Is this true re Child Support Agency and service companies
I have been told by a divorcing dad that CSA ignore his dividend income when computing his income for child support maintenace. This seems bizarre to say the least. He has been running a successful business (not anywhere close to IR35 related contracting work) through a limited company for around 10 years.
Like most other sole shareholder companies he draws a minimal salary and votes himself the balance by way of dividends. I was shocked to hear that the CSA are only interested in his salary. The level of dividends he draws (or indeed could draw, were he to allow funds to build up in his company) is irrelevant apparently.
My friend is very willing to pay significant child maintenance for his son and can afford to pay more than the minimum. However this is all that CSA will direct him to pay due to their antiquated processes and systems. They also refuse to communicate by email.
He tells me that in trying to explain the position to CSA they indicated they are aware of the gap in the rules as they suspect many reluctant fathers leave their jobs and then get re-engaged on a contract basis through a service company so as to reduce the level of their relevant income for child support purposes.
This all sounds quite disgraceful - if it's true. Do any readers of AccountingWeb know what the position is here and how common it is?
- Do you charge fee or % for Successful appeal against HMRC penalties? 481 20
- What do you all do in your spare time? 395 18
- SAGE 50 PAYROLL YEAR END 177 4
- Letting Agents - requirement for audit of clients accounts 246 9
- HMRC RANT!!!! 368 8
- Are accountants keeping up with the pace of change? 95 1
- Accounting Package for Projects 35 1
- Auto Enrolment - Director Only Answer 1,344 19
- Scams are not always obvious 1,950 33
- So who has completed a 2015 tax return then? 201 4
- Design your ideal tax department 939 21
- Does HMRC penalties apply if directors file 113 2
- VTS or VT Software ???? 98 1
- Limited Companies, Directors Employer Registration P11D 253 10
- VT Final Accounts puts "Cost of Sales - Carriage" and "Cost of Sales - Other Costs" into "Other Costs". Is that compulsory? It seems mad. 109 2
- Over the VAT threshold 110 2
- Accountants website 254 3
- New client has not reported director's pay by RTI 235 3
- TaxCalc - A Return to Form 130 1
- Can software startup claim VAT refund during development? 113 5
- New Fangled Penalties 1,067
- Moving away from CCH software 923
- Recruitment agencies 547
- QROP pension input amounts 422
- write off loan or loan to equity swap or both 369
- HMRC BENCHMARK EXPENSES 331
- Unused Losses and Post Cessation Receipts 307
- fraud 255
- EIS relief on transferring shares to spouse 233
- Sole trade business in UK, but the owner works from EU 205