The Child Maintenance Service – suggestions for reform

We are not talking about the majority of non-resident parents, who mostly pay all they should pay and often more. We are talking about those parents who are determined to avoid supporting their children, even when they could easily afford to do so.  They see the avoidance of supporting their children as a type of game – or a battle, perhaps because they want to do the other parent down, to ‘win,’ even though as a result their offspring suffer. We saw this in the recent case of the pensioner father with over £5m in assets who avoids supporting his son by depressing his income. He does this by not earning or drawing from his pension funds or paying support from his capital.

Child Maintenance Service

There are sadly too many such cases. The self-employed working for cash and under-declaring their income to HMRC may pay little child support on the low income the tax authorities are aware of. Worse still are those who don’t work and live off substantial capital investments and gains. They may pay virtually nothing to support their children and be millionaires. The tax-payer props up their families with tax credits and universal credit. Unfair.

Judge Mostyn is calling for reform. The government say it is too complicated to make it fair for everyone. Yet there are some simple options as follows:

  1. Capital gains inside and over the exempt amount for Capital Gains Tax (CGT) must be declared on your tax returns. This could be added to income and child maintenance could be levied on it. If not in all circumstances, in cases where maintenance of less than a certain amount is being paid
  2. Child maintenance could be payable from unearned income such as rent and dividends, interest and the rest of it. It’s already payable on pension incomes – but some people avoid drawing their pension income to avoid paying child maintenance, so
  3. In circumstances where no child maintenance or very little is being paid, it should be ordered as a percentage of the capital value of the liable parent’s pensions. 3% would arguably be right.

If the parent responsible for supporting their child won’t co-operate, then there must be penalties that benefit the child. So in the event of non-disclosure and failure to co-operate then there should be power to order an attachment of a pension fund or other asset, such as a bank account. Much of the requisite information will be on such wealthy parents’ tax returns. Many of them would not defraud HMRC – this being a criminal offence for which they could be jailed. We also need a public information exercise. Not supporting your children is unacceptable and anti-social. Society and children deserve better.

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