A thick fog of stupidity, jobsworths and Section 24

A thick fog of stupidity, jobsworths and Section 24

9:15 AM, 7th March 2023, About 9 months ago 16

Text Size

I have the unfortunate situation whereby the Child Maintenance Service looks at my pre-tax earnings for their calculation. Obviously, that means they “think” that my mortgage costs are earnings and so charge me 12% of that figure.

Given I am a lower tax band earner and that my BTL mortgage costs exceed 80% of my pre-tax earnings, this nearly doubles that which I actually earn. In effect, it puts me into the 40% tax bracket as that 12% that the CMS takes is pre-income tax, and there is no deduction in personal tax for CMS payments.

I spent 18 months complaining and arguing with them, but they are like a thick fog of stupidity and jobsworths. Their responses showed a lack of responsibility or concern or comprehension.

Included in my complaints was a letter from my accountant, they paid no heed to this.

I approached the HMRC technical department and the first gentleman I spoke to agreed the effect of the S24 process upon the CMS calculation was an unintended consequence. I asked if he would write me a letter for the CMS to which he agreed.

When the letter came it had nothing of our conversation, it only technically explained S24, which frankly my accountant and I had tried in vain. I then phoned HMRC again, but could not speak to this gentleman and ended up with a lady who repeatedly told me over and over that it was not her job.

I tried to stop paying the CMS and approached the ex directly, she was and remains un-empathic about the situation and just reported me to the CMS and they then, without due process, started to remove money from my bank account. I now pay 20% on top of the previous unjust figure as the CMS ad this fee for their own processing.

With mortgage rates doubling, you can see how this then increases my mortgage costs to above 100% of that which I actually earn. It is a dire situation, and if I sell the properties, of course the CGT then also gets added to my tax for CMS charges. It is a downward spiral of insolvency.

If it wasn’t for the fact that I was fortunate to buy my properties at the lows of 2009-2012, I’m sure I would be wiped out by now.

My portfolio was never enough to warrant moving to a Ltd co structure, and half of them are partly owned also.

The whole point of the CMS is allegedly to support children in retaining a decent standard of living. This is in practice not true.

Share This Article



11:26 AM, 7th March 2023, About 9 months ago

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.

Simon M

13:08 PM, 7th March 2023, About 9 months ago

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.


18:47 PM, 7th March 2023, About 9 months ago

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......


11:26 AM, 8th March 2023, About 9 months ago

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.


21:08 PM, 9th March 2023, About 9 months ago

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.


21:11 PM, 9th March 2023, About 9 months ago

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?


21:31 PM, 9th March 2023, About 9 months ago

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?


9:29 AM, 10th March 2023, About 9 months ago

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.


10:15 AM, 10th March 2023, About 9 months ago

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?

Susan Bradley

13:00 PM, 11th March 2023, About 9 months ago

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.

1 2

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now