #6
    • 7th Jun 17, 4:33 PM
    The first hearing seemed successful. Both my ex and a representative from the CMS were present. The Judge and CMS seem accepting my ex's income is not correct as they have adjourned now so the judge can have a financial member to assist in making directions to obtain information to determine the ex's income for the period.
    • Bee_Happy329
    • By Bee_Happy329 14th Apr 18, 7:40 AM
    • 6 Posts
    • 2 Thanks
    Bee_Happy329
    • #7
    • 14th Apr 18, 7:40 AM
    • #7
    • 14th Apr 18, 7:40 AM
    Thought I!!!8217;d keep people updated on my progress with the Tribunals service. To date there has been no subsequent hearings due to the tribunals failure to provide a financially qualified person to assist the Judge. I!!!8217;m on complaint number 4. I finally have a 2nd hearing date a year on!!! What the hell is wrong with this service. I started the process in 2016 it is now April 2018 and I still haven!!!8217;t been able to obtain the arrears owed to the children. This service is completely inadequate and even though I!!!8217;ve contacted my MP several times nothing gets done and no one seems to care!!! Judges take their time sitting in cases and the clerks blame them, absolutely useless!!! Nonetheless I!!!8217;m continuing with the process but this is enough to drive you mad, I want it over and done with. We are now discussing financial information 2 years old and I still have ongoing issues regarding calculations after that which are incorrect this is never ending because of this useless service!!!
    • D_M_E
    • By D_M_E 14th Apr 18, 4:45 PM
    • 1,824 Posts
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    D_M_E
    • #8
    • 14th Apr 18, 4:45 PM
    • #8
    • 14th Apr 18, 4:45 PM
    Have you tried a written complaint to HMRC about the tax evasion offered by the company and taken advantage of by your ex?

    If there's a lot of people taking advantage of it then HMRC are more likely to do an investigation and put a stop to it, particularly if there are more people in your situation, and this would likely help your case.

    Would also leave your ex with a big backdated tax bill as well as a big backdated support bill.
    • Ettenna
    • By Ettenna 19th Apr 18, 3:35 PM
    • 635 Posts
    • 898 Thanks
    Ettenna
    • #9
    • 19th Apr 18, 3:35 PM
    • #9
    • 19th Apr 18, 3:35 PM
    My ex was using a tax avoidance scheme based on the Isle of Man. He is still being investigated by HMRC under IR35. He paid himself a pittance and too the rest as dividends. The CSA calculated his payment as about £6/week. I asked for mandatory reconsideration for a variation of earnings and went to Tribunal and won as they had not applied the law correctly. He is now paying off arrears and my daughter is now 21!
    • Bee_Happy
    • By Bee_Happy 22nd May 18, 1:56 PM
    • 6 Posts
    • 2 Thanks
    Bee_Happy
    Light at the end of the tunnel
    (This is my thread but my account was deleted)
    Thank you for your post. I had another hearing this month which seems promising. The financial member agrees with me on the income for 2016 and 2017. He did turn up so they are giving him one more chance to appear and then thatís it he will have his arrears to pay. This seems to be an ongoing issue with him as now he has started a new job for much more pay, set up as a limited company and hasnít informed the CMS. If I have to take it to appeal again despite the dreadful timescales of the Tribunals I will have to rely on them as he refuses to financially support his children.
    • Bee_Happy
    • By Bee_Happy 22nd May 18, 1:58 PM
    • 6 Posts
    • 2 Thanks
    Bee_Happy
    Ive informed them 2 years ago but as of yet no action has been taken. Clearly he owes them, thankfully they have closed the loophole now.
    • Bee_Happy
    • By Bee_Happy 14th Aug 18, 4:59 PM
    • 6 Posts
    • 2 Thanks
    Bee_Happy
    Update the last hearing my ex did not appear and they have given another hearing date so he doesn!!!8217;t have non attendance to support any appeal. Will update on this soon after the hearing. CMS have finally completed their re-assessment today. I am in disbelief. Despite having a variation in place they have resorted back to minimum wage again. This is totally wrong. They know it is wrong but don!!!8217;t care. This system is a joke. It could take 2 years through the Tribunals service like previously to rectify this mess! Also I have to wait until April 2019 when I get his tax return also so it!!!8217;s accurate. In the meantime I have no idea how I am going to meet the children!!!8217;s financial needs. It!!!8217;s less than £80 a month he will pay now. If anyone has any ideas apart from the usual mandatory reconsideration, appeals procedure Id be very grateful.
    • kimplus8
    • By kimplus8 22nd Aug 18, 8:41 PM
    • 706 Posts
    • 2,161 Thanks
    kimplus8
    I'm sorry to hear that you are having a hard time. I have personally found the whole appeals service quite hit and miss. I started my appeal in 2016 and it was just concluded last month. It was ruled in my favour but only after 2 years of painstaking evidence collecting and finally him being investigated by DWP fraud unit.
    If you are struggling with the CMS you can ask them to pass on your case to fraud team. they will allocate you a worker who is assigned to your specific case and they are capable of much more information gathering than the CMS. Often the tribunal will use their concluding for th basis of their appeal decision.
    HTH
    Dave Ramsey and Martin Lewis are my Money Saving Heros.
    • MataNui
    • By MataNui 28th Aug 18, 3:14 PM
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    MataNui
    I think you need to moderate your expectations. You have stated you ex is using a tax avoidance scheme but it sounds like he may just be using the directors loan account. Really you need to know the difference because it will affect your prospects of getting anything and how to go about it.


    What you and others posting need to understand firstly is that any money made by your ex in the name of his limited company is not his money and therefore neither you or the CMS have any legal claim on so much as a penny of it. His company may make 100k per year but that belongs to his company. Not him and not you. CMS can only legally go by what he personally earns or takes out by way of dividends etc. The fact that his company earns £XXXX but he only pays himself £X is NOT diversion of earnings and this is probably why you are getting nowhere with CMS currently. They are applying the law correctly and if you are hoping for anything else then you are wasting your time.


    On the other hand. If he is taking money out and using some tax avoidance scheme then HMRC is where you need to go first. Until they say what he is doing is not legal and his taxable income is higher than is stated CMS wont be able to help you.


    As i said earlier. Diversion of earnings cant be applied to money that legally belongs to another entity. In this case his company. It can only apply to money that he has firstly taken out of the company.
    • Comms69
    • By Comms69 28th Aug 18, 3:18 PM
    • 4,416 Posts
    • 4,274 Thanks
    Comms69
    Can your divorce proceedings not include a child maintenance element?


    It's quite common
    • HoneyNutLoop
    • By HoneyNutLoop 28th Aug 18, 8:06 PM
    • 512 Posts
    • 400 Thanks
    HoneyNutLoop
    MataNui - you are quite wrong. I think you may need to read the law surrounding the diversion of income ground and some of the related commissionerís decisions. It may be quite an eye opener for you.
    I often use a tablet to post, so sometimes my posts will have random letters inserted, or entirely the wrong word if autocorrect is trying to wind me up. Hopefully you'll still know what I mean.
    • MataNui
    • By MataNui 29th Aug 18, 8:37 AM
    • 976 Posts
    • 525 Thanks
    MataNui
    MataNui - you are quite wrong. I think you may need to read the law surrounding the diversion of income ground and some of the related commissionerís decisions. It may be quite an eye opener for you.
    Originally posted by HoneyNutLoop

    If you are suggesting that CMS are legally entitled to take limited company income into account when calculating payments from directors/shareholders (which it appears you are) then you will need to post some links specifying exactly that as doing so would pretty much undermine the main principles of company law. It would mean directors of FTSE 100 companies for example could find maintenance bills in the tens of millions. Of that i am pretty confident i am correct.



    What i may of missed (or not added to the list) is other means of extracting money from companies. (ie the directors loan account) which as far as i am aware (was told by my accountant) is repayable (so not quite what the OP is suggesting).


    I did try to look at the link you posted earlier but it appears to not be working.
    • HoneyNutLoop
    • By HoneyNutLoop 29th Aug 18, 6:00 PM
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    HoneyNutLoop
    I posted that link 18 months ago.

    This is a link to the law governing diversion of income regulations.
    http://www.legislation.gov.uk/uksi/2012/2677/regulation/71/made

    If the evidence could demonstrate that the specific director of a FTSE100 company had the ability to control the amount of income they received from the company, whether directly or indirectly and 71(1)(b) was satisfied, then yes, potentially. However, demonstrating 1 single director of a FTSE100 company had that level of control of the company would be difficult.

    This is a link to Upper Tribunal decisions. You can search and filter for different circumstances such as diversion of income:
    http://administrativeappeals.decisions.tribunals.gov.uk//Aspx/default.aspx

    Having only briefly rescanned, this one appears to have some points of relevance when considering diversion and retention of profits within the business:
    http://administrativeappeals.decisions.tribunals.gov.uk//judgmentfiles/j4854/CCS%202524%202014-00.doc
    I often use a tablet to post, so sometimes my posts will have random letters inserted, or entirely the wrong word if autocorrect is trying to wind me up. Hopefully you'll still know what I mean.
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