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Understanding child maintenance obligations

There has been a great deal of press coverage recently on the issue of unpaid child maintenance arrears, most recently the Victoria Derbyshire programme on BBC1 spent time speaking with women who felt they had been let down by the Child Maintenance Service (formerly the Child Support Agency). According to the programme there is currently £3.8 million of unpaid maintenance arrears, which is leaving a huge number of single parents struggling financially.

When parents separate, there is a statutory obligation on the non-resident parent to provide financial assistance to the resident parent. The Child Maintenance Service (CMS) are the statutory government body who manage child maintenance payments. The CMS retain jurisdiction to deal with Child Maintenance up to a child’s 20th birthday providing they are in full-time non-advanced education. However, according to recent news many parents are not receiving this maintenance from their former partners and are struggling to find answers from the CMS. Many say they have been left with years of arrears which they worry will never be repaid, whilst in the meantime they are struggling to make ends meet.

In recent years, the Child Maintenance Service has undergone a huge overhaul both in name and in practice. The way in which maintenance is calculated has changed, along with the general ethos and capabilities of the organisation.

The Child Maintenance Service now encourage parents to reach a ‘family-based arrangement’. This does what it says on the tin – you can agree anything you want between you which could mean that instead of a monthly maintenance payment, you agree that one parent covers costs for school uniform, swimming lessons, school trips, etc. The CMS are keen to push parents towards dealing with this issue directly if this can be done constructively and amicably.

Unfortunately, for many families this will not be possible, and would prefer the reassurance of a regular monthly sum that can be used towards their general outgoings. The Child Maintenance Service have a calculator on their website (www.cmoptions.org) that is a useful tool to calculate (in broad terms) child maintenance liability and can give a guide as to the sums to be paid.

If you are not receiving child maintenance then you can apply to the Child Maintenance Service for an assessment. However, continuing along the same lines as above, they are discouraging people from seeking to involve the CMS unless they are unable to reach an agreement – they do not want their service to be the only route to dealing with Child Maintenance. There is therefore a cost for the assessment of £20 but they will be able to make a determination as to the amount payable by the non-resident parent. Whilst £20 may not sound like much, for low-income families this can create a barrier to even having the assessment. Furthermore, many parents feel a huge sense of injustice that they should be asked to pay out for an assessment because they are not receiving the maintenance to which they are entitled from the other parent.

If an assessment is undertaken, the paying parent will be given the opportunity to set up a direct debit or standing order for the amount owing. If this does not happen and the sums are still not forthcoming, the CMS have a ‘collect and pay’ service. This increases the cost to the paying parent by 20% and the receiving parent receives a deduction of 4% as a collection fee but it ensures that the payment is taken from the paying parent and passed to the receiving parent by having the sum deducted from the paying parent’s pay at source. This of course is a pragmatic step in cases where the paying parent receives a monthly salary but it is fraught with difficulties in circumstances where someone is self-employed or is running a business and does not have a regular pay-check from which these deductions can be made. Furthermore, this way of managing your income can distort the assessment which is based upon HMRC records of your gross weekly salary, less any pension contributions made. If for example a person is running their own company and receives little by way of salaried income this can result in an assessment showing a low-level liability when perhaps a person is actually earning very highly. Similarly, some parents find that the way the calculation is made can encourage creative accounting on the part of the paying parent, for example, leaving retained profits in a business, or deliberately increasing their pension contribution to reduce their liability to child maintenance.

In some circumstances, parents will share the care of their children relatively equally. In these cases, some families agree that there should be no payments made as each parent has costs associated with the children which are broadly equal. However, if an assessment is made by the CMS in circumstances where it is unclear as to which parent would be considered the ‘resident’ parent for the purposes of determining who pays child maintenance, the CMS will usually deem the resident parent to be the parent in receipt of child benefit.

Of course, it is possible when seeking a financial settlement in the context of divorce proceedings for an order to be made dealing with child maintenance. However, any orders made will only be enforceable for a period of 12 months following the making of the Order, after which it is possible for either parent to apply to the CMS with a view to varying this payment in accordance with any assessment. This leaves many parents worried that the maintenance they are relying upon to meet their outgoings could be at risk of a downward variation. As a result, global maintenance orders have become increasingly popular. This is where any spousal maintenance agreed/ordered by the court is wrapped up together with child maintenance in one monthly sum on the proviso that the maintenance payments under the global order would be set off pound-for-pound against any subsequent CMS assessment. As such, the global figures remains constant at all times – thus the incentive to seek an assessment from the CMS is lost.

Unfortunately the idea of a global order is not an option for unmarried parents. The only financial recourse for unmarried parents is to apply under Schedule 1 of the Children Act for financial assistance from the other parent for the benefit of the child(ren). This can include maintenance but can also include provision for housing, school fees, or capital lump sums to pay for specific items to ensure that the needs of the child are met.

Do not forget that for the higher earners, (those earning in excess of £156,000 gross per annum) the Court do have jurisdiction to make ‘Top Up’ orders. This goes above and beyond the basic rates attributable under the statutory child maintenance liability. These top up orders are not capable of variation under the CMS jurisdiction and an application to vary would need to be made to the Court if these payments became unsustainable.

Ultimately, whilst it is working for many, some parents feel that the child maintenance system is still in need of significant improvement so as to ensure that parents are receiving the financial support they require in order to meet the needs of their children post-separation. 

CONTACT CHRISTINE

If you would like more information or advice relating to this article or a Family law matter, please do not hesitate to contact Christine Caffrey on 01727 798000. 

© SA LAW 2017

Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them alone. You are recommended to obtain specific advice in respect of individual cases.

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