Our James Maguire, Divorce Solicitor, appeared on Adrian Chiles’ show on BBC 5 Live this morning speaking about child maintenance.
At the moment parents on the Child Support Agency (CSA) assessments are receiving notice from the Government that their case is going to close, commonly in 6 months’ time.
There is then the option to:
1. Reach a private agreement known as a ‘family based arrangement’ with the other parent; or
2. Use the new Child Maintenance Service (CMS)
For those using the CMS, the child maintenance will be reassessed using gross income figures rather than the usual net take home pay.
The other noticeable difference and one of the main points of concern is that charges may be applied:
The non-resident parent will face a 20% charge on top of the child maintenance payments
The parent with care will also face a 4% deduction in the child maintenance payments he/she receives
To put this in context: if a father is assessed at child maintenance payment of £500 per month then:
- There is a £20 application fee to use the CMS
- The father suffers a 20% charge which means he actually has to pay £600 per month (£100 increase)
- The mother suffers a deduction to the child maintenance, so the amount she receives is £480 per month
However, this only applies if the parent making the application opts for the CMS ‘pay and collect’ method.
The alternative is to ask the CMS to calculate the amount of child maintenance and for the parents to directly pay between themselves.
But if the mother in this example wants to use the CMS to collect the child maintenance then there is absolutely nothing the father can do about it: the charges will follow.
The concerns about this new CMS regime are numerous and varied:
- It can make an acrimonious situation even worse
- Arrears and debt can build up quickly
- How are private agreements reviewed and based on what information?
- There is no longer a departure category for the CMS to intervene if the paying parent’s lifestyle is inconsistent with the declared income
- It will be harder to challenge a child maintenance calculation and only if the paying parent’s income has changed by more than 25%
- There will inevitably be a gap between the CSA assessment and the new CMS assessment which could cause hardship
- Private agreements are fine if parents stick to them but if not, they are unenforceable; and
- Inevitably, any dispute could impact on the welfare and care arrangements for the child
The CMS has come about because the CSA effectively broke down in 2006 due to a backlog of cases, maladministration and so on; but are the parents and families now paying for these failings?
The charges levied by the CMS are being called a ‘child tax’. Many families are on a tight budget and with these extra charges many cannot move on either to rebuild their lives following separation or divorce or to actually meet the needs of the children. We should not forget these are basic needs for a child but even a 4% charge to a mother in this situation will have an impact on the child.
In my example above, over say 10 years, this could mean:
- The father paying £12,000 in charges
- The mother paying an additional £2,400
- That is a whopping £14,200 for one family which could have been spent on the child!
The Government wishes to encourage people to reach agreements outside of the CMS but if they do chose the statutory regime then they may have to pay for the service. To a certain extent I agree that parents might need to have incentive to reach an agreement but to penalise parents by making such charges seems disproportionately high and in the end it will be the children who suffer. It also seems wrong to me that a parent can insist on the ‘collect and pay’ method and this leaves the paying parent to the 20% and there is nothing than can be done about it.
If you do enter into a private agreement then it is a good idea to make sure the case is closed with the CSA or CMS to avoid any arrears (of allegation of arrears) building up and to have evidence eg. from bank statement sheets that the payments are clearly ‘child maintenance’ and not something else. One aspect I do like is that the CMS links into the HMRC data and automatically reviews the level of child maintenance each year and which was something missing under the old CSA style assessments.
At Maguire Family Law we are finding in practice that a lot of parents do not have the relevant information to decide what to do or what the best option is for them. There are plenty of resources online to include: