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Hi,
On my CMS case, the parent with care has requested a tribunal. I'm a director of my own limited company and pay myself a PAYE salary and also dividends - both are taken into account in the CMS calculation.
However, I'm less certain how the following are taken into account in a tribunal situation:
1) Retained profits in the business - my income fluctuates year-on-year, so since starting the company five years ago I've built up a reserve so that I have a good buffer to fall back on. This is now at a level that I'm comfortable with and the reality is that I wouldn't look to grow the reserve further. However, in a tribunal situation how is a cash reserve viewed and how do I 'prove' that I've done it for that reason and that the amount of reserve is at a reasonable, but not excessive, level?
2) Company pensions - the company has not made any pension contributions since I incorporated it five years ago. I made a few enquiries, but general life took over (very busy at work, got married, had a baby, etc.) The consequence is that the company has now made a lump sum pension contribution to cover the prior five years. Thereafter, the annual pension contributions will be at a 15% level of turnover minus operating costs. How would a tribunal view this? The timing will seem very coincidental given the tribunal that's been called - I have an audit trail that can show I started the process before the tribunal was called, but just not sure how this would be viewed by a tribunal?
3) Expenses - I also take money out of the business to cover expenses. All above board & reasonable. My accountant is comfortable with all of this and I'm happy I could provide the rationale. However, how do tribunals look at expenses and do they overturn anything they don't agree with and consider it income instead? Can tribunals turn into a case about accounting principles? If so, how would I even begin to debate this with them in a tribunal situation?
I'd love to hear from anyone who has a Ltd company and who's been through a tribunal - information requested prior to tribunal, legal representation at tribunal, etc. I'm all for the CMS payment calculation fairly, but I've read a few horror stories with regard the tribunal process.
Thanks!
Hi there
I'm afraid this is out of my sphere of experience, hopefully someone will be along that can share their knowledge and experience with you and offer some advice.
Best of luck
I don't have a limited company, but I went through the tribunal process around 10 years ago (so it may have changed) - I was the one requesting it as my ex was refusing to pay anything (paying 100% of income into pension). I spoke to someone at CSA informally afterwards and he said that they basically looked at what was reasonable and whether they thought the motives were simply to avoid or reduce the amount payable.
Now of course, there are no guarantees, but from what you have said, all your actions are quite reasonable, and moving forward, the amount you pay into pensions, and other expenses are also reasonable, so if you are paying a reasonable level of child maintenance going forward, then the tribunal may not be a problem. They may take a view that you pay something extra because of your reserve, but even that is a prudent measure in running a company.
Thanks very much for the reply, I appreciate the time you've taken to write it. I actually had the tribunal paperwork through recently, which feels a little daunting.
Hi
Came across your post re CMS tribunal. Also going through the same and director of a company. Just wondered how your case worked out as sounds very similar to mine.
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