[Solved] Impact on Child Maintenance calculation of investment property tax rules

Hi just to provide a further update on this.

To remind you, there are two strands of subsequent discussion on this issue :-

1. My raising the issue with my MP, and his subsequent discussions with the government including the Secretary of State for Work and Pensions
2. My personal discussions with the CMS subject to my most recent annual review in which this issue has had an impact

In regard to 1. :-

There is no further progress. Latest was the SoS's response saying that the gross property income is usually net of allowable expenses (as I report above).

In regard to 2. :-

My ex- asked for a mandatory reconsideration of our most recent annual review on two grounds - Property income and my pension contributions.

The reconsideration on pension payments was rejected, the CMS making the judgement that my increased pension contributions were 'not unreasonable'.

The reconsideration on property income was successful, the initial annual review having not accounting for this income (this was the first year where my property had moved in to profit, and so this was not relevant in previous years). I had provided full disclosure of my tax return, and also explained the issue around finance costs to them, suggesting that the figure they use for my property income (as shown on the tax return) was not representative of my actual profit from my property due to the recent HMRC changes. The agent I spoke to actually understood my arguments, but said that they 'just use the gross taxable profit' figure as this is laid down in their process. He also said that I can lodge an appeal with HM Courts & Tribunals against their decision. The agent also suggested that as this was a matter that would impact other clients (i.e. any paying parent who is a landlord with associated mortgage costs) then an official appeal would be the most appropriate action to take.

So that is where I am at - I have lodged the appeal this week and I understand that it can take up to 3 months to complete.

What I am unsure of is whether the appeal body can judge only on whether the CMS have correctly followed their rules and/or process, or if they are also able to pass judgement on whether that process is unfair or not. So I have relayed all this to my MP, wondering if a challenge to the CMS calculation rules / process may require to come from his representations with the government rather than my own appeal.

I'll keep you updated ..

To add :- of the taxable property profit figure shown on my tax return, 64% of that is comprised of mortgage costs which I actually bore (thanks to the HMRC changes). So my argument is that it is unfair that the CMS use that gross figure as representative of my actual property income I received.

found this info:

The first category is income from land or property – this includes property abroad. Typically, this is rent (see Part 3 of Income Tax (Trading and Other Income) Act 2005 for a full list). If a NRP is receiving rental income there are a couple of things to remember. First, as with tax, when calculating unearned income the CMS first remove the costs incurred running the property - such as maintenance and furniture. Second, if a NRP rents a room in their primary residence, he has a lodger, the first £7,500 is not taxable and would not fall within the CMS assessment.

https://classlegal.com/news/challenging-a-nil-assessment-by-the-child-maintenance-service-part-two

Hi, I just wanted to add a couple of things :-

Firstly, when we separated I offered to pay 50% of all costs for our children, regardless of where they lived. I did this in an attempt to play as full a role as father as I could post-separation. As an incentive for my ex- to agree this instead of going to the CMS, I told her that if she did go the CMS route then I would only pay her their calculated amount and not a penny more. However for reasons which are her own she chose the CMS route, but I suspect (and this is my speculation) that she may have thought that as I had income from a property that she may well have been better off.

Secondly, I agree that my income from property should be taken in to account by the CMS when deciding my child maintenance liability, but I steadfastly believe that my ACTUAL income should be considered and not a figure which is enhanced by inclusion of actual costs that I have had to bear in maintaining that property (such as mortgage interest payments). So my battle is in correcting this aspect of the CMS calculation, which I see as unfair to all paying parents who happen to receive income from property and have mortgage interest to pay.

I am absolutely FUMING !

I lodged my appeal with HMCTS concerning this issue back in April this year.

I got a letter from HMCTS in May saying that my appeal is valid and should be admitted.

I enquired with HMCTS approx 3 months later on the status of my appeal, and was told that CMS have not replied yet.

I then got a letter in September with directions from the judge saying that DWP have not complied with the timeframes for a response and they must do so as a matter of urgency and within 28 days.

Then yesterday I rang HMCTS again to enquire on the status and the agent said they would look in to it.

Today 11th November 2021 I got a letter from HMCTS saying that the original directions letter from the judge - dated 26th May 2021 - had not in fact been sent to the parties and they are now sending it. They sincerely apologised for this error. I rang up again and they explained it was due to 'human error'.

So SIX MONTHS I have been patiently waiting for my appeal to progress and all that time it has been stuck in limbo because someone forgot to post the request for a response to CMS ! Apparently the letter in September did get sent to CMS but they still haven't replied to that.

That is absolutely appalling service. This is obviously important enough to me to lodge an appeal and the whole appeal process gets 'lost' / 'stuck' for six months due to human error ! I will lodge a complaint of course but frustratingly all I will get is another 'sincere apology'.

Wow, ridiculous that you have been left in this situation, waiting so long for the hearing.

I'm in a similar boat, so would be interested to hear how it goes.