Spotlight on Heidi Allen MP

Today we’re taking a closer look at Heidi Allen and her “crusade” to change elements of the Child Maintenance Legislation.

We at Voice of the Child are opposed to minor changes and tweaks to the CMS, especially badly thought out ones, in lieu of a wholesale reform process but we were curious to examine whether Ms Allen has any moral basis to be preaching to Parliament and the population about the CMS.

Crusade 1: Diversion of Income

The CMS is able to vary the amount of maintenance due by a non resident parent where they make the determination that income is being “diverted”. The wording in the 2012 Child Maintenance Calculation Regulations (Section 71) says the following:

Diversion of income

71.—(1) A case is a case for a variation for the purposes of paragraph 4(1) of Schedule 4B to the 1991 Act where—

(a)the non-resident parent (“P”) has the ability to control, whether directly or indirectly, the amount of income that—

(i)P receives, or

(ii)is taken into account as P’s gross weekly income; and

(b)the Secretary of State is satisfied that P has unreasonably reduced the amount of P’s income which would otherwise fall to be taken into account as gross weekly income or as unearned income under regulation 69 by diverting it to other persons or for purposes other than the provision of such income for P.

(2) Where a variation is agreed to under this regulation, the additional income to be taken into account is the whole of the amount by which the Secretary of State is satisfied that P has reduced the amount that would otherwise be taken into account as P’s income.

Over the past 18 months there has been a considerable focus on this with everyone from Gingerbread to a number of MP’s complaining about the Child Maintenance Service’s approach to this.

Headlines such as this one were common earlier in the year

Company directors accused of artificially cutting maintenance payments to ex-spouses by disguising incomes through corporate accounts (Daily Telegraph headline, May 2nd 2017)

Heidi Allen MP is quoted as saying (with respect to self employed parents):

“The evasion of child support under the guise of ever-changing ‘self-employment’ is also an evasion of tax.

“It is a double hit to the tax payer in the form of lower tax receipts and also benefit payments to parents with care who can’t then make ends meet.

“It is therefore essential that the Government reviews this as part of its comprehensive review of self-employment.”

We will come back to some of these comments later….

The usual example

The example often cited is that of a Company Director who is paid a salary but also receives dividend payments from the business as investment income.

Consider the following scenario (and assume that one of the adults in this example is a Non-Resident Parent):

2 partners are directors of a business

The Non-Resident Parent has a role in the business as that of an unremunerated Director (i.e. they don’t draw any salary for their role as Director). They do however own a substantial stake in the company so would receive dividends should there be a dividend awarded. These would not be taken into account in the standard Child Maintenance Calculation.

The other adult is not a shareholder but is a Director of the business. They do draw a salary which would obviously go into the household “collective pot”. Obviously the person drawing the salary would not be liable for child maintenance as they are NOT the the Non-Resident Parent.

The remaining shares in the business are owned by the Non-Resident Parent’s parents.

The business also has plant and machinery that needs to be paid for as well as a loan from a bank with interest that needs to be serviced.

Applying Heidi Allen’s logic we could infer the following from the Non-Resident Parent’s behaviour:

They are acting as a director but not drawing a salary from the business. They are therefore shifting all of their earnings from the business into those of dividends or, diverting it to their partner or their parents (who have no child maintenance liability).

Presumably Ms Allen would take umbrage at the behaviour of the unremunerated Director as outlined above?

She has been a historical supporter of the views of the “Single Parent Charity”, Gingerbread who said the following in their “Children Deserve More” report earlier this year.

“The rules which allow various tax reliefs against gross profit are neither designed nor intended to produce an indicative figure for the amount of income a parent has available to support a child.

Self-employed parents should have to strike a balance between maintaining a long-term viable and successful business (important for all concerned) and providing a reasonable income stream to meet a child’s day to day living costs.”

Roughly translated, this means that Gingerbread believe that the businesses should not be able to apply tax reliefs to their business profit for things like capital allowances etc (or, not to the extent that they currently do). Of course, this set of “new rules” would only apply to those businesses which were “owned” by people who had an active Child Maintenance case.

Back in the real world. No more hypothetical examples

You may wonder why we’ve singled Heidi Allen out here. We have written previously about her apparent “campaign” for what she describes as a “fairer system”. She sits on the Work and Pensions Select Committee and is part of a group of MP’s whose rather comical title is the “Compassionate Conservative Caucus”.

She was instrumental in a Kafka-esque inquiry into the Child Mainteance Service treatment of self employed people in 2016. You can read more about that here.

Make no mistake: We want to see large scale reform of the Child Maintenance Service ourselves but we view Ms Allen’s myopic focus on what she views as “injustice” as potentially extremely damaging to people who are just trying to do their best as parents.

Cast your mind back to the example above and we will explain a little bit more about where we got that scenario.

RS Bike Paints Ltd

On July 1st 2008, a lady called Heidi-Suzanne Bancroft formed a company called RS Bike Paints Ltd (http://www.rsbikepaint.com). Companies House records then show that on the 24th July 2008 the company did a share reorganisation resulting in the following ownership percentages:

  • 100 “C Class” shares to Mrs Renate Bancroft
  • 100 “B Class” shares to Mr Arthur Bancroft
  • 99 “A Class” shares to Ms Heidi-Suzanne Bancroft

Here are some other interesting details for comparison to our example shown earlier:

  • The only Director was listed as Ms Heidi-Suzanne Bancroft. Then, in November 2009, records show that the Director changed her name to Ms Heidi-Suzanne Allen.  The same Heidi Allen that now serves as the MP for South Cambridgeshire.
  • The Register of Parliamentary Interests shows that she is an unremunerated Director of RS Bike Paints holding over 15% of the capital (we can’t see any evidence that she does not continue to hold the 99 A class shares (33% of the company).
  • Her husband, Phillip Allen is now also a Director of the business which, according to his LinkedIn profile is the Marketing Director for RS Bike Paint Ltd. The “Persons with Significant Control” register says that Mr Allen holds “more than 25% but not more than 50% of the total voting rights”. So, perhaps his wife has transferred all or part of her stake to him.
  • RS Bike Paints Ltd files abridged accounts as a small company (turnover of £632,000 or less) so it is exceedingly difficult to see what the Directors were paid, or, whether any dividends were declared.

Looking at the company filings, they are also very peculiar but we are not here to audit the company in its entirety.

The point we are making is that this (presumably) perfectly legitimate business is exactly the sort of company that Ms Allen would consider “suspect” if it was owned by or managed by a person with a Child Maintenance case as per our example shown earlier.

How well would RS Bike Paints fare if they were not able to offset the cost of their manufacturing infrastructure because one of the people involved had a child maintenance case?

RS Bike Paints is typical of a normal company set-up in the UK and it’s also worth noting that the Office of National Statistics data shows that 1 in 10 people in the UK is a director or shareholder of a Limited company. Limited companies are not the preserve of child maintenance avoiders – they are legitimate businesses in their own right and plenty of people own and operate them perfectly legitimately – and Heidi Allen’s own set-up shows this clearly.

So why is Ms Allen making this point? We can’t answer that but from where we are sitting, Ms Allen looks like a horrendous hypocrite. She knows full well that Limited companies are set-up and operate like this and yet the way she bangs on about it you’d think this was all news to her.

Heidi and her expenses

As an MP Heidi gets a salary of £74,962 per annum.

She also claims a number of expenses. You can see her full expense record on the Independent Parliamentary Standard Authority here.

Some things we think are interesting (from a Child Maintenance Service perspective).

Ms Allen claims rent at the rate of £1,050 per month. This is presumably for a London apartment. However, she and her husband also own a house in London (as outlined in the Register of Members interests). She’d rather the taxpayers paid her rent though. After all, why should she pay for her own accommodation when the British public can foot the bill?

What about her travel costs? Remember that the CMS only allows 1p to 2p per mile for travel cost variations for Non-Resident Parents. How much does Heidi make the taxpayers pay (at 45p per mile)? In the current Parliament she has expensed £444.15 in personal car travel. In the 2016/17 Parliament she expensed £3,596.85 in personal car travel.

It’s worth saying that if she was asking the CMS to take into account contact costs the amount that Heidi Allen would have been able to claim for this Parliament would be around £15.79 (at 1.6p per mile). Perhaps she could add this inequity to her list of crusades? Especially as travel cost variations were specifically brought in to ensure that contact where a Resident Parent had moved away with the child(ren) was affordable for the Non-Resident Parent.

Let’s also take a look at Heidi’s voting record:

Heidi Allen Vote Record on Welfare Benefits

Date of VoteHow Heidi Voted
4th June 2015Heidi Allen voted in favour of proposed spending cuts and changes to the welfare system and in favour of spending on new nuclear weapons.
20 July 2015Heidi Allen voted to reduce the household benefit cap, to freeze the rate of many working-age benefits, to reduce social rents in England and for other changes to the benefits system.
20 July 2015Heidi Allen voted to reduce the household benefit cap, to freeze the rate of many working-age benefits, to reduce social rents in England and for other changes to the benefits system.
15 September 2015Heidi Allen voted to reduce the amounts people are paid in tax credits.
20 October 2015Heidi Allen voted in favour of an impending reduction in the amount people are paid in tax credits.
27 October 2015Heidi Allen voted in favour of reducing the amount people are paid in tax credits.
27 October 2015Heidi Allen was absent for a vote on Welfare Reform and Work Bill — Clause 13 — Employment and Support Allowance: Work-Related Activity Component
27 October 2015Heidi Allen was absent for a vote on Welfare Reform and Work Bill — Clause 14 — Universal Credit: Limited Capability for Work Element
27 October 2015Heidi Allen voted to reduce the household benefit cap, to freeze the rate of many working-age benefits, to reduce social rents in England and for other changes to the benefits system.
18 November 2015Heidi Allen voted for proposed cuts to tax credits and against investment aimed at growing a productive economy focused on science, technology and green jobs.
6 January 2016Heidi Allen voted in favour of cutting universal credit benefits for many people in paid work
23 February 2016Heidi Allen was absent for a vote on Welfare Reform and Work Bill — Clause 13 — Employment and Support Allowance: Work-Related Activity Component
23 February 2016Heidi Allen was absent for a vote on Welfare Reform and Work Bill — Clause 14 — Universal Credit: Limited Capability for Work Element
2 March 2016Heidi Allen voted to make the removal of the work-related activity component from employment and support allowance conditional on an impact assessment and to require Parliament to approve details of implementing the change.
2 March 2016Heidi Allen voted to make the removal of the limited capability for work element of universal credit conditional on an impact assessment and to require Parliament to approve details of implementing the change.
26 May 2016Heidi Allen voted in favour of repealing the Human Rights Act 1998; against plans to save the steel industry including fast-tracking infrastructure projects requiring large amounts of steel; and against a principle of the Government not borrowing to fund day-to-day spending.
8 June 2016Heidi Allen voted for reductions in benefits for disabled and ill claimants who are deemed capable of work.
20 July 2016Heidi Allen voted for cuts in housing benefit for recipients in supported housing.
20 July 2016Heidi Allen voted for reducing public borrowing and for capping welfare spending.
16 November 2016Heidi Allen was absent for a vote on Universal Credit and Employment and Support Allowance — Analysis of Impact of Changes on Those with Different Incomes

Heidi Allen Voting Record on Corporation Tax

Date of VoteHow Heidi Voted
14 July 2015Heidi Allen voted in favour of the Summer 2015 budget which, among other measures, increased the minimum wage, replaced student maintenance grants with loans and cut tax credits.
21 July 2015Heidi Allen voted for the measures in the Finance Bill including an increase in the income tax personal allowance, and to cap the rates of VAT and income tax at their existing rates until the next general election.
21 July 2015Heidi Allen voted for the measures in the Finance Bill including an increase in the income tax personal allowance, and to cap the rates of VAT and income tax at their existing rates until the next general election.
26 October 2015Heidi Allen voted for the measures in the Finance Bill including an increase in the income tax personal allowance, and to cap the rates of VAT and income tax at their existing rates until the next general election.
22 March 2016Heidi Allen voted to approve the March 2016 budget which contained plans to spend £56bn more than was expected to be taken in, introduced a policy of requiring all schools to become academies and introduced a new soft drinks levy.
11 April 2016Heidi Allen voted to increase the personal income tax allowance, change the way dividends are taxed, cut capital gains tax and reduce the amount which can be taken out of a pension tax-free from £1.25m to £1m.
28 June 2016Heidi Allen voted to reduce the main rate of corporation tax for the financial year 2020 from 18% to 17%.
5 September 2106Heidi Allen voted to reduce the main rate of corporation tax to be charged in 2020.
6 September 2016Heidi Allen voted to increase the personal income tax allowance, change the way dividends are taxed, cut capital gains tax and reduce the amount which can be taken out of a pension tax-free from £1.25m to £1m.

Heidi Allen Vote Record on Tax Avoidance

Date of VoteHow Heidi Voted
13 April 2016Heidi Allen voted against implementing a series of proposals intended to reduce tax avoidance and evasion.
19 April 2016Heidi Allen voted against giving the Financial Conduct Authority and Prudential Regulation Authority duties to combat abusive tax avoidance arrangements, including by ascertaining and recording the beneficial ownership of trusts.
28 June 2016Heidi Allen voted against requiring multinational enterprises to publish a country by country tax strategy including information on their attitude to tax planning.

Interesting isn’t it…?

For someone saying that want fairness and help and support for low income parents Heidi’s voting record tells a completely different story…

Questions

So the question is why is Heidi Allen not campaigning to right ALL of the injustices in the CMS system?

Is it because it’s politically expedient for her to bang the tired drum about income diversion rather than tackle her Government colleagues on proper reform of the CMS?

Diversion of income claims certainly grab the headlines, and probably secure her a large slice of the female vote in her constituency too – but we’d argue that if she front-footed into the disgrace of unpaid or fictitious arrears,  delays in calculations, poor management and leadership, and the failings with the current calculations she’d do more than gain the odd vote here and there; she’d actually start to make a real and measurable difference to children’s lives.

Surely that’s more important than anything else?

In a Family Law system designed for combative parents there is no real allowance for the views of children and any understanding of how Family Law ultimately impacts on children most of all.

We speak for the children in Family Law so that, finally, the children have a voice.

  1. rumbled on 29th November 2017 at 9:35 AM

    The directors use their company diesel cards to pay for private petrol. The workers use the cards to pay their petrol. Their clothes are taken as work clothes, their meals are entertainment. The bribes of champagne are put through as company xmas party, their car maintenance (personal cars ) are put through the company . The expensive Mac etc is put through the company . Not to even start on ‘cash no invoice’ . Money can be taken as a directors loan for the duration of the child being a child. The list goes on and on. All whilst the cms is cut as he pays the mortgage with the tax payers money not declared in a round about way. The girlfriend even has a petrol card as he says she drives him to look at jobs ! REALLY . the system needs to change . 100% carer not even 10% of salary to pay for the children . IT STINKS . REFORM IS NEEDED



  2. Voice of the Child on 29th November 2017 at 10:23 AM

    Thank you for your comment. You’re obviously not aware of the strict rules HMRC have on what can be classed as an expense and what is classed as a benefit in kind – benefit in kind income appears in HMRC records and is picked up every year by the CMS with their HMRC integration.

    By all means take a read of HMRC’s strict guidance on “Wholly and exclusively” business expenses to answer your questions on clothing, mileage, company car use, xmas parties etc:
    https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37007



  3. Maurice Barnett on 1st April 2018 at 5:25 PM

    ah yes Heidi Allen, a member of the “do as i say not as i do brigade” seems to be one of the biggest anti misandry hypocrites. One thing Heidi seems to overlook a few important issues regarding CMS, it isn’t a legally qualified body, nor are the members of staff who work there, but they are quite happy to issue all this legal advice to fathers, breach the Solicitors Act 1974 and seem to think that is ok, CMS and its staff members are not financially licenced, but again they tell fathers what they can survive on;

    couple of questions, since when did a public this public body pay out all of this money to these mums in order for them to say to the fathers “you owe the Agency ££££££ in unpaid child support””” fathers should and must demand a copy of their public accounts to show this so called debt, also those mums on benefits, since when did the father owe the Secretary of State money, wake up people we the public pay benefit bills out of our taxes, its nothing to do with the Secretary of State, this is fraud



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