a friend says her tax credits are saying that

DaisyFlower

Havent seen any advertised changes to WTC but maybe they dont believe her claim is legitimate and are challenging it.

I think its great they are looking into SE people who claim WTC. Its easy to quote hours and hide profit so they need to ensure people are declaring everything and working the hours they state if they want other tax payers money.

Childcare also needs looking into with constant cross checks rather than random ones.

Jowo_2

Deals wrote: »

... they have debts they are owing back. .

Do you mean their business is running at a loss because they have creditors who owe them for their services? Or do you mean they have personal or business debts and owe others?

If they owe others and are in debt, encourage them to post on the Debt Free wanabee board where the members there will help them identify the best strategy to deal with it.

oh_muggy

I had to leave work due to ill health and because of this I would find it difficult to get another job. I decided that, instead of claiming other benefits, I would work from home. That way when I feel okay I can do a couple of hours but if I'm ill I'm not letting anyone down. My profits aren't much, I declare them and claim WTC. My husband worked F/T but his wages aren't very high - less than £14000 a year. I'm not trying to cheat the system, I'm doing what I can. I could have stayed in my old job and gone on long term sickness benefit or I could have signed on knowing that no-one would employ me. I have regular stays in hospital and am sick quite a lot of the time so working for myself is my way of keeping my dignity.

Deals_2

paid up thanks for your more thorough input

Jowo wrote: »

Do you mean their business is running at a loss because they have creditors who owe them for their services? Or do you mean they have personal or business debts and owe others?

If they owe others and are in debt, encourage them to post on the Debt Free wanabee board where the members there will help them identify the best strategy to deal with it.

Deals_2

and we are not lefties as you make out.

leveller2911 wrote: »

As someone who has been self employed for over 25 years I can say from experience that its very easy to show the business is making a loss when in fact it is making money.I also know a few people who have jumped on the bandwagon of starting their own businesses like Avon and e-bay , they are just a smoke screen and its so transparent.Personally I would prefer to be honest and be able to sleep at night.

We are not discussing Top Shop though, are we.This is the typical Lefty Socialist defence,they always blame the rich for the problems of the poor. I think the Banks have a lot to answer for but thats for another thread.

Yes I know people are struggling, lifes got harder for most of us but I stand by my comments , the tax paying public should not be subsidising business start ups by way of tax credits and lets be clear on this at present part time aside the less you earn the more tax credits your entitled too ... The whole system need changing from the roots up.

I don't see that my comments are negaitive, if someone has the drive to be self employed they will succeed and good luck to anyone who does it the right way.

Deals_2

friend in between and she never claimed anything on this front.

oh_muggy wrote: »

I had to leave work due to ill health and because of this I would find it difficult to get another job. I decided that, instead of claiming other benefits, I would work from home. That way when I feel okay I can do a couple of hours but if I'm ill I'm not letting anyone down. My profits aren't much, I declare them and claim WTC. My husband worked F/T but his wages aren't very high - less than £14000 a year. I'm not trying to cheat the system, I'm doing what I can. I could have stayed in my old job and gone on long term sickness benefit or I could have signed on knowing that no-one would employ me. I have regular stays in hospital and am sick quite a lot of the time so working for myself is my way of keeping my dignity.

Jowo_2

Pam17 wrote: »

TCO are currently targeting some self-employed claimants and asking them to provide proof of their income and expenses, how they obtain their clients, what advertising they do, mileage logs, diaries showing their appointments etc. Just the same sort of information the tax office might expect them to provide if/when their tax returns are pulled for an enquiry.

.

Do you have any links or info on this? I've heard (but only on hearsay on MSE forums) that the HMRC are wise to people setting up fake businesses just to claim and maximise their tax credits. I'm very aware that people are setting up appalling 'businesses' in a very amateur low to no profit basis, incentivised by tax credits (I don't say 'fraud' because I think they genuinely feel that are self-employed, just that tax credits doesn't provide a very good basis for them to actually earn much money).

However, I've never seen any evidence of this, such as newspaper articles, prosecutions, articles published by the HMRC or similar. I've started to think this type of investigation is an urban myth.

I've had my company audited on a random basis by the HMRC who did review my contracts, invoices and travel expenses (not mileage as it didn't involve driving). There was no requirement to show diaries, how I market it or find clients. EDIT - apologies but in my original post here, I forgot to say that I wasn't in receipt of tax credits, it was just an allegedly random audit of my tax returns but anyone who works in IT know that the HMRC had a campaign against them)..

(I say 'random' but it was one of those clumsy HMRC targetting of IT consultants, to see if they could get them on the IR35 disguised self-employment clause and all they probably did was find companies whose SIC code indicated that they were in the IT field).

Deals_2

thanksfor your input

Jowo wrote: »

Do you have any links or info on this? I've heard (but only on hearsay on MSE forums) that the HMRC are wise to people setting up fake businesses just to claim and maximise their tax credits. I'm very aware that people are setting up appalling 'businesses' in a very amateur low to no profit basis, incentivised by tax credits (I don't say 'fraud' because I think they genuinely feel that are self-employed, just that tax credits doesn't provide a very good basis for them to actually earn much money).

However, I've never seen any evidence of this, such as newspaper articles, prosecutions, articles published by the HMRC or similar. I've started to think this type of investigation is an urban myth.

I've had my company audited on a random basis by the HMRC who did review my contracts, invoices and travel expenses (not mileage as it didn't involve driving). There was no requirement to show diaries, how I market it or find clients.

(I say 'random' but it was one of those clumsy HMRC targetting of IT consultants, to see if they could get them on the IR35 disguised self-employment clause and all they probably did was find companies whose SIC code indicated that they were in the IT field).

Jowo_2

Deals wrote: »

thanksfor your input

Yes, I like the phrase 'amateur' or 'novice' self-employed rather than bogus or fraudulent businesses. I do have great anxiety about people who post on this forum who are setting up businesses, that are no more than hobbies with barely any turnover and those that encourage them to operate 'zero' or low profit businesses to maximise their benefits. They appear to set up their businesses without any kind of research or planning because there's no great profit incentive in the first place.

I would like to get hard evidence that the HMRC are cracking down on this kind of activity but only ever get hearsay from posters on this forum.


But back to your thread (sorry for going off topic).

you indicated earlier that part of your friends problems are that the people they've provided goods or services to aren't paying or are paying late. you should encourage your friend to seek business advice about how they can deal with late or non payers.

Jowo_2

skcollobcat10 wrote: »

An excellent post and a detailed explanation as to why we have so many people working a few hours per week self employed.

Yeah, great post. I bet the stats show a huge surge in the number of self-employed and it would be great to understand how many of the new businesses were set-up by those claiming means tested benefits and who are still benefit dependent after a year or two of trading.

This isn't to dismiss people who do establish businesses when they have a low income.

I'm just curious how many true entrepreneurs there are who have the drive to build up their businesses, increase their customers and push for the lowest business operating expenses and highest profit they can (which it the basic impulse of a true business person)

This, versus those who are happy to coast along with a business that merely ticks over because they can't face the withdrawal of their receipt of tax credits, CT and LHA and are disincentivised to build up their business, who choose a token way of earning income because of lifestyle preferences.