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

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.

@will99 - the problem is Inland Revenue as much as anything, it would be fair if you were based on the income profit from rental income, and if the property was a business, then interest payments would be deductible, but because of the change, you are being penalised because of interest. The only positive is that hopefully you have a very low interest rate at the moment, so you are keeping more of the profit than the banks are.

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'.

@Will99 

Hi 

I am in the same boat as you, and was wondering if you ever got a response from anyone.

thanks

dave

Posted by: @munday

@Will99 

Hi 

I am in the same boat as you, and was wondering if you ever got a response from anyone.

thanks

dave

Do you mean a response to my complaint about HMCTS not sending out the directions promptly ? If so - all they said was 'sorry' and assured me that my appeal is still pending and valid.

Or are you talking about the core issue of my appeal about being assessed for CM on interest payments that are now included (but didn't used to be) included in my taxable income from property ? If so - I am still waiting for my appeal hearing !

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.

Aargh - I have only been going for a year - made a loss last year, so wasn't an issue. I'm just projecting numbers forward for this year and I will be giving my ex around 220% of my after tax profits as child maintenance. Yes, that's right I will be giving her every penny I earned, then more than the same again.

Really regretting not going down the limited company route now 😟 

@Will99  Hi will.

I am going through the same situation as you describe, im in the process of the MP,s  do you have any further update on your side

Thanks

@andrew8282

My HMCTS appeal hearing date is finally set for next month, so I will have an update after that. However I suspect that, as I am essentially complaining about the unfairness of the rules rather than a failure of CMS to correctly apply the rules, that there is little that HMCTS can do even if they agree with me. I suspect this is an issue on which to lobby my MP to take up on my behalf, which I have done but my MP is saying he can’t really do anything about an issue under HMCTS appeal until that appeal has run its course.

It’s like wading through treacle - it is 18 months since I first lodged my appeal, and even if I did end up going through my MP and via that method managing to get this unfairness recognised and a change applied then I don’t think it would impact me because both children will have dropped out of the CMS case at the end of the current school year. I may still pursue it however, as I do think that if the CMS rely on HMRC information then they should also be aware of changes within HMRC which impact the information they rely on and make any changes accordingly.

@Will99 Thanks for getting back so soon. Im sure you have experienced the countless calls to CSA HMRC etc regarding this,  I wont bore you with the conversations had,  but think as your so far forward with your case, please carry on.  Im only Just starting this Journey, so would be great full for the updates, and I will endeavour to do the same.  I have another 6 years.  I will be going for the change!!

@andrew8282 

I would suggest approaching your MP and explaining the issue. The more people that do that, the more pressure there will be on DWP at least to understand and acknowledge the issue, which they will have to do first before they agree any changes are warranted. After all, why should landlords with Buy To Let mortgages be uniquely singled out for higher Child Maintenance payments ? It doesn't make sense, but it is not the easiest thing to explain.

In my explanation to my MP I took time to explain the HMRC changes (with references eg. to  https://www.gov.uk/government/news/changes-to-tax-relief-for-residential-landlords ), how they impacted my Child Maintenance calculation, and also my suggestion for fixing the issue - i.e. if the CMS already use HMRC data, then they can deduct from the overall gross taxable income from property figure the amount of undeducted property finance costs that is included therein - with the remainder being forwarded to the CM calculation. 

I can give you a copy of my letter if you like (I presume I can do that somehow ?)

Hi will.

Thank you, you have explained the situation very well in your letter. As you say its a tricky one to get across.

I have copied your letter and have sent it to my local mp, and have chased them up,  they are now going to send it to the relevent department, so will await a response from them in due course. 

Going to try the local paper, see if i can get the story printed.  fingers crossed