Tax credit overpayment - help please..

appleblossom

Have received letter stating they have stopped our WTC because they do not beleive my husband is working 30 hrs on the self-employed income declared- he is but admittidly it is a low income @150.00 pw after all expenses but we have struggled surviving with WTC top-up.

They state we have been overpaid by almost 5000.00 for 2011-2012.

We are going to appeal against it but I don't know if we will win as we have to prove he was working those hours -

Apart from the obvious worry about how we will pay it back (will they deduct it from our CTC?) - the letter just says next to the overpayment amount this amount is not being collected yet, I am worried sick (literally) that we will be prosecuted as it says if they find out at a later date the information we gave is incomplete or incorrect we may face prosection - as I cannot physically prove his working hrs will they consider this to be incomplete and there prosecute on this basis or will they just accept the money being paid back?

Thanks in advance.

Icequeen99

appleblossom wrote: »

Have received letter stating they have stopped our WTC because they do not beleive my husband is working 30 hrs on the self-employed income declared- he is but admittidly it is a low income @150.00 pw after all expenses but we have struggled surviving with WTC top-up.

They state we have been overpaid by almost 5000.00 for 2011-2012.

We are going to appeal against it but I don't know if we will win as we have to prove he was working those hours -

Apart from the obvious worry about how we will pay it back (will they deduct it from our CTC?) - the letter just says next to the overpayment amount this amount is not being collected yet, I am worried sick (literally) that we will be prosecuted as it says if they find out at a later date the information we gave is incomplete or incorrect we may face prosection - as I cannot physically prove his working hrs will they consider this to be incomplete and there prosecute on this basis or will they just accept the money being paid back?

Thanks in advance.

There are lots of ways to prove he was working those hours. I have succeeded with cases where the earnings were declared as Nil or a loss, so £150 per week must be coming from somewhere.

Does he have invoices? receipts for expenses, mileage logs, emails, letters, quotations he has done etc?

What type of work does he do? As I say if there is £150 per week, there is money coming in and you mentioned expenses so there is money going out. For tax purposes he must be keeping records, so that should help prove it.

You are right, you need to appeal. If your appeal fails, you will have to pay it back and HMRC can charge penalties if you have failed to report a change of circumstances.

IQ

appleblossom

Thank you for taking the time to reply.

He works for a company on a s/e basis - basically doing what they need him to - he therefore doesn't have books so to speak as its almost like being employed - works pretty near same hours week in week out, if he is off sick he doesnt get anything for it, doesnt get holidays etc., he just gets a set amount each week from them - we are going to get a statement from the accountant showing income and expenditure for the year - will this suffice?

I can face being on the breadline but I can't face being put in prison and more then anything I am scared of being prosecuted if we don't win the appeal.

Icequeen99

appleblossom wrote: »

Thank you for taking the time to reply.

He works for a company on a s/e basis - basically doing what they need him to - he therefore doesn't have books so to speak as its almost like being employed - works pretty near same hours week in week out, if he is off sick he doesnt get anything for it, doesnt get holidays etc., he just gets a set amount each week from them - we are going to get a statement from the accountant showing income and expenditure for the year - will this suffice?

I can face being on the breadline but I can't face being put in prison and more then anything I am scared of being prosecuted if we don't win the appeal.

If I were you I would get some advice. It doesn't sound like he is actually self-employed at all, but rather the company are trying to get out of treating him as an employee.

Have a look here: http://www.hmrc.gov.uk/employment-status/index.htm#1

It isn't for the person or company to decide, whether you are employed or self-employed is a matter of fact and HMRC can challenge it.

Does he have a contract with company showing how many hours a week he works? Does he do timesheets for them? Presumably he must invoice them each week for the hours worked?

For tax credits, even if the status is wrong, as long as he worked 30 hours it shouldn't make any difference.
IQ

Icequeen99

appleblossom wrote: »

Thank you for taking the time to reply.

He works for a company on a s/e basis - basically doing what they need him to - he therefore doesn't have books so to speak as its almost like being employed - works pretty near same hours week in week out, if he is off sick he doesnt get anything for it, doesnt get holidays etc., he just gets a set amount each week from them - we are going to get a statement from the accountant showing income and expenditure for the year - will this suffice?

I can face being on the breadline but I can't face being put in prison and more then anything I am scared of being prosecuted if we don't win the appeal.

I wouldn't worry about the prison thing. At worst, HMRC might think your husband has been negligent and give him a penalty.

But as I say, there must be proof somewhere he is working for this company. Why not ask them for a letter to confirm he has worked X hours each week.

IQ

appleblossom

It is his choice to work for them s/e - won't go into all the details as to why but its for personal reasons (nothing bad or fraud!!) - we would be able to get a letter confirming the hrs he has worked- he doesn't submit time sheets etc, no contract etc, no invoicing as just does 30 hrs a week unless he has time off which he keeps to a minimum due to not being paid for it.

Thank you for your help and advice - can I ask do you answer on a personal or professional knowledge basis?

princessdon

If he works for a company as a contractor then proving hours should be easy

How many hours does he work for them?

Can you prove the additional hours a week (ie invoices to them etc)

appleblossom

he only works for them, he doesn't have any other customers nor does he have a written contract. He started off years ago doing odd bits of work for them when he lost his job as the company closed, the place where he is now just accepted he increased his hours with them and its all kind of been an informal arrangement since then.

princessdon

so how many hours a week does he work for them?

You said 30 hours

Therefore you have the invoices you send them?

Why do you have an accountant with such low values and 1 income stream?

appleblossom

he works on average 30 hrs a week for them.
he does not give them invoices, as I said it is an informal arrangement and doesnt alter - he gets a set amount each week.
Unless I physically video him at work I cannot prove to the tax office he works and I do not have any contract etc to show them, therefore we have asked an accountant to draw up an income and expenditure sheet for them so we have something to offer them other then just our word for it.

princessdon

Very expensive accountant for the little you need

Draft a "contract" - you can download from the web and change a few things, get them to sign it.

Add the difference between his "wage" and what you claim as profit - then submit receipts for the difference.

You are in a much better position to prove the 30 hours than a "self employed with clients".

The problem I can see is if MHRC look too closely at the working arrangement or is he paying employee and employer NI as part of his costings?