Enter Your E-mail

LITRG comments on the proposed use of HMRC tax data in calculating child maintenance payments and says that tax and tax credits guidance is needed for separating couples.
 

Introduction

The Child Maintenance and Other Payments Act 2008 heralded changes to child support, yet to come into effect. Further amendments to the law are now being sought, with detailed regulations expected later this year. But so far LITRG has seen little to allay its fears that basing the new system on tax data obtained direct from HM Revenue and Customs will not be as foolproof as officials suggest.

In January 2011, the Department for Work and Pensions published a Green Paper entitled ‘Strengthening families, promoting parental responsibility: the future of child maintenance’.

LITRG's response to that consultation focuses on two key areas – the use of HM Revenue and Customs data in child maintenance calculations, and advice to separating couples.

Using HMRC data

LITRG participated in a working group in 2008; it raised a number of potential problems as to the use of HMRC data, which were left unresolved. LITRG recommends that further detailed consultation should be carried out, which should consider:

• income assessment and data issues for the self-employed;
• how to deal with cases where HMRC data might be inadequate, perhaps not truly reflecting ability to pay;
• how unearned income features in the basic maintenance calculation, and what can be done to address manipulation of income;
• the processes surrounding the use of HMRC data, the parties giving consent for their data to be accessed and shared, and how calculations can be checked and queried;
• the potential for errors in HMRC data and the knock-on effects;
• testing of IT systems to ensure that the interface is robust before launch.

Advice to separating couples

Furthermore, financial considerations are paramount when a relationship breaks down, including the impact on the couple’s tax position and tax credits claim. Advice to separating couples must therefore include guidance and signposting to further help on both of these areas. In particular, LITRG has seen problems arising with tax credits which could be avoided if full and joined-up advice were to be given. LITRG recommends that the design of support services and guidance is consulted on in detail with interested voluntary sector groups.

Conclusion

LITRG hopes that the further consultation it suggests will be carried out as a matter of urgency, working with interested external groups.

The full response is available on the LITRG website.