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Child support: My partner’s ex-husband has been reporting little or no income on his tax return for years
My partner’s ex-husband is self-employed, who pays little or no maintenance for his children.
The Child Support Service is so poor that they write endless letters but do nothing since the ex-husband apparently has little or no income.
The earnings are determined on the basis of his tax returns in which he has reported little or no earnings for years.
He currently spends around £300 a month, rents a small three-bedroom house, runs a van, has a phone, buys his food, finances his cannabis, spends a meaningless fortune on Christmas presents for children and so on. All from his £300 a month.
I always reported him to HMRC using the online report form but they did nothing.
HMRC essentially doesn’t seem to pursue tax-avoiding low-earning self-employed people, probably because they only think about cost versus reward on a financial level and not about wretches like my partner’s ex-husband.
My question is essentially: how do we get HMRC to do anything? It’s not just about the unfairness of why we should pay when he doesn’t.
The domino effect of tax evasion permeates many other aspects.
You see it all the time on TV shows with sob stories that always show a woman raising children on her own with no money and blaming the government, and they never ask, what about the wretched person or wretches who are raising the children? have begotten?
SCROLL DOWN TO FIND OUT HOW TO ASK HEATHER YOUR TAX QUESTION
Heather Rogers replies: Unfortunately, you and your partner are not the only people in this situation.
In one case a few years ago, a company director hid his six-figure salary, claiming he earned just £175 a week.
He was charged following an investigation by police CMS Financial Investigation Unit with fraud by misrepresentationand convicted and ordered to pay child support owed.
Here I explain how the child support system works and how this relates to income reporting and possible tax evasion. I will then discuss your specific situation and what action you and your partner can take now.
HEATHER ROGERS ANSWERS YOUR TAX QUESTIONS
What is child support?
Child support determines how your child or children’s living expenses are paid if one parent does not live with the child.
It is paid if you have broken up or even if you have never had a real relationship. A child support arrangement must apply if your child is younger than 16 years old or younger than 20 years old if he/she is still in full-time education.
Both parents are responsible for the costs of raising the child, regardless of whether they see the child. Arranging to see your child is a separate matter.
The government explains how child support is calculated here.
Sometimes things don’t work out and the paying parent doesn’t pay, or tries to avoid paying the correct amount by not reporting all their income.
HMRC provides the income basis for the assessment. This can be income from tax returns, income from work and income from a business.
However, it is just the basics. You can also ask for it other income and expenses to take into account.
What if you think the child support payment is incorrect?
If you do not agree with a decision, you can ask for it to be reconsidered, or you can appeal directly. Profession is heard by HM Courts and Tribunals Service.
If you believe the income reported by the paying parent is incorrect, you should dispute and increase it with CMS. They have a team called the CMS Financial Investigations Unit that can investigate this further.
Below you will find examples of cases where FIU action can be initiated. Cases are referred by CMS counselors on behalf of parents receiving child support.
– A paying parent is self-employed, a partner or a business manager, their declared income is disputed by the receiving parent and there is income history or information to support this.
– A receiving parent believes that the paying parent is passing on income, for example to a new partner employed by the company.
– A paying parent does not provide income information.
– A paying parent has no work and is not entitled to benefits.
– A paying parent who knowingly provides incorrect information or there is a suspicion that the paying parent has provided incorrect or incomplete information
How can people shift their income to avoid paying child support?
People in certain positions can control or influence the way they are paid and/or the amount of wages they receive.
Those with the most opportunities are business leaders who are also shareholders in their own companies and those who are self-employed.
Company directors can determine the amount of their salary, as well as any dividends paid to them, especially if they are sole shareholders/directors.
Or they can take out a director’s loan from the company instead of receiving dividends for a certain period of time.
Self-employed income is directly related to the profit and loss of the business: income minus allowable expenses and certain allowable exemptions.
If the person is unscrupulous, he or she may affect declared profits by incorrectly reporting operating expenses or failing to report payments received from customers.
This is tax evasion and possibly money laundering, as I discussed in my recent article on tax evasion. You definitely should report this to HRMif you think this is the case.
A parent can also transfer income to a third party, for example a new partner, by paying him a salary or making him a partner or director of his company.
The majority of the income then goes through the new partner and then the paying parent declares a small income to the CMS.
Most people who pay child support report their income correctly and do not engage in such practices, yet such resources do exist and in some cases will be abused.
What powers does the CMS Financial Investigations Unit have?
The CMS is managed by the Department for Work and Pensions.
Under the Child Support (Enforcement) Act 2023, the DWP can impose sanctions on paying parents who avoid paying maintenance.
CMS enforcement actions include seizing assets, including bank accounts, and enforcing the sale of real estate. They can now even revoke passports and driver’s licenses. They no longer have to apply to the court for a liability decision.
Tax tips from Heather Rogers
What action can you and your partner take now?
In your case it’s not really HMRC that will help you. It is the CMS that should investigate your spouse’s ex-husband, and based on what you stated in your question, there are plenty of reasons to do so.
They might even start an investigation if suspicions have been raised, because they wouldn’t advise you about it, and they wouldn’t advise him for obvious reasons.
In fact, suspected tax evasion is a separate matter. The main issue here is that you suspect the ex-husband’s income has not been reported correctly for child support purposes.
Here you will find the options for you and your partner, which you should consult about the further action you take. The most important thing when reporting these types of matters is that you and your partner stay safe.
– You can report again to HMRC if you think tax evasion has occurred. You can also call HMRC. You do not have to report online.
But remember, they will not inform you of any research they conduct, nor will they keep you informed of any details.
If they have your personal information, they may contact you if they think you have more information. However, if you report anonymously, they cannot.
– You can also go to the CMS and urge them to investigate on their part. Credible information that something is wrong includes a mismatch between the paying parent’s income and lifestyle.
Here is a link to the House of Commons library which gives more information about the CMS investigation process.
– If you can afford it, speak to a lawyer who specializes in child support advice, usually a family law practice.
– If you suspect criminal activity, report it to the police.
Ask Heather Rogers a tax question
Tax expert Heather Rogers answers our readers’ questions
Heather Rogers, founder and owner of Aston Accountancy, is our tax columnist. She is ready to answer your questions on any tax topic: tax laws, estate taxes, income taxes, capital gains taxes and much more.
If you’d like to ask Heather a tax question, email her at taxquestions@thisismoney.co.uk.
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If Heather can’t answer your question, please do so Read here how you can get help with your taxes, including sources of free professional advice if you are older and/or on a low income.
You can also contact us MoneyHelper, a government-backed organization that provides free financial assistance to the public. The number is 0800 011 3797.
Here, Heather provides tips on how to find a good accountant, including when to seek help, hiring the right type of company, and typical costs.
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