Disabled Ebay Seller's Tax Credits Stopped - Advice Please!

Magic_Fairy

Hi,

This is my first post so please be gentle!

I am a disabled woman who lives alone. I receive DLA High rate mobility and middle rate care. I won't go into details about my condition but I am housebound unless a carer can accompany me and that is only possible if I'm having a 'good' day.

I have been receiving tax credits based on my small ebay business and I receive no other benefits (other than DLA), although I don't pay council tax because I am on a low income.

Recently the tax credit office wrote to me and asked me to provide accounts for 3 months along with other information. I phoned the number provided and spoke to an advisor who was very helpful and told me they were not asking for all my receipts etc, they just wanted me to show what I am doing to generate income. I was told that due to my disability and periods of inactivity etc I could choose which 3 months accounts I would like to send. I asked them to make a note of our conversation on the computer.

I sent the information they asked for along with medical evidence outlining how my condition affects me, evidence of items purchased for sale and my ebay invoices/sales etc.

I then had a phone call out of the blue in which I was rudely told that my benefit was being stopped because they do not believe I spend the hours I stated on my ebay business because in the last tax year I broke even. I explained that I cannot work at the same pace as a healthy individual due to my physical limitations which were clearly shown in the medical evidence I provided. The advisor then said my business was a hobby, which it is not as I buy and sell goods with the intention of making a profit! The advisor also asked why I sent accounts for 3 different months (implying that I was trying to hide something) and I explained that it was an advisor who had suggested it to ME and that they were going to make a note of it on the computer. The advisor said a note of it had been made on the computer but it didn't say who had suggested it. Basically they are saying the sales I generated do not match the hours I spend on the business, but they have not taken into account the fact that I am disabled and can't work at the same pace and do the same tasks as a healthy person.

I have now had a letter saying that my tax credits have been stopped and that I must repay any overpayment, which by my calculation will be approx £6500! I am also worried that I will have to pay back any Council Tax Benefit I received during the same period as I only receved it because I was receiving Tax Credits.

I intend to appeal the decision because they cannot prove how long it takes me to undertake the tasks for my business, and they also refused to allow me to provide any further evidence which may support my claim. For example I offered to provide evidence that my Support Worker takes me out to purchase goods to sell in my shop, yet they said it did not count as work!

I am extremely distressed because I have declared my income and hours in good faith and have basically been called a liar. All the work I put in over the past year is being dismissed and they do not seem to be taking into account the fact that I am disabled and cannot work at the same pace as a healthy person. I am often bedbound and working from my bed!

The only benefit I receieve now is DLA so I have no idea how I will be able to cope financially. I cannot claim any other benefit as I am not well enough to attend job centre meetings or attend training courses etc.

If the Tax Credit office had told me BEFORE that they would not accept my ebay business as a qualifying 'trade' then I would have considered some other form of home based employment.

Is it fair that they can ask me to pay back money I claimed in good faith which now means for the whole of the last year I will not have received any benefit (except for DLA which is supposed to pay for my care needs etc)? I won't be able to claim anything else and backdate it to cover any of the past year!

Has this happened to anybody else and has anybody appealed and won?

Sorry for the long post and thanks in advance for your help.

zzzLazyDaisy

Hi OP, sorry to hear that you are having problems with tax credits. Unfortunately, you have to meet the rules for claiming tax credits, whether you are disabled or not. This means working for 16 hrs a week. You say that you can't produce regular accounts for consecutive months because of periods of inactivity. This suggests that, owing to your health problems you don't always work 16 hrs a week... while this is understandable due to the level of your disability, it also means that you wouldn't qualify for tax credits.

A business is a means of supporting yourself - if you are only breaking even, then you are not generating any income, and you are in fact relying on tax credits to provide an income, rather than topping up the income you are already earning. Again, that suggests that you are not meeting the criteria for getting tax credits.

Hopefully someone will be along soon who can help you with your question about appealling this decision, but I do wonder if you might not be better to claim ESA, since this benefit is specifically for people who are unable to work 16 hrs or more due to ill-health.

Magic_Fairy

Hi. Thanks for your reply.

I didn't mean that I didn't work for several months, only that I may work more during one month than another, and the activities I do during one month may differ from those in another month due to my fluctuating symptoms. It was the recommendation of the Tax Credit office that I sent accounts for 3 random months and not my suggestion!

I work over 32 hours a week ON AVERAGE as I have divided out all the tasks I do over the year to work out the weekly averge amount. I was told this was allowable and I have provided evidence of me working all through the night during periods when I was well enough (times are printed on my Ebay invoices).

I accept that a healthy person would achieve a lot more than myself in 32 hours but that does not mean that I am not working 32 hours a week!

It is also my belief that a self-employed business can make a loss but that doesn't mean that the trader was not working (regardless of the trade). If I worked on a market stall, purchased stock, stood behind my stall all day and at the end of the year my figures showed I made a loss, would that mean that I hadn't worked?

What upsets me is I have been completely honest with them and they are treating me as though I am a fraudster. I really don't know what to do.

*I would just like to add that I don't think I would be able to claim ESA as a friend of mine receives that and she has to attend meetings at the job centre and attend training courses to get her back into work. I can only go out with assistance and I no longer have a Support Worker.

Magic_Fairy

I would just like to add that if they have decided I can no longer claim Tax Credits because I can't prove how long I spend working on my Ebay business then I accept their decision and will consider some other form of home based employment. What I am upset about is them telling me the work I have already done during the past year doesn't count (or rather can't be proved) and that I have to pay back the Tax Credits they paid me. During that time I wasn't receiving any other benefit that I could have perhaps claimed and I will therefore be left in considerable hardship!

Anubis_2

Magic_Fairy wrote: »

Hi. Thanks for your reply.

I work over 32 hours a week ON AVERAGE as I have divided out all the tasks I do over the year to work out the weekly averge amount. I was told this was allowable and I have provided evidence of me working all through the night during periods when I was well enough (times are printed on my Ebay invoices).

I accept that a healthy person would achieve a lot more than myself in 32 hours but that does not mean that I am not working 32 hours a week!

It is also my belief that a self-employed business can make a loss but that doesn't mean that the trader was not working (regardless of the trade). If I worked on a market stall, purchased stock, stood behind my stall all day and at the end of the year my figures showed I made a loss, would that mean that I hadn't worked?

What upsets me is I have been completely honest with them and they are treating me as though I am a fraudster. I really don't know what to do.

*I would just like to add that I don't think I would be able to claim ESA as a friend of mine receives that and she has to attend meetings at the job centre and attend training courses to get her back into work. I can only go out with assistance and I no longer have a Support Worker.

The bit in bold. I think this is where your problem is. Stating you work 32 hours a week on ebay especially if your actual sales are low would likely be rejected. They will assume you are stating 32 hours to claim the 30 hour addition.

I think a more realistic 16 hours would have been more acceptable. It takes 5 minutes or so to do a listing. Let's say for you it takes 15 - depending on how many items you sell in a month, I would imagine it would have to be a fair few to justify 32 hours.

As you have implied your sales volume is low - this will tell them two things - that restocking does not have to be done often, and time taken for low sales is unlikely to match the hours you state.

I know there is P and P but these can be done at once - in other words one weekly post of items sold, as it would make sense to HMRC, given your limitations, to load all listings one day and have them end at the same time so they can get posted at the same time.

The HMRC are slamming down on "hobby" type businesses such as ebay and avon because some are claiming they do a lot of hours for little profit in order to claim tax credits. (I am not stating this is the case here.) I know you said it takes you longer but 32 hours average is a lot of hours for low turnover of ebay sales.

How many items did you sell per week?
What kind of jobs relating to selling on ebay did you list and what timescales did you put down?

You should be able to claim ESA. Infact you may have been better doing so, as you can do permitted work of under 16 hours a week and keep your earnings providing it is not more than £95 - if they pass ebay selling as PW.

http://www.direct.gov.uk/en/moneytaxandbenefits/benefitstaxcreditsandothersupport/illorinjured/dg_172014

You should also contact your council for assistance with housing benefit and council tax asap if needed.

Magic_Fairy

Hi. I sell a mixture of jewellery, make-up and vintage customised clothing items in my shop. The vintage clothes have to be washed and ironed, repaired, photographed, measured, described and the listing page has to be designed with the description, pics and details etc along with my terms and conditions etc. It certainly does not take 5 minutes to do a listing, I would say each one takes at least half an hour to an hour. As I said I am probably slower because of my disability but that does not mean I am not working.

Last week I sold £80 worth of goods (sales value), this week I have sold nothing. Yet the hours I have put in have been the same. I cannot force customers to purchase items from me but that doesn't mean I am not actively trying to sell.

The problem seems to be that I can't prove how long it takes me to wash and iron or repair vintage clothes, or how long I spend designing my listing pages, or how long I spend purchasing stock etc (I offered to provide evidence from my Support Worker and they were not interested)!

The Tax Office say I am trading yet the Tax Credit people say I am not! By the way, my Ebay business has been more lucrative in the past but due to failing health and the current economic climate last year was especially bad for me.

The Tax Credit Office have not yet sent the letter stating their reasons for stopping my benefit so I can't appeal the decision yet. However they have stated that they don't even believe that I work the minimum 16 hours which is a huge insult considering the struggle it has been for me to continue working with all my health problems. Surely they have to prove I am not working for 16 hours or more, they can't just say I am not? They refused to allow me to provide any further evidence that may support my case!

withabix

You have been using a Tax Credits loophole which is quite rightly being closed.

You may think this is unfair because you are disabled, however allowing you to utilise this loophole and not allowing able-bodied people to continue using is would be positive discrimination.

There has been plenty of publicity about this.

A reasonable test would be that your profit reaches or exceeds the National Minimum Wage per hour that you work.

Magic_Fairy

Hi. I don't understand how I have been using a Tax Credits loophole?

I claimed in good faith and declared all my earnings, hours worked etc.

As it stands there is no test to determine whether my profit reaches or exceeds the National Minimum Wage unless I am mistaken?

I claim Tax Credits on the grounds of Disability because I am unable to go out to work. How is this exploiting a loophole? Would it be better for me to do nothing and get a different benefit or is it better for me to work and be supported by Tax Credits like many other families?

Magic_Fairy

Why is it greedy to claim Tax Credits for a running a business that unfortunately did not make a profit in the last year? I have not lied about the hours I have worked and the Tax Credit Ofiice knew what I was doing and previously said it was acceptable. Families earning quite good wages can claim so why is it greedy for me to do so? I do not receive any other benefits other than DLA which is to pay for my care needs and Council Tax Benefit.

Why do you think it greedy for me to work and claim Tax Credits but not greedy for me to claim ESA which I believe would actually pay me at a slightly higher rate (although I'm not sure)!

Sugar_Coated_Owl

Surely you could have done all this in less than 30 hours?

zzzLazyDaisy

If you are disabled, in order to claim tax credits you need to do a minimum of 16 hrs a week PAID work. If you are self employed, paid work means work for which you expect to be paid, or on which you make a profit. If you are working 32 hours a week but only breaking even, you are not making a profit and that work is not paid work.

The 'loophole' referred to by another poster is that at one time tax credits would be paid even if the person was not earning any/much money from what they were doing, which resulted in the tax credits being the sole/main source of income rather than the 'top-up' it is intended to be. More recently the rules have been applied more strictly.

You say that if you had realised that tax credits would be applied in this way, you would have done some other form of homeworking. But the same rules would still apply - you need to be showing that you are doing 16 hrs a week PAID work. At the moment that is not the case - yes you may be working, but if that work is not generating an income, it does not meet the criteria for tax credits.



http://www.hmrc.gov.uk/taxcredits/start/who-qualifies/workingtaxcredit/work.htm