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)ofsection 32Isets 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.