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Government to proceed with new child maintenance compliance and arrears strategy

General approval from respondents for proposals in consultation document

The Department for Work and Pensions has announced that it will proceed with a new compliance and arrears strategy proposed in its recent consultation document. It is intended implement any necessary changes to secondary legislation this autumn.

The DWP says that it has received broad endorsement for the key principles which will underpin the new strategy, which will: 

The overall response to the proposals for improving the calculation of child maintenance liabilities was positive. There was a call for steps to be taken to include unearned income automatically when initially calculating a liability, as with historic income. As this would not be achievable without changes to primary legislation, the DWP has begun to explore with Her Majesty's Revenue and Customs ways to speed up the current process for sharing the relevant unearned income data they hold.

Respondents offered a range of views on the proposed new power to allow the CMS to derive a notional income from an asset for the purpose of varying a calculation. There was no clear consensus on the applicable percentage rate to derive a notional income or the minimum value of assets this should be applied to. The DWP has therefore opted to proceed with the 8% rate proposed in line with the Judgment Debts (rate of interest) Order 1993 and will set the minimum aggregate value of assets at £31,250. This, the DWP says, allows it to align its overall approach with how it handles unearned income, and best balances the interests of all parties. There will also be legal safeguards to ensure this new power only targets appropriate assets.

Respondents were generally in favour of the proposal to extend the government's ability to make deductions from benefits to include Universal Credit (UC) for those with earnings who are liable to pay flat rate maintenance. It is intended to introduce new regulations to allow it to make these deductions at the rate of £8.40 a week, aligning the treatment of these clients with others in a similar situation. Deductions from benefit will be extended so that arrears can be collected when on-going maintenance ends.

The DWP had already announced an intention to introduce new powers to make deductions from jointly held accounts, and this consultation sought views on a proposal to extend this to jointly held and unlimited liability partnership business accounts. The proposals will be amended to reflect concerns that there needed to be safeguards to prevent third party funds from being subject to deduction. This means that as well as the proposed representation periods of 28 days for Lump Sum Deduction Orders (LSDOs) and 14 days for Regular Deduction Orders (RDOs) the last six months' bank statements will be checked to establish ownership of funds before progressing the order. Where this is not possible there will be an rebuttable assumption that 50% of the funds in the account belongs to the paying parent.

The proposal to introduce a new power to confiscate passports from those who repeatedly refuse to meet their child maintenance obligations was well received. Regulations will provide that the ban can be revoked or reduced where full and part payment of the arrears covered by the disqualification order is made.

For the original consultation document, click here. For the government's response, click here.