NACSA PROPOSALS

NACSA believes that a system of child support must have the interests of the children as its main focus, but should also be fair and equitable to both parents. If fairness, equality and non-discriminatory practice are incorporated into the system of child support then essentially, compliance between the parties concerned will become less of an issue.

The old and the current systems of child support have seen unacceptable levels of complaints, including the following, which is not an exhaustive list:

• Delays in processing applications;
• Failure to deliver payments to the person with care, in many cases where payments have already been made by the ‘non resident parent';
• Failure to apply effective enforcement measures upon the truly errant parent;
• Failure to calculate an assessment, accurately and fairly;
• Inclusion of the families of the ‘non-resident parent' within assessments.
• The system is not only unfair, but is clearly unworkable.

NACSA believes that the following proposals will address all of these complaints and those not included. We accept that a little fine-tuning may be required to the proposals.

THE SYSTEM

When a child is born, BOTH parents' tax code is to alter. 3p for one child, 6p for two, 9p for three and so on. This ruling must apply to ALL parents, whether separated or intact.

The rate will be applied to the income relevant to the parents P60 for the previous tax year, in line with the current system of tax credits. The amount required for Child Support will be viewed as a yearly amount and divided over a period of 52 weeks in order to provide an award figure for regular child maintenance.

For intact families, the income taken from the parents', in line with their tax code, will be reintroduced to the family in the form of a tax credit, exactly as current Tax Credits are paid.

If the relationship breaks down, and the family separate with one parent moving out of the home, the tax code for both parents remains the same. Child Support continues to be deducted at source - but continues to be paid directly into the main residence of the child/ren. This would prevent any delay in the money flowing to the child/ren, as the process is already in operation.

If the parents of the child/ren are separated at the time of the child/ren's birth, arrangements would continue as with an intact family, whereby both parent's tax codes are altered accordingly. The monies deducted would be payable into the main residence of the child/ren.

WHERE THE PERSON WITH CARE IS A BENEFIT CLAIMANT:

In cases where the person with care is a benefit claimant, the same rules would apply as already exist under the current system. In effect there would be a £10 disregard before seeing a deduction in the benefit paid to that claimant.

The principle argument in maintaining the same arrangement is the consideration of the interests of the taxpayer. If income support is being paid to a person with care, the cost to the taxpayer is approximately £91 per week for one child, £128 per week for two children and £165 per week for three children. Should this be "paid" from the revenue collected BEFORE any balance goes to the family? If so then only a very small minority of ‘persons with care' would receive maintenance over and above the benefit he/she was receiving. Thus if he/she was to gain carer premium and child allowances through Income Support, he/she could not have them again through Child Support.

WHERE THE PERSON WITH CARE IS WORKING:

If the ‘person with care' were working, he/she would be liable to pay his/her 3p/6p/9p Child Support relative to his/her tax code. However, those monies would be reintroduced to his/her as a Tax Credit PLUS the monies paid by the ‘non- resident parent', taken at source. In effect he/she would still receive the full amount of Child Support had the family remained intact.

WHERE THE NON- RESIDENT PARENT IS UNEMPLOYED:

If the ‘non-resident parent' is unemployed, a flat rate of £5 should be payable. However, consideration should be given to the fact that if he/she is to be regarded as financially responsible for the payment of Child Support, whilst unemployed, consideration should be given to the payment of an extra premium, payable in his/her benefit. Currently, a ‘non-resident parent', attempting to support children, receives the same amount of benefit, as does an18 year old with no commitments.

WHERE THE INCOME OF A PARENT CHANGES DURING THE YEAR:

Should the income of a parent alter during the period of the current tax year, the adjustment would only take place at the year-end.

There will be cases where a parent will change employment and receive a lower income. The amount of Child Support actually taken from his/her income will be reflected in the amount of relevant pence in the pound and will reflect his/her new income level. This will prevent the parent having to pay high assessments calculated on previous income and provide a safety net for both the ‘person with care' and the ‘non-resident parent'. Government would have a short period of time in which to subsidise this shortfall, but the amounts would be adjusted at the beginning of the next tax year. Account would then be taken of any overpayments or underpayments when the new calculation is made. Again, Child Tax Credits operate this system of adjustment, at year-end.

SHARED CARE:

Those parents with ‘shared care' as defined under Child Support guidelines would not automatically receive a reduction in payments. Parents were paying the same amount of money whilst the family was intact and the shared care of the children at that time. However, for those parents who have EQUAL shared care, an argument could be considered to the effect that child benefit allowance should be shared.

STEPCHILDREN:

Tax codes would not alter in favour of any stepchildren unless those children were legally adopted. The system, if applied correctly, would ensure that stepchildren receive Child Support from their natural fathers/mothers. The process would automatically be set in motion at the birth or registration of the child/ren.

Obviously, there are some instances where the ‘non-resident parent' simply cannot pay Child Support. Some examples are if he/she were to be hospitalised, in prison or deceased. In such cases, a variation program similar to the one currently in use could be applied.

LOW ASSESSMENTS FOR HIGH EARNERS:

The proposed system would result in many high earners paying a relatively low amount of Child Support. In such cases, the ‘person with care' should have the right to apply to the courts for "top up" maintenance. This could be applied for at the same time as spousal maintenance, during access issues and property settlements.

SELF EMPLOYED:

Many ‘persons with care' experience difficulties when the ‘non-resident parent' is self-employed. No system can be totally secure against parents that adjust their accounts to suit any particular motive. However, the rate of Child Support would be dictated in accordance with an allocated tax code. Inland Revenue, as the responsible government department in possession of the details of a party's income, will be able to ensure accuracy and prevent abuse of the proposed Child Support system whilst ensuring and preventing the provision of false information. The Revenue has the incentive and power to investigate appropriate cases. Parents are less willing to provide false information to the Tax Office than to the Child Support Agency as they appreciate the harsh penalties that can - and will be imposed. The Child Support Agency do not use their enforcement powers effectively, which sends a message out to the truly errant ‘non-resident parent' that the ‘chase' will end relatively quickly if you manage to avoid them for a while.

ADVANTAGES:

• Child Support will no longer be a tax on 'non resident parents' - if anything it will be a tax on families.
• The interest of the taxpayer is protected.
• The proposed system will prevent delays in ‘persons with care' from receiving money.
• The ‘non-resident parent' is already paying Child Support through his/her tax code.
• It treats both the person with care and the ‘non-resident parent' alike. The financial onus is no longer the sole responsibility of the ‘non-resident parent'.
• There will be no government intervention at a time that is extremely difficult for families.
• No need for reassessments as the amount would always be relevant to the earnings of the parties to the arrangement.
• The system is simple to operate. The only costs involved would be the initial funding each year in order to review the individual income of the parties to the arrangement. This process can be combined with Tax Credit reviews.
• Children would enjoy the benefit of the income of BOTH parents.
• Child Support Maintenance would no longer be connected with access issues.
• Exchequer would save hundreds of pounds on staff costs!!
• Support from both Conservative and the Liberal Democrats. Both parties favour the installation of the Inland Revenue as the administrators of Child Support.

DISADVANTAGES:

• The Self-Employed may still be able to manipulate tax returns to demonstrate low income.
• Black Economy workers may still use this avenue to avoid the payment of Child Support, (possibly an agency could be created to devote its resources to the establishment of contact and maintenance enforcement - but avoiding the current practice of making heavier demands on the everyday working man).
• NACSA would not be required!