Motivated by the personal stories of a group of mums in South Cambridgeshire (pictured above), Heidi has been campaigning for stronger collection and enforcement powers to help the Child Maintenance Service (CMS) deal with the minority of parents who do not meet their financial obligations to their children.
As a Member of the Work and Pensions Select Committee, she began her campaign by asking the Committee Chair Frank Field, to investigate whether the new CMS was adequately dealing with the failings of its predecessor system, the old Child Support Agency. The enquiry conclusions, published in May 2017, revealed that the CMS system, though better, still lacked the “teeth” required in cases of deliberate financial evasion.
One General Election later, in November 2017, Heidi introduced a Private Members Bill to the House of Commons – the Child Maintenance Assessment of Parents’ Income Bill to address these deficiencies (pictured above presenting the Bill to the House). Commenting on the Bill at the time, Heidi said:-
“Essentially, when parents split up, the Child Maintenance Service can help parents to work out a fair payment schedule for the child. But if the errant parent wants to avoid paying, they can do so all too easily through hiding behind self-employed status. By hiding their income in dividends and assets, they are denying their child the financial support they deserve, but they are also defrauding HMRC and often forcing the parent with care onto benefits. This is a double hit to the taxpayer and my Bill seeks to close that loophole.”
Following the publication of her Bill, Heidi began working with the then responsible Minister, Kit Malthouse to encourage the Government to adopt the aims of her Bill. Kit promised Heidi that some of her Bill’s aims would be addressed in the imminent publication of the DWP’s new Compliance and Arrears Strategy.
The new Strategy was published and open for consultation until February 2018. Although it did indeed propose new powers for the CMS, allowing them to demand payment from assets as well as income, Heidi knew there was more to do. So, following a Ministerial reshuffle, Heidi continued to persuade the new Minister, Justin Tomlinson MP, to go further.
Heidi continued to meet with the Minister and civil servants to look at ways of strengthening the new Strategy. Consequently, the Department amended and republished the regulations required to bring the Strategy into law. This redrafting secured a range of new measures and ensured the spirit of Heidi’s Bill became law.
By working constructively with Justin, for whom Heidi has high praise, she has been able to secure significant improvements to the collection and enforcement framework of the CMS.
The new regulations - the Child Support (Miscellaneous Amendments) Regulations 2018 come into force last month.
The key measures in the new regulations are:-
Changes to the child maintenance calculation for complex income
Heidi had been concerned for some time that the relationship between the CMS and HMRC was not robust enough, that there was inadequate data sharing and that this allowed some parents, particularly those in self-employment, to arrange their financial affairs in a way which made it more difficult for the CMS to make an accurate assessment.
She said “As the economy changes, there are 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 and to strengthen the powers available.”
Under the new regulations, the CMS now has power to include a range of assets in the calculation of maintenance. These include assets such as coins, gold and property (not including the paying parent’s home), income generated from an asset over time such as property or land, jointly held assets, or income generated from a sale, foreign income and any unearned income, such as inheritance, rental income and interest on bank accounts.
Where such assets exist beyond a certain value, the CMS will now allow a notional income from those assets and include that income in the calculation of a parent’s income for the purpose of calculating child maintenance.
Commenting Heidi said: “The Minister recognised that my Bill was designed to enhance the powers available to the CMS and strengthen the relationship between the CMS and HMRC. These measures will also ensure that a much wider range of assets can now be considered for assessing a parent’s income. These changes will be particularly relevant where a parent has an affluent lifestyle, and a source of income cannot be identified, but ownership of assets can be.”
Deductions from joint and unlimited partnership accounts
From 20 December 2018, the CMS will be able to make deductions from joint accounts and unlimited partnership accounts. Until now, it has not been possible for the CMS to make deductions from such accounts where the paying parent has money in an account but is not making maintenance payments due. Heidi felt that this was an avoidable loophole and one that should be closed.
Commenting on the changes, Heidi said: “It was clear from my meetings with the Minister that if new regulations were going to be introduced, they should include measures to ensure, subject to certain strict safeguards, that money held in joint accounts and unlimited partnership accounts should be considered. Including joint bank accounts as an asset against which enforcement action can be taken, will help to recover maintenance which is due to parents.”
Removing passports from paying parents
In a new measure, the CMS will have the power to disqualify a paying parent from holding or obtaining a passport if they have consistently avoided paying their child maintenance debt. This is a significant new power. If the debt is over £1,000, the CMS will be able to make an application to the Magistrate’s Court for the paying parent to be disqualified from holding or getting a passport for up to 2 years.
In addition to the measures in the regulations, following further representations made by Heidi, the Minister has committed to continue strengthening the data sharing arrangements and collaboration between CMS and HMRC. The CMS has since implemented access to “Real Time Information” across the Department which allows for swift identification of changed financial circumstances. They have also established a bulk data share mechanism which will be used to provide HMRC with information identified during CMS investigations, helping identify tax fraud. The dedicated Financial Investigations Unit within the CMS has been allocated additional staff, with 70 specialists in post from January 2019. This team now have direct links with counterparts in HMRC so can share best practice and collaborate directly on cases.
Heidi concluded “As I was making such constructive progress with the Minister and officials, and the reality is that Private Members Bills are never allocated Government debate time, I decided to withdraw the Bill. I believe the improvements I have secured in the new regulations by working in this way, mean there will now be significantly improved collaboration between HMRC and the CMS. Their new stronger powers mean I am confident more parents will receive more of the maintenance due to them than was the case before. I’d like to thank my “super mums” for their patience as I have sought these improvements. Change comes slowly in Whitehall but between us, we have made a difference.”