Child maintenance: Challenging the undeclared income of paying parents
How child maintenance is calculated and what to do if a paying parent is suspected of not declaring their true income.
The Child Maintenance Service (CMS) uses gross weekly income to calculate which of the five child maintenance rates should be paid (unless a paying parent gets certain benefits).
Gross weekly income is income before deductions for tax but after contributions to approved personal or occupational pension schemes.
In most cases, the CMS will get a gross income figure from information given to HM Revenue & Customs (HMRC) by the paying parent, their employer, or a third party (eg their accountant).
Either parent can ask the CMS to look at other types of income not included above. This is called ‘additional income’.
What is a complex earner?People working in certain positions can influence how they are paid and the amount of pay they get. These people are known as a ‘complex earners’. There’s no suggestion that complex earners seek to “cheat the system” by paying less tax or maintenance, but there’s recognition that they have the means through which to do this.
Examples of complex earners include company directors, who can affect their level of pay or dividends, or self-employed people, whose earnings relate directly to the profit/ loss of their business. Income from other means such as property or savings, isn’t included in the standard CMS calculation and is referred to as “unearned” income.
What if someone isn’t declaring their true income?Where a person with care believes the paying parent isn’t declaring their true income, they can apply to the CMS for an “additional income variation”. One of the grounds for a variation is ‘diversion of income’.
The CMS will consider a variation if it believes the paying parent is controlling (directly or indirectly) the amount of income they get by diverting it to another person or purpose, which means it isn’t included in the figure used by the CMS to calculate child maintenance.
Further information on the different grounds on which a variation can be sought is provided in section 5 of the Library briefing, How is child maintenance calculated?. A person can ask for a variation when they apply for child maintenance or after child maintenance has been calculated.
How does the CMS investigate more complex cases?Where a non-resident parent is suspected of concealing their true income, the Financial Investigations Unit (FIU) can investigate.
The FIU is a body within the Department for Work and Pensions (DWP) which considers more complex cases. It works with HMRC records and other information to assess and uncover additional income from non-resident parents. Where relevant, it also passes information to HMRC.
Additional income and evidence collected by the FIU may be used by the CMS to calculate child maintenance assessments. The CMS can order the parent to pay child maintenance they’ve previously avoided. The FIU does not have powers to investigate paying parents outside the UK.
The Government has said CMS caseworkers forward cases to the FIU if they believe there to be “credible, evidence-based challenges to a child maintenance assessment” that cannot be resolved through standard processes.
In response to a Freedom of Information (FOI) request in September 2017, the DWP attached guidance for the FIU (PDF) which says the FIU “does not accept referrals where the receiving parent challenges the income figure without any supporting information”:
The receiving parent does not need to provide evidence but does need to provide credible information to support the challenge. The receiving parent should not be tasked to source information they do not have.
Credible information includes, but is not limited to:
- I know they keep two sets of books
- They were fiddling their books when we were together
- Significant information shows their lifestyle doesn’t match the income declared
More information on the FIU can be found in section 3.5 of the Library briefing, Child Maintenance arrears and enforcement.
Appealing an FIU decisionIn a follow-up letter from a Committee hearing in January 2017 (PDF), Caroline Nokes MP (then Minister for Welfare Delivery) said “all decisions made by the Child Maintenance Service (CMS) in relation to the level of weekly maintenance amount (i.e. the liability) carry an underlying right of appeal to an independent tribunal” (p4). She went on:
Where a parent believes a maintenance calculation is incorrect, within 30 days of being notified of the decision, they should request that the decision be reviewed (known as a Mandatory Reconsideration) after which, and regardless of the outcome of the review, they may seek to appeal through HM Courts and Tribunals Service.
Information on how to appeal to the Social Security and Child Support Tribunal can be found on the Child Maintenance Service: Complaints and appeals GOV.UK webpage, or on the Citizens Advice webpage, Challenging what the CMS says you should get.
Complaining about the CMSIf someone wants to complain about the service they’ve received from the CMS, the complaints procedure is covered in section 3.6 of the Library briefing, Child Maintenance arrears and enforcement, which includes links for information on complaining to the Independent Case Examiner (ICE). An individual must exhaust the full CMS complaints process before complaining to the ICE.
Further information- House of Commons Library, How is child maintenance calculated?
- House of Commons Library, Child Maintenance arrears and enforcement
- For advice on a specific case, organisations such as Citizens Advice or the single parent charity Gingerbread (T: 0808 802 0925) may be able to help.
About the author: Niamh Foley is a researcher at the House of Commons Library, specialising in child maintenance
DisclaimerThe Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.