Child support changes during the pandemic by James Pirrie, director at FLiP and Michelle Counley, CEO of NACSA.
For those involved with the Child Maintenance Service, you will have worked out (probably long ago) that there is a specific rule for almost every situation … so this brief guide is only a stop gap and a direction rather than any final answer.
For those looking for additional help (as is always our recommendation) please connect up with our friends here at NACSA for expert, affordable help: www.nacsa.co.uk/
Michelle Counley is NACSA’s chief executive officer and has been buried deep in its regulations for as long as I have known her (around a decade or two years) and has been the safe hands that I have referred to for a lot of my clients over this time.
We wanted to look at the following changes:
- More overnights (or fewer)
- Less income as an employee
- Less income as a self-employed person
- Taking forward disputed changes to maintenance
We then want to look briefly at how the administration appears to be holding up.
The philosophy of the current version of the scheme (the third since the system went live in April 1993) sees the policymakers trying to minimise the burdens on the administration – so you should expect to see restrictions on the adjustments that you can action at any time:
- Broadly unless a change of income breaches a 25% threshold (ie would create a 25% increase or a 25% reduction) the CMS will not action any change to the maintenance. To give the phenomenon technical language, under regulation 34 (2) of the 2012 regulations, the CMS will not action a ‘change of circumstances review’ to ‘supersede’ the existing assessment, unless the change in income breaches a 25% “tolerance”.
- On the other hand, the CMS offers annual reviews … that is, the formula is re-run each year to see if a change is justified and here the thresholds do not apply. The annual review takes place on the anniversary of the first “effective date” ie when the jurisdiction of the CMS first started for your case.
The number of overnight stays impacts upon the level of payment made by the Paying Parent to the Receiving Parent. The numbers are well known:
52 – 103 nights a year – A reduction of 1/7th in maintenance payable
104 – 155 nights a year – A reduction of 2/7th in maintenance payable
156 – 175 nights a year – A reduction of 3/7th in maintenance payable
176+ nights a year – A reduction by 50% plus a further £7 pw
Where the care regime of the child/ren is equal then there may be questions as to whether the CMS jurisdiction ends under Regulation 50 of the 2012 regulations. In those cases, decisions about child maintenance fall back to the court.
At the time of writing, Government guidance allows contact to continue between a child and separated parents, providing there are no symptoms of being displayed in the relevant household.
Given this cliff-edge threshold approach for shared care allowances, it is quite likely that changes in overnights during the Covid-19 period will not necessarily change the adjustment category. For many the number of nights changing will not be so great as to cause them to cross over into the next category.
This is particularly given that we don’t know for how long any pandemic period will last and therefore what impact the arrangements would have over the year.
Income reductions for the PAYE employed
Significant numbers of employed workers will now be seeing their income reduced by 20% under the package of measures announced on the 20th March 2020.
Currently, the tolerance level to allow any change to maintenance is 25% (so that would mean that the tolerance was not breached so that a mid-year change of assessment could be activated. However, CMS is looking at the feasibility of amending legislation to reduce the tolerance to 20% in response to the announcements over pay reductions. This may only be a temporary measure and the rate may revert to the 25% when normality resumes.
Until such an announcement is made, you should expect current rules to be applied, which requires the 25% threshold difference before maintenance will change, or wait for their annual review date where no tolerance applies.
It is possible – but risky that in the meantime, an increase in pension contributions, for example, might tip a reduced earner over the top of the tolerance. We say that it is risky because where a Paying Parent deliberately makes a change over one of the formula variables to impact the assessment, the CMS has the power, on an application for a ‘variation on the grounds of diversion’ to ignore the change. Hence, it is possible that the NRP already struggling with lower income would then land themselves with higher pension contributions, and no change in the CMS obligations.
Before the Coronavirus Crisis began, the mantra was quite simply “pay in full, on time, all the time“. Not doing so would risk the case being moved to the ‘Collection Service’, which would see a 20% surcharge on top of the regular maintenance amount. Further charges would also apply if enforcement action is adopted. This remains the safe guidance. However, CMS officers have advised that no action will be taken where payments are missed or not in full in cases where Paying Parents have registered financial difficulty because of Coronavirus.
You must state your reason for the missed/short payment – without official registration that the change is due to the current health emergency these protective measures may not be given.
Important points to remember:
For the paying parent
- Child maintenance is a priority payment, and you should not simply cease payments without genuine changes to your income, and only once you have reported the situation to CMS.
- If maintenance is recalculated using the 80% wage, CMS will expect that revised payment to be made in full and on time.
- If your maintenance is recalculated using your reduced income, you will be subject to Regulation 23 of 2012 regulation which places an obligation to report any change to your income that again breaches the 25% (20%) threshold. Not reporting changes at the time may result in arrears being added to your account at a later time.
Remember too that at this time, everyone is facing financial pressure and payments may be needed at this stage more than ever. Reductions that could be avoided may have a significant detrimental effect on your children.
For both parents
- It is important to keep adequate records of maintenance amounts paid. These will need to be produced if there is any dispute raised by the Receiving Parent.
Changes for the self-employed
As we post this note, there is as yet no succour for the self-employed. They may be harder hit than their employed colleagues, as it is much harder to get a ‘change of circumstance’ review off the ground for a self-employed earner.
This is because the CMS can only determine income from a full complete year tax return. So until the year-end results are posted, there is no-knowing whether a change for the self-employed income is a temporary blip that will be balanced up by increases in earnings later in the year.
If your self employed status will be non-existent for some time, you may consider deregistration* which will allow CMS to calculate the change without any self-employment income included.
*you will want to discuss this with your accountant and/or only having considered the latest Government guidance on financial support for self-employed earners.
Private Agreements and FBAs
If a change in the level of payment could be agreed then this would be one way forward – but for many, this level of co-operation may not exist.
For those who have adopted the FBA (family-based agreement) approach, then the new income figure will be adopted and parents can agree on any revised maintenance amounts. This is because the FBA is simply an informal holding pattern arrangement: parents have agreed not to go to the CMS whilst an arrangement continues.
If a new agreement is reached that is fine. If it is not agreed then either parent may make an application to CMS, who will look at the situation as it stands at the time.
Dealing with the CMS & Disputing CMS decision
We now hear that the situation is going to become worse as CMS staff are now being sent for training ready for deployment to work on Universal Credit, so CMS cases are likely to be delayed further. It also shows where the Government’s priorities lie. We just have to do our best and you will need to be alert to do what you can to ensure your file is near to the top of the pile at all times.The CMS, like all government bodies has suffered cuts and is now very much a heavily burdened and understaffed organisation. It is really difficult to be patient whilst applications are managed and corrections made.
Going back to CMS procedures, if the supersession is actioned to reflect the change in your circumstances and the Receiving Parent does not agree with it, or the supersession is refused which you disagree with, the matter can be disputed by raising a Mandatory Reconsideration Request, which must be made within one month.
In theory, this process was to give the CMS a chance to review and put right errors, but unfortunately, its more significant characteristic is often to simply slow matters right down.
HM Courts and Tribunals
Tribunals are part of the Ministry of Justice who face increasing pressure to maintain services safely during this pandemic.
HMCTs are to prioritise work with limited resources. Uppermost of importance are matters that may lead to the deprivation of a person’s liberty or matters involving public safety such as terrorism, and possibly enforcement of Government instructions during this pandemic. Family matters such as care orders, protection orders, abduction, injunctions etc are considered priority work, along with certain immigration, social security and mental health matters. In the scheme of things, child support disputes are likely to be viewed as a lower priority to much of the courts’ other work, so expect delays!
If a date is scheduled for a Tribunal hearing you should aim to attend as instructed unless you are self-isolating, fall into one of the vulnerable groups, or have any other concern that would put you at risk. Not attending your tribunal hearing without good reason is risky! Decisions made in your absence can be detrimental, so you must discuss any issue that prevents you from engaging with the proceedings. Always notify the tribunal if you have concerns and do this as early as possible – don’t just fail to turn up on the day.
HMCTs are taking necessary measures to protect the public, including telephone or video link hearings where possible. Sadly not all venues have these facilities and those that do are likely to be seconded for priority hearings.
Court buildings are being regularly cleaned, but there is a significant shortage of hand sanitizer, so rules are being relaxed to allow you to take your own.
The quality of service from the Child Maintenance Service
Despite all assurances that the CMS service would be robust, fast and efficient the reality for many is different. Under normal working conditions, we see lengthy delays in administration, some parents can wait for several months for simple changes to be made to maintenance awards. We do not see matters improving given the current crisis.
Standard CMS practice is that any reported change has to be in place for at least 12 weeks before they will consider revising the maintenance. We have no official confirmation that this requirement will change, but we anticipate some relaxation of that guideline given the anticipated change to the 25% threshold.
The legal position is that you must pay as per the last calculation and pay schedule until you receive any revised decision in writing. For some parents, this is simply not possible. In those cases, you MUST discuss your financial situation with CMS, explaining why you cannot maintain your payments at the assessed rate.
If you have registered to use the online portal, monitor it regularly as not all decisions are issued through the post. You can also use your portal to send further messages or ask for updates on your maintenance recalculation.
CMS also face staff shortages through illness and self-isolation and the DWP as a whole will now have increased workloads with changes to SSP and ESA. There is a possibility that CMS staff are deployed into other areas of the benefits system to meet the current demand.
Families are likely to encounter new and distressing situations over the coming months. We understand that notifying CMS may not be at the top of your priority list, but we cannot stress enough the importance of early reporting and good communication. With any change in circumstance, the change can only take effect from the day that you report the change and provide the necessary verification. The sooner you report the change the better and maintaining good communication throughout makes it more likely that any application will be processed efficiently and more speedily. As a side note; good communication should not be confused with harassment. Getting your new maintenance decision will be delayed further if staff have to deal with parents calling several times a day!
If you need to help and support regarding this, or any other matter relating to Child Maintenance Service please take advantage of the NACSA Telephone Support Service which can be found here: NACSA or call NACSA at 01384 572525. If you are looking for legal advice on your rights or obligations, please contact James Pirrie at Family Law in Partnership E: email@example.com or T: 020 7420 5000.