Child Support and The CMS Formula
Child maintenance starts with the CMS (‘Child Maintenance Service,’ previously known as the ‘Child Support Agency’) which provides a formula to calculate how much child support should be paid.
When the Child Support Agency was originally set up, it had a complicated formula which required about 50 items of data about both parents’ incomes and their other commitments. It proved far too unwieldy, and the CSA became a disaster which eventually collapsed under a backlog of unresolved cases. So over the years the formula has been simplified, and it is now based almost entirely on a percentage of the payer’s income, taken from the figures in previous years’ tax returns. The percentage payable increases according to the number of children but it takes no account of the receiving parent’s own income and there are very few variables.
The CMS has a good website where you can put in your numbers and see what it comes out with. Parents are encouraged to agree that figure between themselves and arrange to pay it. The CMS will step in and enforce payment if they are asked to, but there is a cost to both parents for that service to discourage them from using it.
The CMS Tribunal
Because the CMS formula is quite simple, there is very little scope for further discussion about how much child support should be paid. Parents can agree a different figure between themselves, but if they disagree at a later stage, the CMS figure becomes the default figure. With minor exceptions (such as high income families and costs of education which are discussed below) child support has been taken away from the courts , and the court has no power to make a maintenance order. The CMS has its own internal tribunal where disputes about how the formula applies in a particular case are resolved, and CMS decisions can be challenged. This is a very technical area and you should get individual advice before you get involved with the Child Support Tribunal.
Shared care under the CMS formula.
It is quite common for children to spend more or less equal amounts of time with each of their parents after they have separated, or for the arrangement to fluctuate. People commonly ask me why they should have to pay maintenance to their former partner for their children, when the children spend about half the time with them anyway? The question has its own logic, but it is not the way the CMS approach the issue. For them there has always been a “parent with care” and a “non-resident parent” who pays child support to the parent with care. If the children spend a significant amount of time with the non-resident parent, s/he gets a percentage reduction.
Sometimes the arrangement can be so equal, or fluid, that it is difficult to see who is the “parent with care” and if the parents don’t agree the CMS will decide. If necessary the decision can be referred to the CMS Tribunal. Often the CMS will decide that the parent who is receiving Child Benefit is the parent with care, although when their decisions have been reviewed by the courts the legality of that approach has been questioned. The CMS are supposed to take account of a broader range of factors, such as where the child’s GP is, and where the child goes if s/he has to go home from school sick etc.
The most recent CMS regulations seem to envisage the possibility that parents might share responsibility for their children so equally that neither of them is legally obliged to pay child support the other. But I have never encountered that approach actually being applied.
Exceptional treatment under the CMS formula – ‘variations’
It is possible to apply for exceptional treatment under the CMS formula. These are known as “variations”. To keep the scheme simple there is a very limited range of circumstances where you can apply for a variation, but the questions we are most commonly asked about are where the figures in the payer’s tax return are not a fair reflection of his or her income, perhaps because the payer has “diverted” income away from himself/herself or has understated the profitability of a business.
Other circumstances where a variation is possible include where the payer is incurring high levels of expense to maintain contact with the child (for example travel costs), or where s/he is paying fees for boarding school, or where s/he is paying a debt incurred during the relationship, but there are quite strict rules about the type of debt which will be taken into account
The CMS and business owners.
The CMS can present a particular problem to people who own their own business. The basic formula takes a percentage of the individual’s own income, rather than a percentage of the profit generated by the business. Most business owners do not draw the whole of the profit out of the business as personal income each year, because they say the business needs to retain some of its profits to continue to operate and potentially to grow, so their personal income shown in their tax return is less than the profit share they are entitled to. Their accountant would probably say that that is prudent.
But there is obviously a balance to be struck, and the person receiving the maintenance can object and request what is known as a variation, if s/he feels the payers tax return does not properly reflect the payer’s income from the business. This is a very technical area, but generally speaking the CMS expects the payer to take virtually all of his/her share of the profit of a business into account in working out how much child support to pay, not just the profit he or she actually draws or shows in her/his personal tax return. The request for a variation is initially considered internally at the CMS, and any further dispute gets referred to the CMS Tribunal. If you get involved in this issue you need individual advice and someone to represent you.
Extra maintenance for high income families.
You will notice that the CMS formula only takes account of the first £156,000 per annum (£3,000 per week) of the payer’s pre-tax income. Only a relatively small percentage of the UK population have an income above that figure, but any dispute about maintenance payable from income over that amount would ultimately be resolved by the courts.
The courts expect people who are earning more than this amount to make provision for the children above the CMS figure. The actual figure is as determined by the judge who is likely to take the percentages the CMS uses at lower levels of income as a starting point, but can order more, or less. A senior judge, giving judgement in a case concerning a famous rock star, that the CMS percentage should be applied and used as a starting point for income up to £650,000, after which a lower rate should generally apply. At that level the appropriate level would be what the CMS call their 'basic rate plus', which varies according to the number of children.
You will need to get individual advice about your own situation if you face this issue.
School fees and other costs of education.
The court retains the power to order a parent to contribute to the cost of a child’s education, on top of any CMS maintenance. The most common area of dispute is probably school fees.
The main issue is usually around “affordability” because for parents on relatively high incomes, paying school fees is not a problem, and it does not become a point of dispute between them.
But there is a band of parents who are less well off for whom school fees are something of a struggle. If they separate the payer may say that after he or she has paid the CMS figure, and his/her own living expenses, school fees are simply not affordable and the children will have to change school. If the parents can’t agree, the dispute gets resolved by the court, which is extremely expensive and for many families would defeat the object.
Most judges seem to say that some families choose to prioritise independent education for their children, even though they can barely afford it - sometimes the family struggles and they make sacrifices to meet the school fees, which is a choice they are free to make. But if the parents separate the struggle becomes harder and the judge may say that - for parents in this category - independent education is a matter of parental choice, and it is not a choice the judge should force upon people who cannot easily afford it. So it can be hard to persuade the judge to make an order in that type of situation.
You should never embark on this type of court application without getting proper individual advice.
Funding University and Higher Education.
The legal responsibility to pay Child Support ends when the child in question stops being a “qualifying child” as defined in the CMS regulations. The definition is quite complicated, but broadly a qualifying child is under the age of 19 years, and in secondary education up to ‘A’ level standard or equivalent.
But university or some other kind of tertiary education above ‘a’ level standard is increasingly the norm. Most parents expect to support their children through university, and will do the best they can. But it is possible for either parent to apply to a court order requiring the other parent to contribute. These court applications are relatively rare.
The child in question can also apply to the court for an order requiring his or her parent to give financial support through university and I have seen judges require parents of quite modest means to dig very deep into their pockets for this. But these applications are quite expensive - they were relatively common when legal aid was available for them, but since it has been withdrawn they are no longer cost-effective. If the application is successful the judge may also award costs, but it remains a risky type of court application.
Collecting Child maintenance payments from overseas.
Technically the CMS only has jurisdiction where both the child in question and the potential payer are in the UK, or if he is working for a UK domiciled company. So they probably can’t help you if the payer is living and working overseas.
In that case the UK court has power to make a maintenance order, but you still have the problem of collecting the money if s/he doesn’t pay up voluntarily. In the end, unless the payer has assets such as a house or savings in the UK against which you can enforce, much will depend on how effective the court system is in the country where s/he is living and working. Most states in the US, and Australia and Singapore for example have very good and effective systems, but some other countries are not so good.
There are various treaties you can use for international enforcement of a maintenance order, and the subject can become very technical indeed. The UK government has a team, known as the REMO Unit (REMO stands for ‘Reciprocal Enforcement of Maintenance Orders ‘) which should be your first port of call. You will find that their staff are very helpful, and more knowledgeable about this subject than most solicitors, even solicitors who specialise in family law.