Directors accused of artificially cutting CM

Interesting article in the Telegraph today:

Company directors accused of artificially cutting maintenance payments to ex-spouses by disguising incomes through corporate accounts

By Christopher Hope, chief political correspondent Steven Swinford, deputy political editor

2 MAY 2017 • 12:01AM

Company directors and entrepreneurs are artificially reducing their earnings by paying themselves in dividends to cut their maintenance payments to ex-spouses, MPs say today.

They urged ministers to tackle "shameless self-employed" parents who exploit a legal loophole that allows them to avoid paying the right amount of child support to their former families.

A high proportion of cases slipped through the cracks when the new child support system was introduced in 2012, a report from the House of Commons Work and Pensions select committee found.

A decision to calculate maintenance payments on gross income meant that the self-employed who received income in dividends or rents were not included.

The committee said: “We heard that self-employed people and company directors were able to deploy techniques significantly to lower income declared to HMRC or hide assets using their company accounts in order to minimise their maintenance liability.”

One MP told the committee that “her former partner had been a director of his own companies and had used his position to disguise his income through directors’ loans and expense claims”.

However, since 2012 parents in charge of children have lost the right to challenge former partners whose lifestyle is inconsistent with their declared income.

Conservative MP Heidi Allen, who sits on the committee, said the child maintenance Service should “up its game” and close these loopholes for the self-employed.

Ms Allen said: “The victims of this fraud by shameless self-employed parents who play the system, and old-fashioned deadbeat non-payers here, are children.

"The evasion of child support under the guise of ever-changing ‘self-employment’ is also an evasion of tax.

"It is a double hit to the tax payer in the form of lower tax receipts and also benefit payments to parents with care who can't then make ends meet.

"It is therefore essential that the Government reviews this as part of its comprehensive review of self-employment."


www.telegraph.co.uk/news/2017/05/01/comp...aintenance-payments/

Well, that article is incorrect regarding payment of dividends or any other unearned income e.g. Rent.
When a claim is made for child maintenance, CMS use the gross earnings figure to calculate the amount of maintenance payable.
If the claimant suspects the payer has unearned income eg.dividends,rent etc, they simply put in an 'application to vary' through the CMS, checks are done with HMRC and the correct figure is then used to calculate maintenance.
This is the method CMS have chosen to use. Unearned income isn't hidden. The claimant merely has to submit an application to vary and it's taken into consideration.
These articles always make men out to be the bad guys when in fact, this is just the way the CMS system works !

I am self employed, for 30 odd years now, there are massive loopholes some are shall we say mentioned in the article that Ruby posted.

The fact of the matter is that if you take a low income receive dividends, or director loans and other methods i won`t mention you can play the game and get away with blue murder.

Rules changed to prevent men paying huge sums into a pensions to avoid CM, a good thing, gross calculation - but then lifestyle V claimed income was chucked out! which frankly is bonkers.

So the article has a couple of problems its a news paper, don`t they always, the direction and issue however is perfectly valid, more should be done.

To be clear statistically more men than women pay CM, a small number without honour.