A thick fog of stupidity, jobsworths and Section 24

If I remember correctly CMS looks at income rather than assets and takes 19% of income? I can't remember.

If so, I would look again at incorporation and consider whether the CMS takes CGT and assets into consideration in its calculation, or whether it just looks income. I would also take a look at the effect of pension contributions on net earnings and consider whether the income figures for CMS are net of pension contributions.

Wow. You could contact your MP. This sounds like the kind of mess they have the access and clout to sort out. Summarise the problem - I'd show the actual numbers & the contact you've had attempting to get it resolved. Remember to include your name & address - so they can see you live in their constituency.

Financial hardship on your children, you, possibly being forced to evict tenants who may also be their constituents will all have most impact. (I wouldn't mention CGT.)

To add pressure, ask to attend their weekly surgery.

Ah Yes,

Thank goodness the CMS does not apply to me but student loan calculations do and provide a similar scenario but under a different statutory approach. Neither of which are applied in a way to allow for the miscalculations generated by S24.

It would be worth you delving into the CMS calculation regulations that will lead you to the HMRC legislation. There may well be agruements to be made that the taxation calculation for CMS is different to that used to calculate your personal liability. But who am I to wonder why......

I’m afraid that I can only sympathise. I worked for the CMS 5 years ago and it’s the system not the people. The operators can’t simply recalculate your earnings because your ex would challenge it even if they somehow smuggled it through compliance. Far from being thick, I worked with really bright qualified people but even the smallest procedural change took a lot of pushing. The 20% charge is down to your decision to pay less than the prescribed amount. Your MP unless you know otherwise will probably not even fully understand your situation, much less take on both the inland revenue and the CMS. I suggest you get your accountant to plot your choices to see if there is an unpalatable alternative to bankruptcy and copy in your ex as she will not pay attention to anything you say I suspect. By calling the CMS thick jobsworths I suspect that diplomacy is best left to others.

Reply to the comment left by Beaver at 07/03/2023 - 11:26
The basic rate is 12% for one child, 19% for 3 children on gross earnings before tax.

As CGT goes on your gross earnings it is likely to be included.

Yes, a private pension can reduce this, but so long as you can cashflow. When your mortgage cost is +80% of your fictional earnings so far as S24 & CMS are concerned, that you could put all your earnings going into a pension and then still be charged 12% on what you are paying for the mortgages.

Reply to the comment left by at 07/03/2023 - 18:47
Is there a different Student loan legislation re S24 and your tax liability?

Reply to the comment left by Contendedted at 08/03/2023 - 11:26
Thanks for your experience. Unfortunately the experience in the interaction with the CMS reveals a jobsworths attitude, and an inability to comprehend basic logic. It's not a label for insult without cause.

That said, the CMS calculation was "fine" before S24, but as soon as 2020 hit & HMRC changed the workings, it all went wrong.

Therefore, it's nothing to even do with what the Ex would challenge, it should be recognised by the CMS that it was wrong to be charging 80% more in the first place and refund the money.

The 20% charge is not down to a decision to pay less, it is down to the inequitable systems of the CMS to understand what is reasonable and just. The system creates cattle of the paying parent by which you are damned if you do and damned if you don't. Instead of the CMS looking at a case seriously, they just pigeon hole you as a trouble maker.

I was told by one advisor that the 20% charge is a "disincentive". If that be the case, then why charge it arbitrarily and refuse you to be removed from that charge? Especially when the grounds that you were standing on were justice and not to abscond from responsibility.

No, the system is without equity, the people within then learn to be inequitable.

Oh, and has anyone heard about the 1000 parents who are driven to suicide each year who are in arrears to the CMS?

What does that say about equity and support for children?

Reply to the comment left by howdidigethere at 09/03/2023 - 21:31
Sorry but I have to comment on this. The CMS system has crude percentage rules. The people working there cannot and will not deviate from this. The 20% is the admin charge to wrestle money from people who cannot or will not pay. Unsurprisingly in these tough times this is a big category. There are many injustices within these clumsy calculations but the injustice is caused by the revenue not the CMS. It’s rather like arguing with the shop assistant over the price and availability of eggs.

Reply to the comment left by howdidigethere at 09/03/2023 - 21:08So when the CMS looks at cashflow does it also look at capital items being sold? Or just other income?
And what happens if you don't realise the cash but just roll your gains into a company?

I would seriously look to see if incorporation is worthwhile for you. Especially as you mention that someone else owns part of some of your properties. The reason for that is because you could have a partnership and that will make a great deal of difference. Book an appointment for a bespoke consultation. I did and my husband and I took their advice. They will give you your money back if they can't help you. The reason you need a bespoke consultation is because you give them your personal circumstances and they work it all out for you. Your accountant will not know about this sort of thing and I had my accountant join in the Zoom meeting.