Tax credits- letter asking for more info

Vejovis

the_matrix wrote: »

On budget hosting @ £20 a year + £10 a year domain name. If they pay £10 per week- you are making a clear profit. This would be acceptable?

i doubt it, that is not a business.

the_matrix

Vejovis wrote: »

i doubt it, that is not a business.

It's a start- yes/no? To be classed as a business what extra would I need?

BoGoF

the_matrix wrote: »

I see where you are coming from. There are no jobs and I have been looking for ages. This business is profitable. I am making money- not a loss. I know £50 is not much but it will grow- fingers crossed.

So you make £50, what is your actual turnover?

Dognobs

And they pay more if you say you work for 30 hours.

the_matrix

BoGoF wrote: »

So you make £50, what is your actual turnover?

I have only started a six months back. So far I am averaging £50 profit a week. The things I make I use stuff from family and friends- which they give me for free. No business like making money from free stuff!

BoGoF

Surely you can see then why HMRC are questioning your claim then. 30 hours a weeks for £50? If you're selling stuff at car boots then you must have costs such as petrol and fees?

In the real world nobody runs a business for that sort of return.

Dognobs

the_matrix wrote: »

I have only started a six months back. So far I am averaging £50 profit a week. The things I make I use stuff from family and friends- which they give me for free. No business like making money from free stuff!

So what happons when you have used up all the stuff you get for free? You have to face the fact this is a hobby that you make some money a little money from it is not a busness. You have now been challanged and you can't prove you hours. And if I was working for 60p a hour go get a job cleaning for 10 hours a week!

BigAunty

I can't really advise anything other than to gather all the information and evidence you can that the HMRC are seeking to prove you are fulfilling the terms of the receipt of WTC.

Go to the HMRC and tax credit websites to identify the terms and conditions of getting WTC as fully renumerated work via self employment.

See if you can dig up any of the threads in this forum about it (though I guess they are going to be pretty hard to find), or find a self employment forum that perhaps is already covering this topic.

BigAunty

Vejovis wrote: »

perhaps they are preparing the way for people being classed as earning over £200 a week when SE, whether they are or not. if they can get the word out now, it'll save them a lot of work in the future.

I've had debates with people on the topic of self employment and the move to the Universal Credit system when tax credits get scrapped and there is an expectation that the SE can earn the National Minimum Wage and will be treated as if they earn this.

Certainly the proposal paper gives the impression that the SE will be treated as if the earn the NMW, even if they don't.

However, those participating have indicated it's a bit more nuanced than that and that perhaps those not earning at least the NMW will have greater conditionality, the expectation that they will be required to seek other work.

So it might not be as simple as 'earn the NMW because that's how the threshold is set for top-up benefits'.

Sixer

the_matrix wrote: »

Hi every1

I am self-employed working 30 hours a week. I have applied for tax credits. I got a letter yesterday. It says I must provide informations on:

• Type of work you do and or the nature of your business
• Summary / diary of bookings and / or appointments you have made
• Copies of advertisements placed
• A breakdown of hours worked per week
• Invoices for any work done
• Receipts for any expenses paid
• Details of any vehicles (provide registration documents) and tools used in your business
• Insurance documents for vehicles
• Details of any trade or business qualifications

My business is that I make arts and crafts and sell them at car boots sales on the weekend. This is how the money is made. The materials are given to me by family- I have not bought them- what is this classed as?

I also have a website but do not sell on it. Its more like an information website on arts and crafts and I am hoping someone will advertise on it soon. This makes up part of the 30 hours a week I work- post, maintenance, emails, backup, repair, optimise etc

Also I go out to / write / email businesses and try and get them to contribute to the website.

What's they best way to answer the above questions?

Type of work: simple typed description of the business. Sentence or two.

Summary: presumably, you keep a diary for your business. Photocopy a month's worth, so they can see a typical business period.

Adverts: you only need to enclose these if you have place any.

Breakdown of hours: this will be included in the diary copy as above.

Invoices: you need to keep these for five years anyway, so this should be easy. If car booting and everything is cash, provide them with a breakdown of sales attended and cash taken for each.

Receipts: you don't need any for raw materials, as you say you aren't paying for those. Otherwise, ticket stubs for car boot entries. Photocopies of any bills for which you're claiming all or a proportion of as expenses on your accounts (web hosting, telephone, internet, etc). Note any proportions for which you're claiming if not the full amount.

Vehicles: as they've asked for, together with a breakdown of business to personal mileage done, copies of insurance docs, tax discs, and fuel receipts (copies of credit card/bank statements with fuel purchases highlighted will do). Make sure you label it with proportions of business to personal mileage. But you only need to do this if you are claiming vehicle or fuel costs as expenses within your accounts.

Generally: be aware that HMRC are cracking down on low profit self-employed people who also claim the 30 hour element for WTC purposes. And that work done must have a reasonable expectation of payment (ie at least one bona fide customer). It may well be that they disallow the work on your website as that doesn't seem to be truly commercial at the moment. I fear you are likely to be hit with an overpayment of at least the 30 hour element.

For other low profit self-employed people with WTC claims reading this thread: beware of the 30 hour element. Unless you can fully document 30+ hours AND prove the work is done with reasonable expectation of payment, you may well be hearing from HMRC. This is one of many recent threads on exactly this topic.