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  • FIRST POST
    • Wildhoney
    • By Wildhoney 21st Sep 16, 9:46 AM
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    Wildhoney
    working tax credits and owning a company
    • #1
    • 21st Sep 16, 9:46 AM
    working tax credits and owning a company 21st Sep 16 at 9:46 AM
    Apologies if this isn't the right place to post. My partner set up his own security company last year (this is a ltd company) and claimed working tax credits. All was fine and i was asked by concentrix to fill out the annual declaration which we did, they have since come back to us and said the amount on my partners p60 meant he was not working over the stated hours (which are 32 but on some weeks this is much more) so they have put him as working 15 hrs and now asked us to pay the working tax back, or send in a years worth of payslips and to ask his employer for a covering letter.... they asked for his employer details.. i honestly cannot remember how many times i explained that it was my partners company... it was like speaking to a robot and they would not listen... how do i explain it's impossible for him to write for himself?! he could say whatever he bloody likes! The thing is some weeks there was not enough money left in the business to pay himself a wage, and how do we break down his hrs ect when they vary week to week depending on what venue he is covering.... any help would be greatly appreciated
Page 1
    • Darksparkle
    • By Darksparkle 21st Sep 16, 10:28 AM
    • 3,082 Posts
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    Darksparkle
    • #2
    • 21st Sep 16, 10:28 AM
    • #2
    • 21st Sep 16, 10:28 AM
    He can write for himself. He can explain that he is the director of his Ltd company.

    Does he keep a diary or calendar so he can show how many hours he has worked over the last year?

    Explain on the letter that a company director isn't subject to NMW so therefore cannot compare salary to hours.

    I assume he's declared any dividends he's taken as well as the salary? Does he have any company benefits such as company car or medical? If so has he declared this?
    • Wildhoney
    • By Wildhoney 22nd Sep 16, 9:40 AM
    • 3 Posts
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    Wildhoney
    • #3
    • 22nd Sep 16, 9:40 AM
    • #3
    • 22nd Sep 16, 9:40 AM
    Thank you Darksparkle,

    The reason we thought he could not write for himself was because of information both concentrix and hmrc had given us! They both stated it had to be his employer hence the frustration at them not listening when we said it was himself, Aaron from concentrix laughed and said... well he could put what he wanted really couldn't he!

    He has kept appointments and such on his outlook account, he is a sub contractor and keeps a record of work done with time sheets ect.

    No dividends have been taken and no medical or company car.

    I did query the NMW and being a company director, to which Concentrix said... and i quote...

    "company director and only 4,500 in salary??!! That's not right surely?! Well be honest wouldn't YOU question a directors salary for that small amount for the year?!?" ... gobsmacked to say the least
    • fishybusiness
    • By fishybusiness 22nd Sep 16, 1:02 PM
    • 1,003 Posts
    • 602 Thanks
    fishybusiness
    • #4
    • 22nd Sep 16, 1:02 PM
    • #4
    • 22nd Sep 16, 1:02 PM
    It used to be that the first year of business is looked on favourably with respect to not taking a full wage - is that not the case anymore?
    • Darksparkle
    • By Darksparkle 22nd Sep 16, 5:31 PM
    • 3,082 Posts
    • 1,919 Thanks
    Darksparkle
    • #5
    • 22nd Sep 16, 5:31 PM
    • #5
    • 22nd Sep 16, 5:31 PM
    It used to be that the first year of business is looked on favourably with respect to not taking a full wage - is that not the case anymore?
    Originally posted by fishybusiness
    The issue here is that company directors are classed as employed for tax credits and not self employed. It's then automatically assumed they should get NMW as there is no where to record they are a director.
    • fishybusiness
    • By fishybusiness 22nd Sep 16, 9:09 PM
    • 1,003 Posts
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    fishybusiness
    • #6
    • 22nd Sep 16, 9:09 PM
    • #6
    • 22nd Sep 16, 9:09 PM
    Yeah, I think it is less clear than your statement...

    he amount of time being spent on these activities may also depend upon how established the business is. If a business is in its early days, it is more likely that the claimant will have to invest large amounts of time and effort in building up business contacts for little or no outcome. However, over time the amount of unproductive time spent in this way reduce considerably. If it does not, it may be an indication that the work is not genuinely remunerative.
    That is the get out for new businesses, and for directors....

    Directors

    The position of Directors for WTC has caused much discussion in the tax world over the last few years. However, HMRC have confirmed that for WTC purposes, a Director, as an office holder, does not have to be engaged under a contract of service in order to claim WTC. This interpretation of the regulations means that Directors do not need to pay themselves the National Minimum Wage in order to claim tax credits as such a requirement only exists where there is a contract of service.
    Ref for quotes

    http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/entitlement/wtc-elements/

    I know it is tricky, but from the information the OP has given, it looks as though they should be given some room for manoeuvre.
    • Wildhoney
    • By Wildhoney 23rd Sep 16, 9:54 AM
    • 3 Posts
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    Wildhoney
    • #7
    • 23rd Sep 16, 9:54 AM
    • #7
    • 23rd Sep 16, 9:54 AM
    Thank you fishybusiness ,

    My head is just swimming with all the conflicting information we have gotten from people at hmrc and concentrix, and the way they both wanted us to word things and what information they required. But as from this morning the good news is we are no longer with Concentrix but hmrc are upholding their decision and we still have to appeal this.
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