CSA overhaul potentially flawed

The new Child Maintenance & Enforcement Commission (C-MEC), which replaces the Child Support Agency (CSA), is full of good intentions to help children, but is potentially flawed by requirements for 'voluntary payments' according to Angela Davis, a family lawyer with Nottingham law firm Berryman.

Created by the Child Maintenance and Other Payments Act, various provisions of the Act will be in force by the end of October, with others already introduced during June and July. Further sections are expected to be implemented between 2009 and 2011.

"The CSA has long been criticised and in need of a desperate overhaul," says Ms Davis, an associate in Berryman's private client team, "and C-MEC has been created with the principle objective of maximising the number of children for whom there is an 'effective maintenance arrangement', by encouraging parents to make their own voluntary maintenance arrangements wherever possible.

"However, there are a number of concerns about such voluntary arrangements. First, they won't be legally binding and as such are not enforceable, so if the payer were to default, the parent with care of the children would have to apply to use the statutory scheme, which is likely to result in a period of non-receipt of maintenance. Second, one party could easily exploit a dominant position in the instance of inequality of bargaining power between the parents."

C-MEC has a new framework which sets out how maintenance will be calculated in the future, as Ms Davis explains: "The new formula will calculate liability based upon the payer's gross income, as opposed to net income under the current scheme, and details of income will be provided directly to C-MEC by HM Revenue and Customs. It is believed that this will ensure that C-MEC obtains the necessary information quickly and accurately and it is hoped that this change will make it harder for payers to manipulate their income to avoid or reduce liability."

The formula for calculating the basic rate of child support is two tiered; where the payer's gross weekly income is between £200 and £800 the percentages range from 12 percent for one child, to 19 percent for three or more children. Where the payer's weekly income exceeds £800 the percentages apply to the income over £800, and range from 9 percent for one child, up to 15 percent for three or more children. There is a different formula applied when the payer's gross weekly income is less than £200.

"The upper limit of £2,000 net per week under the current scheme has now been increased to £3,000 per week gross," adds Ms Davis. "Any income over and above that amount will be ignored, but in such high income cases an application can still be made to the Court for 'top up' payments, whilst deductions may be made if the payer has other children living with them."

In an attempt to cut down on applications to revise maintenance liabilities, regulations are anticipated which will prevent reassessment unless there has been a fundamental change in circumstances such as loss of job or change in income of more than 25 percent. "This means that unless there is a significant change, liability will be fixed for 12-months based on the latest tax year information provided by HM Revenue and Customs."

The new scheme is not yet available to either existing cases or new applications. The transfer of existing cases to the new scheme and new applications being accepted into the new scheme rules is not expected until 2010 to 2011. It is anticipated that it will be 2013 before all existing cases have been transferred. At the end of October, benefit claimants in existing cases will be able to opt out of the statutory scheme and make a voluntary arrangement instead if they wish to do so.

The 12 month rule will survive under C-MEC whereby if child maintenance has been dealt with by way of court order after a period of 12 months has elapsed, then either party can elect to use the statutory scheme instead.