Partner Claire Dyer, in our leading Family law team, looks at the outcomes of the Government's review of the Child Maintenance Service and the payment of child maintenance.
For the vast majority of separated parents it is the Child Maintenance Service (CMS) that deals with disputes in relation to the payment of child maintenance. Whilst it is hoped that parents will be able to use the tools provided by the CMS to come up with their own agreement about the child maintenance payments, there are some cases where parents are simply not able to do this and the CMS has to step in. For a minority of these cases, this also includes the CMS having to take action to enforce the payment of child maintenance. The CMS has always had wide ranging enforcement powers to try and ensure child maintenance is paid. But as many parents who are due to receive payments will tell you, there are still gaps in the current system that mean they, and more importantly their children, are not receiving what they are entitled to.
At the end of last year the Government consulted on proposals to introduce new enforcement powers and mechanisms. The Government has now set out it proposals in response. Under these proposals the following changes will be made:
Income from assets will be included in child maintenance assessments.
This is a particularly key issue for those children whose parents derive their income predominantly or solely from capital assets, i.e. property developers, professional landlords, etc. Ideally the Government had hoped to introduce a system where information about these types of income would be shared between HMRC and the CMS. This would, however, require significant changes to the legislation governing the working practices within and provision of this information to HMRC. This is something that the Government has committed itself to working on, but in the meantime, to ensure children are not prejudiced whilst this work is done, in these cases the CMS will be able to include a notional income of 8% on any relevant assets of £31,250 and above and include this within their calculations. In the current market there are many that have questioned the appropriateness of this rate but it is in line with the rates used by the Court on outstanding debts.
Deduction payments due from benefits including Universal Credit
For those on low incomes the CMS already operates a “flat rate” child maintenance payment. In line with public opinion the Government has committed to extending this rate to those receiving state benefits. Once these changes come into effect, the CMS will be able to deduct a sum of £8.40 per week from benefit payments and will also be able to continue to make deductions once the on-going maintenance obligation has ended to cover the repayment of any arrears.
Deducting payments due from joint accounts and business accounts
The government has already committed to providing the CMS with powers to deduct payments due from any jointly held accounts of the paying parent. These proposals extent that to confirm that deductions can also be made from business accounts where balances exceed £2,000. To avoid potentially costly disputes and delays about the precise ownership of such accounts, where this cannot be readily established the CMS will be able to ascribe 50% of the balance in an account to the paying parent and made deductions from this proportion of the account. This should help to resolve issues that have arisen where paying parents claim they are unable to meet the payments due as a result of a lack of income. The Government is particularly conscious of those paying parents that try to manipulate the position by choosing not to draw income from a business and instead accumulate funds in business bank accounts, which were previously untouchable by the CMS.
Confiscation of passports
For persistent non payers, the Government has committed to provide the CMS with wider powers to confiscate their passport and retain this until payment has been made. Parents will be given 48 hours to surrender their passport, before the CMS will take action through the Court to compel this. Many have already commented on the effectiveness of similar provisions that are already available in relation to driving licences and it is hoped that there will be similar successes with this proposed change.
Whilst the above changes are aimed to widen the powers of the CMS and improve recovery rates, the Government is also realistic about not throwing good money after bad, as there will always be those who try to avoid contributing financially for their children. To ensure that taxpayer’s funds are not unduly expended in circumstances where it is extremely unlikely to result in child maintenance payment being made, the CMS will have the ability to end child maintenance enforcement in those cases where the arrears have been outstanding for a significant period and are in total under £65.
If you have any issues with the child maintenance you are receiving or paying and would like further advice on this then please contact a member of our family team.
For further information or legal advice, please contact firstname.lastname@example.org or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.