[Solved] CMS Recalculation Help !

hi,

when CMS check HMRC info for the annual review, it's based on old information, like income over last tax year. it's up to the dad to provide CMS with the correct/latest income info, in form of payslips etc. I lost a job in april so I gave CMS evidence, like termination letter, P60 form. they accepted. now am not paying maintenance because I am out of work.

CMS will only back-date from the date the dad registered with CMS. if he has missed payments for past 6 months, then they could back-date to that period.Usually when they write to a parent, they give them 14 days to respond with income info. if they don't receive, they can revert to a default maintenance decision, or at worse they can take enforcement action, such as telling his employer to make CMS deductions direct from his monthly wages. this will include an extra 20% collection fee. on each payment. nasty.

Hi Bill, thanks for reply!

So in our case he started the CMS case last month and so the first ever calculation is wrong as its based on old information, not his current salary.

I'm just hoping they have ways and means to find out his current salary, and if not I suppose we need to wait until July 2021 and hope its backdated?

Doesn't seem right that he can get away with paying less by refusing to disclose current salary.

FlexRay

Hi Flexray

I don't think he can get away with it. The reason the CMS uses previous annual salary is thats the only way to do a calculation..

It cannot obtain live monthly info as there are so many factors that impact monthly pay which can or cannot be factored into cms calculation such as overtime/sickness/pension/parental leave/paternity pay/ taxable allowances etc.. not all are legally allowable for cms calculation and it is cost prohibitive to manually work this out each month so it is done on an annual basis and yes it is backdated as arrears which then need to be paid.

There is also an obligation on those who pay cms to notify of any changes to salary of 25% promptly.

Those subject to cms and are sensible will put the funds aside to make said payments much like an annual tax bill for those who are self employed..

Those who do not will be chaed by cms including enforcement action which may result in deductions from salary plus 20% collections costs if not able to clear arrears..

Some of the areas of contention are where the paying person stops work and works cash in hand so cms cannot collect or where they stop work and have a new partner who funds them (I'm sure there are other examples too)..

The area of contetion from the paying persons side is that often cms is used as a means to restrict contact (or creates tension), or that currently reasonable costs to see children are not deductible in their totality but merely decuted from annual gross salary which leads to a nominal deduction.. These can lead to paying person to find ways to delay or avoid payment until they no longer can in order to bring both parties to the table and informally negotiate an informal amount that can be agreed upon.

Hope this helps.

Daddyup

he won't be able to get away with not disclosing salary. CMS will keep checking his tax records every year, with the annual review. if he has permanent job, anything from bonuses to over-time work will get flagged up. they will back-date and make his life a misery. also during review, receiving parent can ask for variation or mandatory reconsideration, if they dispute the maintenance amount. some paying parents have been dragged to a tribunal or been investigated by their fraud team.

I would have agreed with everything said here until my recent annual assessment in April.

I moved from Limited Company Director paid by minimum salary and balance in dividends, to PAYE from April 6. I did not disclose to CMS immediately as I thought it would complicate, given the timing, and my intention was to get reassessed as a director and then inform them of the new job from April 6 to trigger a re-assessment(higher).

So when they sent a letter asking if I agreed with X in unearned income(dividends) from last year I confirmed yes and expected to be assessed based on that. When the assessment came, it was double what I expected, £700 instead of £350.

They had seen my new job(started April 6) and added this PAYE salary to my Dividends from the previous year. I only managed to escape because the dividends were more than 25% of new salary and therefore I asked for a variation based on that. Otherwise would have been stuck paying for a year.

The moral of my message is that experience has told me you can never second guess exactly what CMS will do. In theory and in line with the other posts, they should have assessed me on last years income, but they must have seen the new salary income and used that, not waiting to the end of the following year. So to answer the original question, if they do the same in this case, the new salary would be used.

yes it can be quite tricky dealing with them. i also transitioned from LTD Director to regular PAYE job. last trading day of company was 31st March. Told CMS early that I would be starting new perm job 1st april. company messed me around and new job terminated after 2 weeks (during covid crisis). told CMS I lost my job and not earning any income. they said i'm still assessed as a Director and I could be earning from my company still, and that I should close down the company and have evidence of that.

I told them my company can not simply be closed down right away. accountants need to sort it out and their very busy. in the end i sent them evidence that I have de-registered for VAT, and also showed them some emails from accountant that I am no longer trading and company in process of being shut down. so they decided I am to pay NIL maintenance after losing my new perm job.

Hi All,

Thank you for taking time to reply.

Basically I need a little it of luck, and hope CMS say the right things to the father in the hope he discloses his current salary.

I know for fact if they check through previous years (which they state they do to make an informed decision) he was earning more than 50k...If the calculation comes back higher than he is currently earning i'm sure then he will be pretty quick to disclose his current income haha

Thanks again

FlexRay

I think the CMS can see real time information as well on their system, however I suspect they only see this if there are queries.

Like others have said, the CMS are unpredictable, and you never know what they are going to do. Just plan for worst case and it can only get better!

You are correct Yoda64. I forgot to mention in my post that in my case, I was originally reassessed based on the last years information on record, but then my ex went for a mandatory reconsideration and variation based on unearned income. It was this that triggered the letter to me asking to confirm dividends for previous year and when they took into account the new PAYE job, that I assumed they did not yet know about.

This is a positive for FlexRay however, in that even if it is not picked up in the initial assessment, a mandatory reconsideration will likely unearth the new amount.

Just to update this thread -

Mandatory recalculation was done which doubled the maintenance figure based on his actual salary which he withheld.

Father is now appealing the decision on the basis 'Its just far too much and i don't have the money to spare, this would bankrupt me'....Something tells me he's in for a disappointing appeal result.

He has also not paid any maintenance since the initial calculation in July, because he knows better obviously..

Kids continue to need heated, clothed, fed and activities paid for... Wonderful father we are dealing with here.