Enforcement / Investigative Action
Investigative Action
The purpose of this activity is for a caseworker to raise a SR to request an investigation. The
SR will be routed to the Financial Investigation Unit (FIU) who will review the
allegation made and an Investigative Officer (IO) will carry out an investigation if
appropriate. FIU will record the result and notify the caseworker. For Northern Ireland the
Investigative Action SR is routed to FIU by the Legal Enforcement Team. The Investigating
Officer will record the result and notify the caseworker. For more information refer to
Financial
Investigation Unit (FIU) Summary. Investigative action by an IO can be required at any point in the lifecycle of a case, particularly
when gathering other party information. It may be required during investigations into
suspected criminal activity and where there is a requirement for face to face information
gathering.
When caseworkers suspect a receiving parent or paying parent of criminal activity or an
investigation is requested by a client, obtain as much information as possible to support the
allegation. The client can be advised that a referral will be made for FIU to consider opening
an investigation, FIU will contact the client during this process, assess the information
supplied and decide if their case can be accepted. The Investigative SR is raised in the first
instance, record all information gathered within the SR notes. After investigating, FIU will
advise of the result and next steps.
If a receiving parent or paying parent requests timescales regarding the investigation, refer to
the published average times. However, every case is individual and will be dealt with in
accordance to the information received. The FIU need to assess a variety of open and closed
sources of information, before evaluating all of the evidence to decide if there should be any
changes to income and maintenance calculation.
Clients who are being investigated should never be told that FIU are investigating the
case.
Investigative action is conducted by FIU and triggered when a Child Maintenance Group
(CMG) caseworker requires an IO to gather information in order to progress a case. While an
investigation is taking place, the ownership of the case will not transfer to FIU.
To request an investigation by an IO the caseworker will create a service request (SR) and
record the details of the information to be gathered.
The SR will be routed to the FIU who will review the case and decide if face to face
information gathering is appropriate.
When an investigation is completed FIU will record the results on the SR, including the FIU
decision maker's details, name and staff number, and return it to the owning caseworker. For
Northern Ireland, the IO will record the results on Investigative Acti on SR, including the FIU
decision maker's details, name and staff number, and return it to the owning caseworker for
action.
The process will complete when the caseworker is satisfied that the required information has
been received.
It is important the correct actions are taken to ensure CMG have exhausted our own actions
including financial investigation before a client is referred to HMRC Fraud. Caseworkers must
never signpost clients to the Fraud Hotline. If the client raises concerns we will take all
possible action, including making our own investigations, and should not direct clients to
HMRC. If after our investigations are complete the client tells the caseworker
Financial Investigation Unit FIU
Summary
The FIU are responsible for investigating allegations of criminal/civil activities that negatively
impact the correct amount of Child Maintenance being calculated. It will also deal with a
variety of different cases, such as:
Allegations of fraud when attending or supplying a DNA test
Allegations that the paying parent is a complex earner and has failed to report their true
level of income
Employers who fail to comply with deduction from earnings orders (DEO)
Offences that relate to client status, for example:
o A QC may no longer be a QC
o The QC may no longer be in the receiving parents household
o A CIFBA is reported instead of a ROC
Complex earners come from a diverse customer base, such as self employed, directors of Ltd
companies and those in receipt of unearned income. Elements that contribute to a complex
earners income can be manipulated to reduce their overall level of income, this directly
impacts on the amount of child maintenance being calculated. FIU will provide advice for
caseworkers dealing with complex earners.
To request an investigation to FIU, create a SR as per
Investigative Action, recording details
of the information to be gathered.
The SR will be routed to FIU who will review the allegation made and carry out an
investigation if appropriate. While FIU are conducting the investigation the owning segment
will continue to own the case and continue to perform business as usual activities (keeping
notes up to date) on the case until a response is received from FIU. There is no need to lock
assign the case in a particular segment unless specifically requested by FIU, this will be
decided on a case by case basis. Within the referring SR, detail conversations with the paying
parent and the receiving parent, and include the Verint reference number for these calls.
Verint reference numbers will be provided by team leaders (TL).
The following lists examples of when to consider instigating FIU action:
Paying parent Self Employed/Partner/Director and historic income has been disputed by
receiving parent and history of income or information known
Receiving parent believes paying parent diverting income i.e. new partner employed by their
company
Paying parent fails to provide earnings information and we are unable to calculate liability or
use estimated earnings/DMD
Paying parent not employed and not claiming benefit
Variation applied for by receiving parent for paying parent additional income or assets held
(HMRC has no trace and or evidence known unable to reach client outcome)
Paying parent knowingly supplying false information or it is suspected that the paying parent
has supplied false information
This list is not exhaustive. Contact FIU for further advice when uncertain of reason for
referral. Do not ignore the client as they can escalate their issue. FIU are available to assist
with any queries relating to referrals being made and can provide advi ce regarding the
information required or the process to follow. FIU are situated within all main CMS centres
with the exception of Leicester, Leicester colleagues can contact FIU Dudley team.
Do not inform the client who is being investigated when a referral is made to FIU that FIU
are investigating their case, and ensure all notes are recorded on relevant contact notes on
CMS2012.
Contact with Receiving Parent
If the receiving parent challenges the income figure, ask what the paying parent does for work
and what type of employment this is. Check Paying Parent information on RTI to see if it
supports information provided by the Receiving Parent. If the receiving parent advises the
paying parent is PAYE, establish what information they have to suggest this is different to the
income information held. FIU does not accept referrals where the receiving parent challenges
the income figure without any supporting information. The receiving parent does not need to
provide evidence but does need to provide credible information to support the challenge. The
receiving parent should not be tasked to source information they do not have. Credible
information includes, but is not limited to:
I know they keep two sets of books
They were adjusting their books when we were together
Significant information shows their lifestyle doesn’t match the income declared
Once FIU have completed the investigation the case will be returned to the caseworker to
implement the change by following BAU instructions for Change Income. For more information
refer to
Change Income.
Input the new calculation, FIU will already be recorded as the Decision Maker on the
Investigative Action SR. At this point the paying parent can be advised if the income change is
as a result of the FIU investigation. Do not challenge the new calculation with FIU nor refer
the case to Advice & Guidance as the income has been already been investigated by FIU.
If a maintenance calculation is implemented as a result of FIU decision this will need to
be considered when the case goes through Income Current Periodic Check or through Annual
Review. This is so that the caseworkers can determine whether the existing current income
continues to be more accurate. When we conduct a Periodic Current Income Check we are
seeking to establish current income that is reflective of the NRP’s circumstances at the
effective date of the income review. This includes deciding whether we should retain the
existing current income if it continues to be more reflective of the NRP’s circumstances. For
more information refer to
Periodic Income and Annual Review.
Complex Earners
People in certain positions are able to control or influence either the manner by which they are
paid, and / or the amount of the pay they receive (directly). The most commonly seen of these
are company directors and self-employed individuals. There is no suggestion that all clients
with such earnings are seeking to “cheat the system” (tax or maintenance), merely that such
means exist. Do not refer clients to the HMRC Fraud hotline. If concerns are addressed CMG
will take all possible action, including making investigations, and should not direct clients to
HMRC. If after our investigations are complete, the client advises the caseworker they still
wish to report tax evasion, the caseworker should direct the client to do this on line by using
HMRC Fraud on-line (link is external). For more information on complex earners and different
income refer to the following information:
Company directors are employed earners, employed under a contract of employment with
their company. They can influence the level of own salary as well as dividends (and the level
of those dividends)
Self-employed earners’ earnings relate directly to the profit and loss of their business i.e. they
do not “pay” themselves a wage. They can affect declared profit by falsely creating or
elevating business expenses, or failing to declare payments received into the business i.e. “off
the books”.
Information held on RTI may help determine if a Paying Parent is employed / self employed /
a director.
Other (complex) methods by which clients may reduce their taxable income include:
Diversion of income – e.g. paying a third party instead of oneself
Retaining capital within the company / business, which could otherwise be considered as
profit
Use of tax avoidance schemes – e.g. Umbrella companies (IR35) / film share schemes /
Employee Benefit Trusts (EBTs)
For more information refer to Policy, Law and Decision Making Guidance
.
Income Types
A paying parent can be in receipt of more than one income type.
For more information regarding income types refer to Policy, Law and Decision Making
Guidance
Employed
A person who is employed, but not exclusively by one company and pay tax via the PAYE
system will normally have a contract of employment between them and the company they are
employed by. Their contract will normally detail the hours of work with the excep tion of a zero
hours contract.Information held on RTI may help determine if the Paying Parent is employed.
Self Employed
A person who works for themselves i.e. not contracted to one company but may use the term
sub-contractor. The self employed will complete a self-assessment tax return annually via
their accountant online. Those in the construction industry who are self employed must hold a
Construction Industry Scheme (CIS) card.
Self employed paying parents have the ability to hide income from HMRC and therefore CMS.
Where it is suspected that the true income figure has not been declared, referring the
receiving parent to HMRC may not resolve the issue, an FIU referral should be considered
where there is enough supporting information. For more information on what information to
gather refer to FAQ’s.
Partner
Two or more people who set up a non limited company, they will have a partnership
agreement with the other partners on how profit will be split amongst them, generally based
on an individual’s investment or worth to the company. This is very common in law firms and
Medical/Dental practices and is generally a limited liability partnership. Partners also complete
an annual self assessment tax return.
Directors
All directors are employees of the Limited company they are a director of. They can take
wages in the form of PAYE income, normally up to the current personal tax allowance
threshold, and then take dividends based on their share of the shareholders funds if they hold
shares in the company. They also complete a self assessment tax return annually for their
whole earnings. For more information on unearned income and action to take refer to FAQ’s.
Other Case Types
Where the maintenance calculation is based on current income, the paying parent is required
to inform CMS when their income increases by 25% or more (See PLDMG
Changes self-
employed non-resident parents are required to report ). When the receiving parent reports a change to the paying parents income, check if a change
income would apply to gather evidence. Where this process is exhausted and the receiving
parent has credible information that other evidence may exist, check RTI to see if information
supplied can be verified, if not contact the paying parent to verify the claim. If the paying
parent fails to respond, or responds however denies the change, you may need to refer this to
FIU.
Where the paying parent reports a change of circumstances, for example, they are no longer
working and are being supported by family and/or friends. If this is challenged by the receiving
parent and it seems improbable based on information held or reported, this can be considered
for FIU.
Where the paying parent has multiple cases and is reporting as living together with one of the
receiving parents, refer this to FIU for investigation, this may also apply to claims for ROCS.
People who work in the ‘Hidden Economy’ and do not complete self-assessments for tax
purposes are called ‘Ghosts’. You may see these where the HMRC interface returns no
information, gather information from the receiving parent and check CWOL, if the information
gathered suggests different, consider a referral to FIU.
Additional Income Variations
If the receiving parent advises the paying parent is a director, or this is viewed on
Companies
House (link is external), ask the receiving parent if they believe the paying parent is receiving
dividends. If the receiving parent advises the paying parent has property rental income,
establish as much information as possible to identify whether the paying parent is receiving a
profit from this.
For variation purposes, the paying parent would need to receive a profit of at least £2500.00
per annum. If the receiving parent confirms the paying parent has dividends or receives at
least £2500.00 in property rental income, inform the receiving parent they can apply for a
variation. Refer to
Variation – Additional Income for more information. If during the variation
process the HMRC unearned income field is blank or zero, or the receiving parent provides
credible information to show why the returned figure is wrong, or the information held on CMS
suggests the returned figure is wrong, refer the case to FIU by launching the enforcement SR.
Refer to
Investigative Action for instructions.
For more information regarding Additional Income refer to Policy, Law and Decision Making
Guidance
Benefit Fraud
If the receiving parent advises the paying parent is working, however CMS shows they are in
receipt of a benefit, do not refer the receiving parent to the benefit fraud helpline. Instead,
record this information and use the
Fraud Referral FMO icon from the workstation desktop.
Select
C-MEC from the dropdown list of referrers, and then complete as many of the
information fields as possible. The following is a list of some of the information required. Do
not forget to ask the receiving parent if they have this if CMS doesn’t:
Nino
Address
Phone numbers
Description of paying parent
Employment type - Employed, or self-employed
What they paying parent does for work and who is their employer if not self-employed
What time do they leave for work and come home
What area are they working in if exact location is not known
Details of how the paying parent is paid
CRA/PSG Check
CRA information may appear to contradict the income figure held on our system or the
information given by the paying parent, check CRA/PSG financial activity to identify if this
indicates otherwise e.g. HMRC income figure is low but the paying parent has high credit
availability, there are no or few defaults, or the paying parent has a mortga ge that is close to
or exceeds their income. These are indicators something may be wrong but does not mean
criminal activity is taking place. Gather all possible information and consider a referral to FIU .
Third Party Information (TPI) Datamart
On a monthly basis the Financial Investigation Unit (FIU) sends details of non-compliant
cases currently sitting with the Enforcement and Arrears teams to the DWP Data & Analytics
team to be checked against a commercial database called ‘TPI Datamart’. This then identifies
any Income the paying parent receives from savings interest or share dividends. For further
information refer to
Third Party Information (TPI) Datamart.