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

Anubis_2

Magic_Fairy wrote: »

Hi. I am sorry if I have come across as defensive. I just feel upset that some people on here think I am deliberately flouting a loophole and disbelieve the hours that I have put into my business.

I had a Support Worker because I developed agoraphobia after I collapsed on a bus due to my disability. My elderly Father sometimes takes me to the Post Office and I also have a friend who helps occasionally although due to their own commitments they would not be able to spend the time attending training courses etc with me for ESA purposes. I only recently lost my Support Worker and the Tax Credit Office are looking at the period April 2011-2012 during which I did have one. I did not only buy stock when I went out with my Support Worker, I also purchased stock online.

You keep mentioning training courses for ESA - you do not know if you will be sent on these, and certainly won't be straight away and I am sure if they are aware of how disabled you are you may not even have to do them.

There are plenty of people on ESA who haven't been on training courses and the WFI can be arranged to do them over the phone.

Are you saying you think you could manage to do your ebay business without a support worker?

I really think as you are not making much money you need to claim ESA as tax credits are likely out of the equation now.

Anubis_2

Dunroamin wrote: »

It's equally valid to argue that the system is being tightened up because of the number of people who have been abusing it. This is particularly the case where people on JSA are using the WTC system as a way of avoiding the Work Programme and other back to work schemes..

How can they be on JSA and WTC?

BigAunty

Sixer wrote: »

..

Personally, I would agree with those who say hobby businesses have become a loophole for tax credits entitlement. BUT, we should remember that in many cases, DWP themselves actively encouraged the creation of such businesses with the carrot of tax credits entitlement. So it seems unjust that HMRC are now cutting the ground from beneath claimants' feet. Typical fiasco from government organisations if you ask me.

Agree. A long term unemployed person who wishes to become self employed can access a new enterprise allowance and receive a loan but only if they can show that their business is viable and they are also mentored.

Same with a young person wanting to become self employed and contacts the Princes Trust for assistance. Same with a person not entitled to benefits who wants to set up their own business - they are more likely to write a business plan because they don't have the cushion of HB/CT discount/WTC, etc, they really need their business to work, there's no safety net.

With tax credits, all a claimant has to do is claim them and register with the HMRC without a jot of research or business planning.

Also, while the online HMRC site does give information about the eligibility for WTC, the need for the work to be done in the expectation of payment and some guidance on what is classed as business time, there is little guidance provided to a claimant in keeping time-keeping records which they later insist on as evidence.

To the OP - it appears that the HMRC are launching many investigations into self employed people earning WTC. We've seen a handful of posts similar to yours where they have asked for evidence of business activity and then told the claimant they are not eligible and have demanded back the overpayment. These posts have come from e-commerce sellers, a graphic designer, a guy that sells things he makes at boot fayres, a book seller on ebay, for example. There is a suspicion that HMRC have a certain criteria that they investigate for the self employed on WTC and that there is a big purge going on.

In the move to the Universal Credit system, the govt are turning the WTC criteria on its head. Instead of placing the emphasis of time spent on the business as the threshold for claiming, they expect a claimant to earn at least the NMW from an established business. Download the proposal paper from the DWP site to understand how benefits will change for the self employed in the future.

Magic_Fairy

Soolin, thank you for inviting me to the ebay board.

I am not sure how I could take photos of an item, upload them onto the computer, add them to Turbo Lister, then measure the item, describe it, fill out the listing page thingy, weigh the item, work out the postage costs etc in less than half an hour to an hour per item? Although I have good typing skills there are times when I have difficulty using the computer due to problems with my arm, shoulder and back and I also have problems getting up and down from a chair/bed to measure items and take the photos etc because of my physical problems. This was all supported by medical evidence that I submitted.

Dunroamin

Anubis wrote: »

How can they be on JSA and WTC?

Sorry if I was unclear.

There are plenty of people on JSA who, when the Work Programme looms, sign off JSA and start an "Ebay business" and live off WTC and any small amount of money they earn on the side. Some very notable MSE members have done this.

Magic_Fairy

BigAunty wrote: »

Agree. A long term unemployed person who wishes to become self employed can access a new enterprise allowance and receive a loan but only if they can show that their business is viable and they are also mentored.

Same with a young person wanting to become self employed and contacts the Princes Trust for assistance. Same with a person not entitled to benefits who wants to set up their own business - they are more likely to write a business plan because they don't have the cushion of HB/CT discount/WTC, etc, they really need their business to work, there's no safety net.

With tax credits, all a claimant has to do is claim them and register with the HMRC without a jot of research or business planning.

Also, while the online HMRC site does give information about the eligibility for WTC, the need for the work to be done in the expectation of payment and some guidance on what is classed as business time, there is little guidance provided to a claimant in keeping time-keeping records which they later insist on as evidence.

To the OP - it appears that the HMRC are launching many investigations into self employed people earning WTC. We've seen a handful of posts similar to yours where they have asked for evidence of business activity and then told the claimant they are not eligible and have demanded back the overpayment. These posts have come from e-commerce sellers, a graphic designer, a guy that sells things he makes at boot fayres, a book seller on ebay, for example. There is a suspicion that HMRC have a certain criteria that they investigate for the self employed on WTC and that there is a big purge going on.

In the move to the Universal Credit system, the govt are turning the WTC criteria on its head. Instead of placing the emphasis of time spent on the business as the threshold for claiming, they expect a claimant to earn at least the NMW from an established business. Download the proposal paper from the DWP site to understand how benefits will change for the self employed in the future.

Is it fair for them to judge my PAST claim on proposals that haven't even been implemented yet though? At the time of my claim I should have been able to claim Tax Credits based upon the number of hours I worked. Proving the number of hours I worked is my problem, but they can't change the qualifying criteria until the changes have been implemented surely?

Anubis_2

Magic_Fairy wrote: »

Soolin, thank you for inviting me to the ebay board.

I am not sure how I could take photos of an item, upload them onto the computer, add them to Turbo Lister, then measure the item, describe it, fill out the listing page thingy, weigh the item, work out the postage costs etc in less than half an hour to an hour per item? Although I have good typing skills there are times when I have difficulty using the computer due to problems with my arm, shoulder and back and I also have problems getting up and down from a chair/bed to measure items and take the photos etc because of my physical problems. This was all supported by medical evidence that I submitted.

A pair of earrings would not take an hour would they?

Clothing I presume you buy knowing the measurements? Or is it all sold to you unmeasured?

Half an hour is a much more realistic but generous time accounting for your disabilities - an hour can not be taken seriously by HMRC.

Now if you list 8 items per week, and you are including measuring etc in your listing time, that's 4 hours. What do you do for the other 28?

More importantly on the weeks you sell nothing and relist, what do you spend 32 hours doing? HMRC will definitely not believe you do anywhere near 32 hours for the weeks you don't sell.

Anubis_2

Dunroamin wrote: »

Sorry if I was unclear.

There are plenty of people on JSA who, when the Work Programme looms, sign off JSA and start an "Ebay business" and live off WTC and any small amount of money they earn on the side. Some very notable MSE members have done this.

Ah, I am with you now. No wonder why the advisor at the JC immediately jumped to the conclusion I would be selling items on ebay. I only said I want to talk to someone about PW, and she said "you going to be selling on ebay?" :cool:

Icequeen99

I would suggest that you ignore much of the discussion about whether this is right or wrong.

I have won a couple of appeals recently on this exact point, so I certainly wouldn't give up.

You need to approach this practically. List out all of the things you do each week and apportion hours. HMRC have said things like going out and buying stock is not counted for hours, but they wouldn't win that argument at a Tribunal.

Have a look at http://www.hmrc.gov.uk/manuals/ccmmanual/CCM6755.htm

It shows what you can count as remunerative work.

There is a difference between doing something in hope of payment and in expectation of payment. There is case law from DWP benefits about that, but where you are actually doing things that the business needs to run (such as buying stock) there is no doubt those hours count. And indeed if you are listing things for sale, the fact that no-one then buys them is not relevant to whether or not you were doing it in expectation of profit. You listed with the intention to sell. Again, a point that I am fairly sure a Tribunal would listen to.

I would suggest that you appeal. You have nothing to lose by doing so.

Then contact an organisation for help, such as one of the tax charities (https://www.taxaid.org.uk or https://www.litrg.org.uk) and take it from there.

The fact that you have made a loss or no profit does not mean you are not working in expectation of payment.

As others have pointed out, the rules will change under Universal Credit, but until that happens it is perfectly legitimate to work within the tax credits rules.

IQ

Sixer

Guys - the OP has asked for advice on what to do about the OVERPAYMENT. This is the advice she needs - it's several thousand pounds. Any advice about future claims/work balance is just secondary. Whether or not hobby businesses are a tax credits loophole are only marginally related to her problem, which is what to do about a massive overpayment and large debt she has no means of repaying.

OP: vis a vis the overpayment - you need to appeal. It's a complex area so you will need advice and support from CAB or a disability charity that advises on welfare entitlements. You are unlikely to succeed on your own - if you think DWP can be autocratic, HMRC is ten times worse. It's possible you will succeed on appeal - either in entirety or with a notional requirement. That you made a loss is irrelevant - despite the "common sense" opinion of people on here - losses don't invalidate tax credit entitlement. What matters is that you can show evidence that you worked X hours in realistic expectation of payment.

Going forward: you need to claim ESA. You will be able to do permitted work of fewer than 16 hours on your eBay business.