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Bill to catch parents ducking child maintenance

28 November 2017

In May 2017 the Committee published a short report into child maintenance, concluding that the "tentative" Child Maintenance Service (CMS) must up its game in child support collection.

Self-employment loopholes

The issue of unscrupulous parents disguising their incomes to avoid paying their fair share of child support - through self-employment loopholes, creative accounting or fraudulent tax returns, among others - was a common theme throughout.

The Committee recommended that the Department of Work and Pensions reinstate the mechanisms for parents to challenge child maintenance awards where the non-resident parent has assets or a lifestyle apparently inconsistent with their declared income.

Potential to hide true earnings

At the time of a "disappointing" response by Government to the report, Heidi Allen MP, the Committee Member who led on the child maintenance inquiry, said:

"Much of what we found highlighted the challenges associated with new ways of working: the growth of self-employment and the potential it creates to hide true earnings.

As child maintenance evasion often goes hand in hand with tax evasion, it seems inefficient and ineffective not to combine forces with HMRC.

I am afraid I am not reassured by the four investigations so far conducted by the crack Financial Investigations Unit, with just two resulting in any action.

This is not a difficult concept to grasp. A parent can see with their own eyes when their ex is living beyond their declared income or assets. Yet the Government, through the CMS, seems unprepared to act on that."

Now Ms Allen has tabled a 10 Minute Rule Bill for first reading in the Commons on Tuesday 28 November 2017.

The Bill aims to "equalise the assessment and enforcement of child maintenance arrangements of children of self-employed parents with that of children of other employed parents", to get around at some one of the loopholes that allow self-employed parents to disguise the means they have available to financially support their non-resident children.

All too easy to avoid paying

Heidi Allen MP said:

"When parents split up, the child maintenance service can help parents work out a fair payment schedule for the child. When the split is amicable and sensible, this system works well. But if the paying parent wants to avoid paying, they can do so all too easily and all too often, by hiding behind self-employed status.

By hiding their income, not only are they denying their child the financial support they deserve, they are also defrauding HMRC and often forcing the parent with care onto benefits.

This is a double hit to the tax payer. The country loses out on tax and instead pays out to support the receiving parent. The purpose of this Bill is to ensure the statutory child maintenance system works for as many families as possible, by closing this loophole."

Further information

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