a friend says her tax credits are saying that

BoGoF

And it seems HMRC have decided to advertise their campaign

http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=418149&SubjectId=36

Jowo_2

BoGoF wrote: »

And it seems HMRC have decided to advertise their campaign

http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=418149&SubjectId=36

Fabulous link, BoGoF, just the kind of substance I was looking for to verify the rumours that the HMRC are getting suspicious and are actively looking into tax credit claims for the self-employed.

You may be interested in a thread I established in Discussion Time because it discusses the proposals for the SE under the Universal Credit system.

The govt is proposing that those in SE will be treated as if they earn the National Minimum Wage whether or not they achieve it in their profits. If this is implemented, it pretty much spells the end of large means tested benefits for low profit self-employment. Some info here

https://forums.moneysavingexpert.com/discussion/3059226

BoGoF

Long overdue I say.

HMRC's tax credit system is a joke. For example, up until fairly recently, somebody could renew saying they worked 40 hours a week earning £6000 a year without a question being asked about NMW.

Jowo_2

BoGoF wrote: »

Long overdue I say.

HMRC's tax credit system is a joke. For example, up until fairly recently, somebody could renew saying they worked 40 hours a week earning £6000 a year without a question being asked about NMW.

Yes, though these 12,000 letters probably only represents a tiny percentage tax credit claims submitted by the self-employed, targetting areas with known high fraud and targetting those whose name has come up in a data matching analysis which presumably flags up suspicion about their allegedly low income. The campaign is targetted at fraud, not at honest people who simply are hopeless at making a living from their real efforts. The latter is being taken care of through Universal Credits which requires them to start treating themselves as if they are earning NMW which should spur more on to become profitable.

I came across a post on a forum where someone indicated they earned £15 per week through blogging and they were encouraged to apply for tax credits.

It has the potential, obviously, to build into a higher income (i read another forum post where someone says they'd built it up to around £50 per week) but it's still not a sustainable way of making a living for 99.9% of bloggers, I'd imagine.

I haven't yet found statistics for how many self-employed people there are in the UK receiving working tax credits.

There are about two million households with children receiving WTC together with CTC, and over half a million childless households receiving WTC, if I read the following statistics correctly, but it doesn't say how many are self employed. If 10% are self employed (finger in the air time for the purposes of showing some scale), then that will be approx 250,000 which means that tax credits are reviewing 4.8% of claims.

http://www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-dec2010.pdf

Hammyman

I started self employment whilst on ESA. In my first year I made a loss on paper of £88. This year is looking like a negligible profit partly due to a massive fall off in trade in September when I typically sold loads of laptops to parents wanting something cheap for their kids to ruin at college and Uni and partly because the price of used laptops at auctions increased 50% overnight yet people won't pay more for them from a business. My unit sales are actually in excess of the business plan I had however the profit per unit took a nose dive. Today I went to buy stock and came back with nothing because a laptop that was £70 in the last sale was £110 this one due to Africans buying them all for export and willing to pay over the odds.

Does the above announcement worry me? No because I have probably the most comprehensive set of books a business can have and my number of sales quadrupled when I got Ebay TSR. It'll be those people who keep no records or very rudimentary records and accounts that are going to find themselves in trouble, especially if their business is Avon. In addition, my wife works so the difference between me having a business and making nothing and me not having any work at all is a big fat zero as far as WTC is concerned.

System

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 can only speak from my experience of the number of people turning up at my place of work asking why TCO is asking for proof of their self-employment. The number has increased considerably in recent weeks.

Sixer

Hammyman wrote: »

In addition, my wife works so the difference between me having a business and making nothing and me not having any work at all is a big fat zero as far as WTC is concerned.

I'd imagine this is exactly it. I would imagine the 12,000 people were flagged by looking at household income.

xnatalie81x

HI ALL

This isn't new. I was investigated last year. I had to show advertising i do, client lists etc. I run a swim school and so i sent registers, accounts, newsletter i advertised in, posters etc etc. I only started in Jan 2010 and i was investigated in April renew time - they also called my childminder etc to check out my childcare.

Nothing happened as i am genuine and honest and work my butt off. I get tax credits and wtc but my business is growing. I am single parent to 4 children, one of whom is 3mths old. I had him on mon and was back at work on sat. I didn't claim a penny in maternity. Some of us are genuine