Self-employment - WTC terminated due to lack of turnover

saving-mad

sorry i did not post for an argument or to declare all my business to the country but a little more info,

there are allowable expenses for example food, snacks, petrol that may not necessarily cost as much as is claimed ie petrol at 40p a mile but its a 7 mile round trip for me to get to school and playgroup which i do 3 times a day, i do not use £8.40 worth of petrol a day.

When i have a child for 1 hour at either end of the day for 2.70 a hour, give tea and breakfast its not cost effective for me but there are no other childminders locally (we live in a very outlying area)
without my service many parents would be unable to work.

meds12_2

vgs wrote: »

I was self-employed, working from home, and claiming WTC, and I have to admit the business was doing very poorly, with only around £400 profit in the last tax year.

After filing my tax return in April 2011, my WTC claim was selected for review, and I was asked for documents/accounts etc for the period 1st Jan to 31st March 2011.

The result is that my WTC was immediately terminated from the start of the current tax year (meaning that they would seek repayment for April).

In addition, I was told that once I have returned the renewal claim (- still not received the Renewal Pack though), they will terminate it from 1st January 2011, and seek repayment from that date.

Since WTC was the only thing that was allowing me to continue to try to recover the business, I had to sign on straight away instead - and in fact the WTC person advised it.

I went to CAB to see if there were any grounds for appeal, and they said they couldn't find anything about such a situation in their records, and so while there was nothing to support the WTC decision, there was also nothing to support an appeal, and therefore they couldn't advise me one way or the other about anything.

Although I can see in general that after 3 years it might be reasonable to expect greater profit from self-employment, I can't find any current regulations specifying self-employment turnover has to be at a certain level, or even in profit, to qualify for WTC.

e.g. from the TCT Manual, TCTM02411:

"A self-employed earner's expectation of payment must be a reasonable one. The claimant must confirm that the work is done in expectation of payment. It does not matter that a self-employed earner might trade at a loss."

I can try to appeal the WTC decsion, and in the unlikely event of winning it, I'd recover WTC for the months Jan to April - but having had to stop self-employment to become a JobSeeker, I would have in effect disqualified myself from WTC from May onwards.

It has also been suggested that I try to have my JSA claim backdated, but having been in good faith trying to work as self-employed for over 30 hours a week for that period, it seems unlikely to succeed.

I have no idea how I am supposed to fill in the WTC renewal form when it arrives ... I cannot claim to be self-employed for over 30 hours a week and signing as unemployed ... I cannot be appealing against not being classed as self-employed if I am now signing as unemployed.

Tis all very confusing

Can I ask what your total turnover for the year was?

MissMoneypenny

saving-mad wrote: »

sorry i did not post for an argument or to declare all my business to the country but a little more info,

there are allowable expenses for example food, snacks, petrol that may not necessarily cost as much as is claimed ie petrol at 40p a mile but its a 7 mile round trip for me to get to school and playgroup which i do 3 times a day, i do not use £8.40 worth of petrol a day.

You claimed that you were "one of the innocent ones" with regards to Working Tax Credits reviews. You are using an accountant to make your business show a loss and you then claim maximum welfare. Under the new welfare system, that practice will be stopped.

For the new Universal Credits welfare claims: minimum wage is the minimum you would earn if you worked for someone else, therefore your 60 hours of work per week will be multiplied by at least minimum wage per hour, to give your weekly wage. This is the income that your welfare claim will be based on. They common practice of using accountants to lower income and claim higher welfare payments, will stop.

For paying less income tax, allowable expenses will still be allowed.

HappyMJ

saving-mad wrote: »

there is money in it, but the allowable expenses are such that it doesnt show much on paper, i have a good accountant who knows the rules well,
the reward of seeing the children develop far outweights any money you could earn and i am here for my 2 when they need a day off due to there disabillities, no employer would want to employ me as i would need too much time off.

saving-mad wrote: »

sorry i did not post for an argument or to declare all my business to the country but a little more info,

there are allowable expenses for example food, snacks, petrol that may not necessarily cost as much as is claimed ie petrol at 40p a mile but its a 7 mile round trip for me to get to school and playgroup which i do 3 times a day, i do not use £8.40 worth of petrol a day.

When i have a child for 1 hour at either end of the day for 2.70 a hour, give tea and breakfast its not cost effective for me but there are no other childminders locally (we live in a very outlying area)
without my service many parents would be unable to work.

You need a better accountant. You can claim 45p per mile (£9.45 per day) and it's not just for petrol it's mileage expenses meant to cover everything to do with the car. i.e the comprehensive insurance including business cover and tyres, servicing, MOT, etc...

saving-mad

you are right i was referring to the last tax year which we are just finalising figures for, so i can submit them for tax credits.

staffsuk

HappyMJ wrote: »

It is expected that you charge the client at least minimum wages...i.e £5.93 per hour. If you need 30 hours to get WTC'S then your turnover should be £5.93*30hours*52weeks = £9250 per year. You could have expenses which reduce the profit to NIL but your turnover matches the hours claimed for.

I'm not sure I understand the logic of that? So that would suggest if I dealt in high tagged items, I dunno say audiophile amps worth 2k each, I would only have to buy & sell five in order to satisfy them? That would take no time at all :huh:

As it happens I have not focussed on one specific way of making money, but several in order to broaden my prospects for making a profit and to see what I gravitate towards that is working in these tough times.

It is only my first year of full trading doing this, and as I understand it many new business ventures don't make any profit at all in their first year.

I will be gutted if I am selected for review based on my figures and my WTC is terminated. It will cripple me emotionally too as I really want this to work and I am relying on the WTC whilst I build the business up. If they terminated it I'm afraid that would be it for me

HappyMJ

staffsuk wrote: »

I'm not sure I understand the logic of that? So that would suggest if I dealt in high tagged items, I dunno say audiophile amps worth 2k each, I would only have to buy & sell five in order to satisfy them? That would take no time at all :huh:

As it happens I have not focussed on one specific way of making money, but several in order to broaden my prospects for making a profit and to see what I gravitate towards that is working in these tough times.

It is only my first year of full trading doing this, and as I understand it many new business ventures don't make any profit at all in their first year.

I will be gutted if I am selected for review based on my figures and my WTC is terminated. It will cripple me emotionally too as I really want this to work and I am relying on the WTC whilst I build the business up. If they terminated it I'm afraid that would be it for me

OK another way of looking at it if you trade a product is gross profit. If you bought 1 of these amps for £1700 and sold only 1 a week for £2000 but that took you 30 hours then your gross profit is £300 or £10 per hour. You could also have expenses such as rent and mileage which could reduce your net profit to zero but that doesn't matter it's the turnover they are looking at. If you sold widgets that you bought for a pound each and you sell 300 of them for £1.10 each over a period of 30 hours then your gross profit is only £30 or £1 per hour which isn't enough for the clampdown.

Oldernotwiser

saving-mad wrote: »

there is money in it, but the allowable expenses are such that it doesnt show much on paper, i have a good accountant who knows the rules well,

That's one of the most cynical, brazen comments I've read on here! The sooner the system's tightened up the better!

KimYeovil

staffsuk wrote: »

I will be gutted if I am selected for review based on my figures and my WTC is terminated. It will cripple me emotionally too as I really want this to work and I am relying on the WTC whilst I build the business up. If they terminated it I'm afraid that would be it for me

But you are demanding credits subsidise your business. You have no right to expect indefinite subsidy. Business angels, your capital, your hard work for next to nothing - that is how businesses are born and grow. If you don't have the capital or don't want to tighten the strings then move to a communist country.

Hammyman

vgs wrote: »

I was self-employed, working from home, and claiming WTC, and I have to admit the business was doing very poorly, with only around £400 profit in the last tax year.

After filing my tax return in April 2011, my WTC claim was selected for review, and I was asked for documents/accounts etc for the period 1st Jan to 31st March 2011.

The result is that my WTC was immediately terminated from the start of the current tax year (meaning that they would seek repayment for April).

I've made a trading loss on paper the last two years.

What was your turnover? If its like £10,000 or less and you're claiming you're doing this fulltime, I can kind of see their point.