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How is child maintenance calculated?
The Child Maintenance Service (CMS) uses gross weekly income to calculate which of the five child maintenance rates should be paid (unless a paying parent gets certain benefits).
Gross weekly income is income before deductions for tax but after contributions to approved personal or occupational pension schemes.
In most cases, the CMS will get a gross income figure from information given to HM Revenue & Customs (HMRC) by the paying parent, their employer, or a third party (eg their accountant).
Either parent can ask the CMS to look at other types of income not included above. This is called âadditional incomeâ.
What is a complex earner?
People working in certain positions can influence how they are paid and the amount of pay they get. These people are known as a âcomplex earnersâ. Thereâs no suggestion that complex earners seek to âcheat the systemâ by paying less tax or maintenance, but thereâs recognition that they have the means through which to do this.
Examples of complex earners include company directors, who can affect their level of pay or dividends, or self-employed people, whose earnings relate directly to the profit/ loss of their business. Income from other means such as property or savings, isnât included in the standard CMS calculation and is referred to as âunearnedâ income.
What if someone isnât declaring their true income?
Where a person with care believes the paying parent isnât declaring their true income, they can apply to the CMS for an âadditional income variationâ. One of the grounds for a variation is âdiversion of incomeâ.
The CMS will consider a variation if it believes the paying parent is controlling (directly or indirectly) the amount of income they get by diverting it to another person or purpose, which means it isnât included in the figure used by the CMS to calculate child maintenance.
Further information on the different grounds on which a variation can be sought is provided in section 6 of the Library briefing, Child maintenance: Calculations, variations and income (UK). A person can ask for a variation when they apply for child maintenance or after child maintenance has been calculated.
How does the CMS investigate more complex cases?
Where a non-resident parent is suspected of concealing their true income, the Financial Investigations Unit (FIU) can investigate.
The FIU is a body within the Department for Work and Pensions (DWP) which considers more complex cases. It works with HMRC records and other information to assess and uncover additional income from non-resident parents. Where relevant, it also passes information to HMRC.
Additional income and evidence collected by the FIU may be used by the CMS to calculate child maintenance assessments. The CMS can order the parent to pay child maintenance theyâve previously avoided. The FIU does not have powers to investigate paying parents outside the UK.
The Government has said CMS caseworkers forward cases to the FIU if they believe there to be âcredible, evidence-based challenges to a child maintenance assessmentâ that cannot be resolved through standard processes.
In response to a Freedom of Information (FOI) request in September 2017, the DWP attached guidance for the FIU (PDF) which says the FIU âdoes not accept referrals where the receiving parent challenges the income figure without any supporting informationâ:
The receiving parent does not need to provide evidence but does need to provide credible information to support the challenge. The receiving parent should not be tasked to source information they do not have.
Credible information includes, but is not limited to:
I know they keep two sets of books
They were fiddling their books when we were together
Significant information shows their lifestyle doesnât match the income declared
More information on the FIU can be found in section 4.5 of the Library briefing, Child Maintenance: Fees, enforcement and arrears.
Appealing an FIU decision
In a follow-up letter from a Committee hearing in January 2017 (PDF), Caroline Nokes MP (then Minister for Welfare Delivery) said âall decisions made by the Child Maintenance Service (CMS) in relation to the level of weekly maintenance amount (i.e. the liability) carry an underlying right of appeal to an independent tribunalâ (p4). She went on:
Where a parent believes a maintenance calculation is incorrect, within 30 days of being notified of the decision, they should request that the decision be reviewed (known as a Mandatory Reconsideration) after which, and regardless of the outcome of the review, they may seek to appeal through HM Courts and Tribunals Service.
Information on how to appeal to the Social Security and Child Support Tribunal can be found on the Child Maintenance Service: Complaints and appeals GOV.UK webpage, or on the Citizens Advice webpage, Challenging what the CMS says you should get.
Complaining about the CMS
If someone wants to complain about the service theyâve received from the CMS, the complaints procedure is covered in section 4.6 of the Library briefing, Child Maintenance: Fees, enforcement and arrears, which includes links for information on complaining to the Independent Case Examiner (ICE). An individual must exhaust the full CMS complaints process before complaining to the ICE.