Section 22: Orders for regular deductions from accounts

130.     This section inserts new sections 32A, 32B, 32C and 32D into the Child Support Act 1991 which will enable the Commission to deduct child support maintenance from the non-resident parent's account.

131.     Section 32A enables the Commission to make a regular deduction order against a non-resident parent who has failed to pay child support maintenance. The order allows the Commission to collect regular deductions of maintenance from an account held by a non-resident parent with a deposit taker.

132.     Subsection (2) of section 32A sets out that both arrears and maintenance payments which will become due under the calculation in place can be collected through deduction orders.

133.     Subsection (3) allows a regular deduction order to be made even where there is an ongoing appeal against the maintenance calculation. This can only happen however in cases where the Commission concludes that the outcome of the outstanding appeal will not affect the amount of the liability covered by the order or, if the outcome of the appeal would have such an effect, the Commission still considers making the order to be fair in all of the circumstances.

134.     Subsection (4) sets out that regulations may prescribe when an order may not be made in respect of an account of a prescribed description, and can be made against a joint account which is not of a prescribed description.

135.     Subsections (5), (6) and (7) set out that the order will specify which account it is made against and the date it has effect. The order will operate as an instruction to the deposit-taker to make deductions from the specified account and pay them to the Commission, and copies of the order shall be served on the deposit-taker, the non-resident parent against whom it is made, and if it is directed at a joint account, the other account-holders.

136.     Subsection (8) provides that the deposit-taker is under a duty to comply with the regular deduction order. However, it also protects the deposit-taker from any liability if they do not comply with the order during the seven day period beginning with the day the order is served on them.

137.     Subsection (9) provides, for the avoidance of doubt, that where regulations have been made under section 29(3)(a) of the Child Support Act 1991, the person liable to pay child support maintenance (the non-resident parent) is taken to have failed to pay if they have not paid it to, or through, the person specified in, or by virtue of, the regulations.

138.     Section 32B requires the Commission, before a regular deduction order is applied to a joint account, to offer each of the account-holders an opportunity to make representations with regards to the making of the order and the amounts to be deducted.

139.     Subsections (2) and (3) ensure that amounts to be deducted from a joint account do not exceed amounts that appear to the Commission to be fair in all circumstances, with particular regard to the representations made, the amount contributed to the account by each of the account-holders and such other matters as may be prescribed.

140.     Section 32C provides regulation-making powers to the Secretary of State with regard to the practicalities and procedure relating to regular deduction orders. The following paragraphs give examples of provision that may be made by the regulations.

141.     Subsections (2)(a) to (2)(c) of section 32C - the regulations may require that the order specifies the amount in respect of which it is made, the amounts to be deducted in order to meet liabilities, and the dates deductions are to be made.

142.     Subsection (2)(d) - the regulations may limit the rate of deduction under a deduction order. It is envisaged that an order will be limited to an amount which is a percentage of the non-resident parent's income. If the circumstances of a non-resident parent change it will be their responsibility to inform the Commission so that the amount in the order might be changed and the deposit-taker notified. Only amounts in credit will be deducted from an account.

143.     Subsection (2)(e) - the regulations may allow for certain circumstances when amounts of money held to the credit in an account should be disregarded in respect of the regular deduction order. This could be if the money is being held on behalf of another person, for instance.

144.     Subsection (2)(f) - the regulations may include provision concerning the payment of money deducted by a deposit-taker to the Commission.

145.     Subsection (2)(g) - the regulations may allow the deposit-taker to deduct an amount from the non-resident parent's account towards its administrative costs before making any deductions in line with the regular deduction order.

146.     Subsection (2)(h) - the regulations may provide for notifications to be given to a non-resident parent who is subject to a deduction order, and if the order is directed at a joint account, the other account-holders, regarding amounts deducted and paid under the order.

147.     Subsection (2)(i) - the regulations may require the deposit-taker to notify the Commission, within a specified period of time, if the account specified in the order does not exist, or if the non-resident parent who is the subject of the order has any other accounts.

148.     Subsection (2)(j) - the regulations may require the deposit-taker to notify the Commission, within a specified period of time, if a non-resident parent subject to a deduction order closes their account or opens a new account.

149.     Subsection (2)(k) - the regulations may allow the deposit-taker at which an order is directed, the non-resident parent against whom an order is made, or if the order is directed at a joint account, the other account-holders, to apply to the Commission for a deduction order to be reviewed, in certain circumstances, and may provide for how the Commission is to carry out such a review.

150.     Subsection (2)(l) - the regulations may allow the Commission to vary an order. Regulations will prescribe the circumstances when this might occur, for example, as a result of a review, or if some of the arrears have been settled.

151.     Subsection (2)(m) - the regulations may provide powers similar to those in section 32A(8) in relation to the variation of an order, whereby although the deposit-taker has a duty to comply with the order as varied, they will not be liable for non-compliance during the first seven days from being given notice of the variation.

152.     Subsection (2)(n) - the regulations may provide that an order will lapse in prescribed circumstances. This might include, for example, provisions that an order will lapse if the non-resident parent no longer holds a current account with the deposit-taker to whom the order was directed.

153.     Subsection (2)(o) - the regulations may provide for an order to be revived in certain circumstances. This could be where it has lapsed because the non-resident parent has agreed to make payments but then defaults on those payments.

154.     Subsection (2)(p) - the regulations may make provision allowing or requiring an order to be discharged.

155.     Subsection (2)(q) - the regulations may require the Commission to give notice to the deposit-taker in the case of an order lapsing or ceasing to have effect.

156.     Subsection (3) provides regulation-making powers to the Secretary of State, with regard to the priority of a regular deduction order and:

• any other regular deduction orders in place;

• any other type of order which makes deductions from the same account; and

• any diligence (done in Scotland) against the same account.

157.     Subsections (4), (5) and (6) require the Secretary of State by regulations to make provision for any person affected to have a right of appeal to a court against a regular deduction order, or against any decision made by the Commission following an application for a review of the order. On such an appeal, the court is prevented from questioning the maintenance calculation by reference to which the deduction order was made. Regulations may include provision with respect to the period within which an appeal must be made and the powers of the court in relation to any such appeal.

158.     Section 32D sets out that it will be an offence for a person not to comply with the requirements of a regular deduction order or any designated requirements set out in regulations made under section 32C. A person found guilty of such an offence may be liable to a fine. However there is a defence if the person can show that all reasonable steps were taken to comply with the order or regulation.

Section 23: Lump sum deduction orders

159.     This section inserts seven new sections, 32E, 32F, 32G, 32H, 32I, 32J and 32K into the Child Support Act 1991. These sections relate to lump sum deduction orders, which enable the Commission to collect payments from a non-resident parent's account held with a deposit-taker, or from money due or accruing to them from a third party. Lump sum deduction orders, however, may be used only to collect arrears and not ongoing maintenance.

160.     Section 32E enables the Commission to make an interim lump sum deduction order if it appears to it that a non-resident parent has failed to pay an amount of child support maintenance and an amount of money stands to credit in an account held by the non-resident parent, or an amount is due or accruing to them from a third party.

161.     Subsection (2) sets out that a lump sum deduction order may not be made in respect of an account of a prescribed description, and can be made against a joint account which is not of a prescribed description if regulations so provide.

162.     Subsection (3) provides regulation making powers to the Secretary of State to allow him to set out the conditions to be disregarded in deciding whether an amount is due or accruing to the non-resident parent from a third party, for the purposes of lump sum deduction orders.

163.     Subsection (4) sets out that an interim lump sum order will be directed at the deposit-taker or third party in question and will specify the amount of arrears in respect of which the Commission intends to make a final lump sum order. Where it is directed to a deposit-taker, it will also specify which account it applies to.

164.     Subsection (5) allows an interim lump sum deduction order to be made even where there is an ongoing appeal against the maintenance calculation. This can only happen however in cases where the Commission concludes that the outcome of the outstanding appeal will not affect liability for the amount covered by the order, or if it will have such an effect, it still considers making the order to be fair in all the circumstances.

165.     Subsection (6) requires the Commission to serve a copy of the order on the deposit-taker or third party at which is directed, the non-resident parent responsible for the arrears and, if directed at a joint account, the other account-holders.

166.     Subsection (7) provides that the order will come into force at the time it is served on the third party at which it is directed.

167.     Subsection (8) stipulates when an interim order will cease to be in force. It will be the earliest of the following:

• when the prescribed period ends;

• when the order lapses or is discharged, which may be where, for example, the non-resident parent has paid their arrears, or they have made representations to the Commission which then chooses to discharge the order; or

• when a final lump sum deduction order is served.

168.     Subsection (9) provides, for the avoidance of doubt, that where regulations have been made under section 29(3)(a) of the Child Support Act 1991, the person liable to pay child support maintenance (the non-resident parent) is taken to have failed to pay if they have not paid it to or through the person specified in, or by virtue of, the regulations.

169.     Following the making of an interim deduction order, the Commission can decide whether to impose a final deduction order. Section 32F provides powers to enable the Commission to do this.

170.     Subsection (1) of section 32F stipulates that a final deduction order can only be made if an interim one is in force, the prescribed period for the making of representations has passed, and the Commission has considered any representations made to it, for example, by the non-resident parent.

171.     Subsection (2) sets out that the order will be directed at the deposit-taker or third party at which the interim order was directed and will specify the amount of arrears and, if directed at a deposit-taker, will also specify which account it applies to.

172.     Subsection (3) provides that the amount of arrears specified in the final deduction order must not exceed the amount specified in the interim order less any of those arrears which have subsequently been paid by the non-resident parent.

173.     Subsections (3)(b) and (4) ensure that amounts to be deducted from a joint account do not exceed amounts that appear to the Commission to be fair in all circumstances, with particular regard to the amount contributed to the account by each of the account-holders and other matters as may be prescribed.

174.      Subsection (5) allows a final order to be made where there is an ongoing appeal against the maintenance calculation. This can only happen however in cases where the Commission concludes that the outcome of the outstanding appeal will not affect liability for the amount covered by the order or, if it will have such an effect, the Commission still considers making the order to be fair in all the circumstances.

175.     Subsection (6) requires the Commission to serve a copy of the order on the deposit-taker or third party at which it is directed, the non-resident parent responsible for the arrears and, if directed at a joint account, the other account-holders.

176.     Section 32G enables accounts or amounts accruing to be frozen during the relevant period.

177.     Subsection (1) of section 32G enables interim and final lump sum deduction orders to operate as an instruction to a deposit-taker not to do anything that would reduce the amount of money standing in credit in a non-resident parent's account to an amount below the amount specified in the order (or if the amount held is below the amount in the order, not to reduce it any further).

178.     Subsection (2) enables interim and final lump sum deduction orders to operate as an instruction to a third party not to do anything that would reduce the amount of money due to a non-resident parent to an amount below the amount specified in the order (or if the amount held is below the amount in the order, not to reduce it any further).

179.     Subsection (3) sets out that subsections (1) and (2) have effect subject to regulations made under section 32I(1).

180.     Subsections (4) and (5) define "the relevant period" as: for interim lump sum deduction orders, the period during which it is in place; and for final lump sum deduction orders, the period from the time it is served on the deposit-taker or third party at which it is directed, until the time when appeals can no longer be brought against it.

181.     Subsection (6) sets out that if an appeal is brought against a lump sum deduction order, the relevant period ends when appeal proceedings have been concluded and any period during which further appeal may be brought has ended.

182.     Section 32H(1) sets out that once the relevant period has ended, a final lump sum deduction order directed at an account held with a deposit-taker will operate as an instruction to the deposit-taker to deduct the amount of arrears specified in the order from the account and pay it to the Commission and, if the amount held in credit in the account is less than the due amount of arrears, to deduct the whole amount in the account and pay it to the Commission.

183.     Subsection (2) of section 32H provides that if any of the due amount of arrears remains unpaid after the lump sum deduction has been paid to the Commission, the deduction order will remain in operation until the relevant time, as an instruction to the deposit-taker to pay to the Commission any amount (not exceeding the remaining amount) and not to do anything that would reduce that amount.

184.     Subsection (3) sets out that following the end of the period during which the order is in force, a final lump sum deduction order directed at a third party will operate as an instruction to the third party to deduct the amount of arrears specified in the order from the amount due to the non-resident parent and pay it to the Commission. If the amount due to the non-resident parent is less than the arrears due, the whole amount due should be paid to the Commission.

185.      Subsection (4) provides that if any of the due amount of arrears remains unpaid after the lump sum deduction has been paid to the Commission, the deduction order will remain in operation until the relevant time, as an instruction to the third party to pay to the Commission any amount held due to the non-resident parent and not to do anything that would reduce that amount.

186.     Subsection (5) clarifies that this section has effect subject to regulations made under sections 32I(1) and 32J(2)(c).

187.     Subsection (6) defines "the relevant time" as the earliest of either: the time at which the amount of arrears is paid; the time at which the order lapses or is discharged; and the time at which a prescribed event occurs or prescribed circumstances arise.

188.     Section 32I enables the Secretary of State to make regulations providing for circumstances when a deposit-taker or third party may do something to reduce the amount held in an account, or due to the non-resident parent. Subsection (2) of section 32I sets out that these regulations may require the Commission's consent to be obtained in prescribed circumstances.

189.     Subsection (3) sets out that the regulations may provide for the Commission's consent to be applied for by a deposit-taker or third party at which an interim or final deduction order is directed, the non-resident parent responsible for the arrears and, if directed at a joint account, the other account-holders.

190.     Subsections (4) and (5) state that if the regulations require the Commission's consent to be obtained, the Secretary of State shall by regulations provide for a right of appeal to a court against the withholding of that consent. These regulations may include provision with respect to the period within which an appeal can be brought, and the powers of the court to which the appeal lies.

191.     Section 32J provides regulation-making powers to the Secretary of State with regard to the practicalities and process relating to lump sum deduction interim and final orders. The following paragraphs give examples of provision that may be made by the regulations.

192.     Subsection (2)(a) - the regulations may make provision for the circumstances in which the amounts held in an account are to be disregarded for the purposes of: the making of an interim lump sum deduction order; the instruction to a deposit-taker not to reduce the amount held in credit; and the instruction to a deposit-taker to deduct amounts to pay to the Commission.

193.     Subsection (2)(b) - the regulations may make provision for the payment to the Commission of sums deducted under a final lump sum order.

194.     Subsection (2)(c) - the regulations may allow the deposit-taker or third party who deducts and pays an amount under a lump sum deduction order to deduct an amount towards administration costs before making any deductions in line with the deduction order.

195.     Subsection (2)(d) - the regulations may provide for notifications to be given to the non-resident parent who is subject to a lump sum deduction order and, if the order is directed at a joint account, the other account-holders, regarding the amounts deducted and paid under the order.

196.     Subsection (2)(e) - the regulations may require the deposit-taker or third party at which the order is directed to supply prescribed information to the Commission or to notify them if a prescribed circumstance occurs.

197.     Subsection (2)(f) - the regulations may allow the Commission to vary an order. They could include, for example, provision that the Commission may vary an order if some of the arrears have been settled.

198.     Subsection (2)(g) - the regulations may provide that an order will lapse in prescribed circumstances.

199.     Subsection (2)(h) - the regulations may allow an order which has lapsed to be revived in certain circumstances. The regulations may provide that an order may be revived if it has lapsed because the non-resident parent has agreed to make payments but then defaults on those payments.

200.     Subsection (2)(i) - the regulations may allow or require an order to be discharged, for example, where the arrears have been paid in full.

201.     Subsection (3) of section 32J prevents an order being varied to increase the amount of arrears specified in the order.

202.     Subsection (4) provides regulation-making powers to the Secretary of State, with regard to the priority of a final lump sum deduction order and:

• any other final lump sum deduction orders in place;

• any other type of order which provides for payments to be made by the same deposit-taker or third party from amounts held in credit in an account, or due to the non-resident parent responsible for the arrears; and

• any diligence (done in Scotland) against amounts to which a lump sum order relates.

203.     Subsection (5) provides regulation-making powers to the Secretary of State to provide a right of appeal against the making of a final lump sum order, to a court.

204.     Subsection (6) prevents the court hearing an appeal against the order being made, from questioning the maintenance calculation from which it is derived.

205.     Subsection (7) provides that regulations regarding the appeals against the order being made, or the Commission withholding consent, may include provisions regarding:

• the length of time a non-resident parent has to make an appeal; and

• the powers of a court with respect to an appeal.

206.     Section 32K provides that it will be an offence for a person not to comply with a lump sum deduction order or any regulation made under section 32J which has been designated for this purpose. A person found guilty of such an offence will be liable for a fine of up to level 2 on the standard scale (£500). However, there is a defence if the person can show that all reasonable steps were taken to comply with the order or regulation.

Section 24: Orders preventing avoidance

207.     Section 24 inserts new section 32L into the Child Support Act 1991. Subsection (1) of section 32L enables the Commission to apply to a court to prevent a non-resident parent who has failed to pay maintenance from disposing of or transferring property, if it is being done to avoid paying child support maintenance.

208.     Subsection (2) allows the Commission to apply to a court where a non-resident parent has failed to pay maintenance, for an order to set aside a disposition, if that disposition was undertaken with the intention of avoiding child support maintenance payments.

209.     Subsection (3) gives the court the ability to make either order if it is satisfied of the grounds.

210.     Subsection (4) provides that the court which makes an order under these provisions may make such consequential provision by order or directions as it thinks fit for giving effect to the order, including provision to require the making of any payments or the disposal of any property.

211.     Subsection (5) sets out that, for the purposes of an order to set aside a disposition, any disposition can be reviewed unless it was made for valuable (or, in Scotland, adequate) consideration (other than marriage) to a person who acted in good faith and was not aware of the non-resident parent's intention to avoid child support maintenance payments.

212.     Subsections (6) and (7) clarify that, when an application is made for an order either to freeze assets, or to set aside a disposition, if the court is satisfied that either the disposition or other dealing would result in making the recovery of child support maintenance ineffective, it is to be assumed that the action was done or planned with the intention of avoiding child support maintenance payments.

213.     Subsection (8) defines that for the purposes of this section, "disposition" does not include any provision contained in a will or codicil, but does include any conveyance, assurance or gift of property of any description.

214.     Subsection (9) clarifies that this provision does not apply to a disposition made before the provision comes into force.

215.     Subsection (10) defines that, for the purposes of this section, "the court" means the High Court in England and Wales, and the Court of Session or the sheriff in Scotland.

216.     Subsection (11) sets out that an order made in a Scottish court to either freeze assets or set aside those already disposed of is effective for such period (including an indefinite period) as the order specifies, and may on application to the court be varied or recalled.