What does HMRC accept as legitimate employment for Tax Credits purposes?

Enigmaman · 12 January 2018 at 1:28PM

Am I correct in thinking that HMRC requires employment (or self- employment n my case) to be for a company based in the UK?

Meanwhile, do they accept it if, say, you are subcontracting for someone who is not registered as a business or a sole trader? Helping them out with an enterprise they run, and you are getting paid on an hourly basis. What are the rules around this?

Mersey_2 · 19 January 2018 at 12:57AM

There isn't a list of occupations (if that is what you are looking for), but there are requirements that the work is for a certain number of hours per week, in expectation of payment and so on in order to satisfy HMRC that the job exists, is permanent etc.

It does not have to be for a ltd company - many self-employed people simply complete a self-assessment return and trade under their own name.

The work would have to be in the UK, yes.

If you are paid on an hourly basis, helping out a new venture you would in all likelihood be a part-time employee and not self-employed, however.

Icequeen99 · 19 January 2018 at 8:16AM

I have to disagree with Mersey. There is no requirement in the tax credits legislation that the work has to be in the UK. There is however a requirement that you are in the UK (with some exceptions).

It is possible for someone living in Northern Ireland to claim WTC if they work in ROI or if they live on the South Coast and work in France each day.

However, the main issue is that if you are working for someone who is not a company or registered as a sole trader - then what are they? Are they registered with HMRC at all?

You would need to use the employment status tool to see if you would then be an employee of theirs (if so, they would need to register as an employer, run payroll in most cases) or self-employed (in which case you would need to register as self-employed and fill in a tax return, pay class 2 NIC if your income was high enough).

IQ

Enigmaman · 19 January 2018 at 11:18AM

Thanks for the replies. I am defintely in the Uk and carrying out the work in the UK.

The parent company is a Ltd company and is based in Monaco, with a Jersey bank account. They pay me directly. However, if we rule dout all parent companies based abroad I guess that ould rumneout half the UK workforcce!

The secondary job, where I perform a different role and am paid for my assitance by someone who is self employed and also workls for that company, is for someone who is registered as self-employed and pays tax to HMRC. Whether they have set up as a sole trader I am not sure but I will ask them to check. In effect they are I beelive a small, tax- paying, self-employed small business. They are over retirement age, but I don't know whether that makes any difference.

Icequeen99 · 19 January 2018 at 9:46PM

Enigmaman wrote: »

Thanks for the replies. I am defintely in the Uk and carrying out the work in the UK.

The parent company is a Ltd company and is based in Monaco, with a Jersey bank account. They pay me directly. However, if we rule dout all parent companies based abroad I guess that ould rumneout half the UK workforcce!

The secondary job, where I perform a different role and am paid for my assitance by someone who is self employed and also workls for that company, is for someone who is registered as self-employed and pays tax to HMRC. Whether they have set up as a sole trader I am not sure but I will ask them to check. In effect they are I beelive a small, tax- paying, self-employed small business. They are over retirement age, but I don't know whether that makes any difference.

I would say that the first job should be fine - assuming you are an employee?

On the second point - the self-employed person - you will need to establish if you are employed or self-employed. If you are employed then they may need to run a payroll depending on the amounts. If you are self-employed, you will need to invoice them so they can deduct the payments when working out their profits but you will then need to register as self-employed with HMRC. This will count for tax credits providing it is all done correctly and any laws adhered to e.g. NMW if employed

IQ

Enigmaman · 19 January 2018 at 9:55PM

I am self-employed with both roles and am registered as such with HMRC and fill out the self-employed pages on my tax return. I feed all the income from these jobs through my business, a language services company.

With the second role I mention, the person running the business is themselves self-employed. I do invoice them and we have an agreed rate which meets the NMW and they do indeed set off my pay against their profits. Judging by the above replies I feel I am on the right side of the TaX Credit regulations.

mcculloch29 · 20 January 2018 at 1:56PM

Just a quickie, I'm in the UK and work on a freelance self-employed basis as a tutor/instructor, from home, on online contracts. The company can be based overseas, but my work takes place in the UK. I'm paid in an overseas currency, via PayPal, that's the most cost-effective method for all concerned..
In the past I've sent in sheaves of documents to prove that my self employment is a legitimate business for tax-credits purposes. It is an enormous PITA, and you can be asked to do this at any time.

Enigmaman · 20 January 2018 at 2:51PM

I was asked to send in shaves of paper to prove the income was genuine, about three years ago.

Enigmaman · 12 February 2018 at 5:16PM

[BUmP] The person who employs me is not registered as self-employed for NI purposes because they are over retirement age and thus not liable for NI contributions.

However, they send in a self-employed self-assessment return to HMRC.

Is this of any relevance whatsoever in terms of the legitimacy of the employment for Tax Crfedit purposes.

What does HMRC accept as legitimate employment for Tax Credits purposes?

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