Children missing out on maintenance payments owing to CMS loopholes

Gingerbread, the UK charity for single parent families, has published a damning report on the Child Maintenance Service. Among many things, the research shows that parents are manipulating the loopholes in the system to avoid paying their children what they deserve.

The charity was set up in 1918 to make sure that children growing up in separated households are not financially disadvantaged. The change in child maintenance regulation in the UK over the last year prompted Gingerbread to make a new enquiry. The Child Maintenance Service (CMS) was established to replace the ailing Child Services Agency (CSA), however the report reveals that, far from resolving the CSA’s flaws, the CMS has compounded them.

There are several differences between the CSA and the CMS, such as the new focus on redirecting parents to mediation. One of the most crucial changes regards the income which is included in calculations. In the current system, a parent will pay little or no child maintenance in certain situations:

1. Nil rate: if the paying parent is in prison or is a minor.
2. Flat rate (£7): if the paying parent receives certain benefits such as state retirement pension or jobseeker’s allowance, or has a weekly gross income of £100 or less.
3. Reduced rate: if the paying parent has a weekly income between £100 and £200.

As it stands, the calculations do not take into account if the paying parent has any:

1. Non-taxable income such as ISAs or trust funds
2. Overseas income unless it is taxable in the UK
3. Capital and assets

Through not counting the financial sources listed above, many paying parents with substantial funds have managed to avoid paying what is due.

In the report Children deserve more: challenging child maintenance avoidance, Gingerbread outlines the principle failings of the CMS in the hope that the government will fight against child maintenance evasion. The publication sets the tone with its preface:

‘Our report shows how loopholes in the CMS allow some parents to pay a fraction of what they should. Parents and children are being let down by an opaque and unhelpful system, and many give up on getting the support they are owed.’

Gingerbread found that instead of helping single parents to calculate and, where necessary, enforce payments, CMS has been prioritising administrative convenience. Some parents are ping-ponged between HMRC and the CMS as neither establishment is willing to take responsibility the calculations. Some parents are not given the information they need or not notified of their options. Others, overwhelmed with having to do all the work themselves, give up entirely.

To demonstrate the flaws in the system, the report focuses on the stories of five single parents. One of these parents is the mother, Elizabeth Green, of Green v Adams. In this case, a wealthy father was able to pay his child a mere £7 a month because, despite having millions in assets, he was receiving a state pension. Mr Justice Mostyn was vociferous in his judgment about the need for change to stop monied individuals paying a “pitiful” minimum in child support.

The common denominator between these five parents is that they all went through difficult and painful separations. A testimonial from another parent provides a bleak perspective on the destructiveness of acrimonious divorce. On considering why the ex-partner is refusing to contribute, ‘Lee’ comments:

“The only answer I can find is that it must be about saying no to me. I believe that for many former couples, withholding maintenance is about holding on to power and control…but I hate the thought that my child would ever be disadvantaged because of me. This ‘game’ shouldn’t even be possible, should it?”

It is very common for couples who split on bad terms to be obstructive and combative when it comes to child matters. Parents who bear immense resentment towards each other often struggle to agree on financial and contact arrangements for their child. The report proves how the parents worst affected by the incompetence of the CMS are those who were the financially weaker party in a relationship which ended badly:

‘It can be particularly hard to negotiate and agree how much one parent can afford to pay for their child, where that parent holds most of the financial cards – and wants to keep those cards face down.’

The CMS added a £20 application fee to encourage parents to opt for mediation instead. However, for individuals who experienced a traumatic separation or who escaped from abuse, mediation may never be a viable option.

After assessing the many short-comings of the CMS, Gingerbread makes a number of suggestions to reform the service. Some of these include:

• Achieve better communication between HMRC and the CMS on income
• Reinstate safeguards against evasion
• Make sure parents know how to challenge a calculation
• Coordinate better with the family courts (this would allow the courts to disclose financial information obtained in proceedings to CMS)
• Exempt receiving parents from the £20 application free if on a low income
• End the 4 percent collection charge for receiving parents
• Instate compulsory domestic abuse training for CMS staff
• Invest more resources in debt collection and enforcement

It is shameful that single parents have to contend with a system which turns a blind eye on those evading parental responsibility. Gingerbread’s report is emphatic in denouncing the CMS’ negligence and lays bear the nasty world of individuals hiding their wealth so to disadvantage their ex. It is imperative that the government takes the report seriously and finds a solution as quickly as possible to stop desperate parents who can’t rely on mediation falling through the cracks.

Read more about our top lawyers for child maintenance matters and how they cater for HNW and UNHW individuals. Alternatively, read more about child maintenance and failures to pay.