Payments, fees and charges
Application to Child Maintenance Service (CMS) will attract an application fee, currently £20. Further charges will be applied if the Collect and Pay service is required, and if enforcement action is necessary. Fees and charges can be avoided if the case is managed through Direct Pay service.
This is the default method of payment. Receiving Parents can no longer refuse direct payments and must provide details of the bank account in which maintenance is to be received.. Parents who do not wish to disclose their residential location may apply for a Non Geographical bank account, or use other money transfer schemes such as paypal.
The advantage of Direct Pay is the avoidance of maintenance charges. CMS will carry out an initial calculation of maintenance which they will seek to review annually - but no other administration will take place unless payments are missed. CMS will assume that payments are being made at the rates detailed in the pay schedule.
To maintain a case on Direct Pay, the Paying Parent MUST make the payments according to the pay schedules that are issued. Failure to do so (even if there is a dispute over the amount) may lead to the case being referred to Collect and Pay scheme, and charges will be applied.
Once a case is referred to Collect and Pay scheme, it will remain so for at least 6 months, often longer if enforcement measures were necessary. Referral back to Direct Pay will only be allowed if there are 6 consecutive monthly payments received at the correct rate.
Note; CSA cases that had a history of non compliance may be subject to a compliance period under CMS before being allowed onto Direct Pay. This is to provide the paying parent with the opportunity to pay in accordance with the calculation and not default. If payment is not maintained correctly, the case will be referred to the Collect and Pay service.
WARNING: do not be tempted to use the CMS calculation as a basis for a Family Based Arrangement. If CMS have made a calculation, that is the amount you should pay. If you and the other parent agree on a lower amount, you should seek to close the CMS case entirely and create a Family Based Arrangement.
Collect and Pay
Paying Parents who fail to make regular payments directly to the Receiving Parent will risk a referral to the Collect and Pay service, and fees will become payable. Under the Collect and Pay service, maintenance is collected from the paying parent, something through enforcement, and paid to the receiving parent. Both parents will need to pay for the Collect and Pay service;:
- The Receiving Parent will lose 4% of any maintenance paid
- The Paying Parent will pay an additional 20% of the maintenance calculation.
- Further charges may be applied if enforcement action is taken.
Example: A maintenance calculation is made at £40.00pw. The case is set as Direct Pay, so the Paying Parent will pay £40pw and the Receiving Parent will receive the full £40. If the Paying Parent fails to maintain this payment, the case will be moved to Collect and Pay, and charges will become applicable. The Paying Parent will now pay a total sum of £48.00 (£40 + 20%) and the Receiving Parent will receive just £38.40 (£40 – 4%). CMS will gain £9.60.
If a Direct Pay arrangement has broken down, the Receiving Parent must contact CMS as soon as possible. CMS must then contact the Paying Parent to investigate, and a period of 14 days is given in which the Paying Parent must provide evidence that maintenance was paid on time. This is not a 14 day period in which to pay the maintenance – but to prove that it was paid in accordance with the pay schedule. However in reality, we have seen many cases pay the shortfall upon contact from CMS and no further action is taken.
If the Paying Parent does not make the necessary payment, it will be considered an unwillingness to pay, and the case will be referred to the Collect and Pay scheme. Charges will be applied from the first date in which payment was not made at the appropriate rate.
NACSA have raised a concern over the correct procedure to follow in cases where the calculation is under dispute, particularly if the dispute is lodged as an appeal with HM Courts and Tribunal service. If a calculation is deemed to be wrong, and is in the process of appeal - there is a serious question over the correct amount to pay.
Non payment of the assessed rate will result in collect and pay fees being added. But payments at a rate which is later deemed to be incorrect may result in an overpayment which may prove difficult to recover.
If you are in this situation, you need to seek guidance on the options available specifically to your circumstances.