Self Employment, benefits and expenses issues.

Fillyboo

These are self produced accounts. The HMRC allowed the expense. The council simply said that it was a piece of equipment that was aiding in the 'growing' of the business. This was said over the counter face to face. I did not dispute it as I took thier word and just went from there. It was more a question of, if my partner starts small, and has to buy a piece of equipment is that classed as 'growing a business'. Thank you very much for your answer and link, I'll click through now.

Fillyboo

Got it, thank you, I wasn't aware of the UC terms and this will greatly affect any work I undertake on a self employed basis in the future. I cannot guarantee that I will make anywhere near close to nmw if I were to start again l, but I will read more as it might be different for my partner who is already employed.

epitome

Fillyboo wrote: »

I did not specify how much the camera cost as it was not in the interest of my question. My question isn't here to be used as fodder for those who wish to nitpick in a childish way, but for the purpose of finding out how we can make the business work, in order to better our situation. I did not question the camera incident, I simply did not know it was not an allowable expense. It's equipment. It doesn't matter the cost. They cannot tell me how much my equipment should cost to run my business, surely. Again, I did not complaint about the camera, I put it down to experience and moved on, my question is for future endeavours.

So what you are saying is, you don't have the first clue about what is and is not allowed on a HB calculation, you chose to omit (EDIT: omit from your OP obviously) the cost of the camera, not knowing if the cost was relevant or not, and when asked by someone on the board about the cost ...because it *might* be relevant...you choose to throw all decorum out the window and reply in an increasingly childish and rude manner.

Fillyboo wrote: »

Is there anyone out there that doesn't have a chip on their shoulder,

Someone other than you, you mean.

Good day to you.

BigAunty

Fillyboo wrote: »

Got it, thank you, I wasn't aware of the UC terms and this will greatly affect any work I undertake on a self employed basis in the future. I cannot guarantee that I will make anywhere near close to nmw if I were to start again l, but I will read more as it might be different for my partner who is already employed.

Do unearth the full DWP information - the notional income of NMW is an aspiration, an expectation, for a business to achieve after x period after being founded. I believe that they may set some extra conditionality, a bit like JSA sign-on for those in low income self employment.

Do find out if you can appeal the council's interpretation of your accounts and double check on the tax forum that the HMRC should not have an issue with that as a legitimate business expense. Hopefully another poster can tell you how you can appeal the reduction in HB but there's always the option to contact your local MP who is there to serve their constituents and do get involved in benefit disputes.

If you are claiming working tax credits (you don't say, perhaps your partner's employment income rules this out) or if your partner's drop in income when he leaves his employer means you may, then make sure you fully understand the terms of claiming WTC, that you keep evidence on how you are spending your time on legitimate business activities, all undertaken with the expectation, not hope, of payment.

There is no direct issue with a self-employed claimant of WTC running a business at a loss or with a low profit. However, what we see regularly on this forum is SE claimants who fall foul of HMRC wtc compliance investigations and who have to pay back years of WTC because the HMRC are adamant that the claimants are not working the hours they say or spending the hours on non business related activities.

Fillyboo

This board is full of assumers with very few real helpful people here. I did NOT omit anything from the council, the hmrc, or even here. I did not post to be scrutinised on an unimportant point because it somehow makes you and 'poppasmurf' feel better when you're bashing those who are unsure about something. My assumption is that people like you and 'poppasmurf' cruise the benefits board because you just love sticking the boot in. Except, with my question you simply can't. There's nothing to scrutinise. I declared everything, I did not ONCE complain that the council said its not an allowable expense. I did not moan whine or kick up any fuss there, or on this board about that, but you two choose to assume I did because it allows you to belittle.

Can you so kindly point me in the direction on the housing benefit terms for non allowable expenses and show me where it states that you cannot claim for business equipment if its over a certain amount of money for a specific purpose. I did not put the cost of the camera, even when questioned by 'poppadmurf' because it has absolutely nothing to do with the question at hand, and because I already knew poppasmurf was out for a fight instead of being a genuinely interested person who may have had an answer for me.

Go pick your own fight elsewhere, poppasmurf had this covered. Please don't assume you or anyone else has anything to say that will have me quaking in my boots because I have nothing to hide, unfortunately for the likes of you, you people truly love nothing more than to puff up your pigeon chests because the only thing you can do is sit there and look for points to nit pick in others. It's not happening here, I'm afraid, so please do move on.

BigAunty

By the way, I think UC has some kind of transitional protection for benefit claimants.

Again, in your research, you may find out how long this is protecion is for and what is considered a trigger for a new claim that might end the transitional protection, plus get an idea of the timetable for its introduction. Therefore you may identify that that with transitional protection, plus the fact that it's a while until it is rolled out, there is ample time to build up more sustainable businesses.

Fillyboo

BigAunty wrote: »

Do unearth the full DWP information - the notional income of NMW is an aspiration, an expectation, for a business to achieve after x period after being founded. I believe that they may set some extra conditionality, a bit like JSA sign-on for those.....

Thank you BigAunty, you certainly are very knowledgable about all aspects here and I'm grateful for it. I personally have all of the information needed if I were to be in the position of having to prove hours of work, it's helpful to know all that needs to be recorded if my parter were to take on self employment full time. I have lots of reading to do, it seems.

I had gone over the rules for expenses and housing benefit claims but information is light so I had thought the equipment cost was ok, since I believed it came under 'supplies' since its a tool directly used in the making of my items, even though it had a dual purpose. There's not a specific rule that states 'equipment used to grow a business' but I guess as its not completely under those guidelines written, I did think they were right and decided I could not cover it. I will look into whether there is a time limit with regards to querying thier decisions.

Thank you again.

tyllwyd

Fillyboo wrote: »

When giving my books into the council with sales of around £1700 for the year, and expenses of over £2000, I was told an expense (a camera to aid in the taking photographs of products) was not allowed to be considered an expense as it was 'something which grows a business' which they don't take into account. They then issued an overpayment for the housing benefit to the cost of the camera. I couldn't pay it any other way than selling the camera and having to stop my business.

I'm a bit confused - even taking the camera out of the accounts, you still made an overall loss for the year, so wouldn't your income be £0 when it came to housing benefit, so why did they ask for money back as an overpayment? Or had you added together income from other sources and reduced it by the amount of your loss from self-employment?

I wonder if the problem was that buying the camera was capital expenditure, which is treated slightly differently in your accounts compared to everyday expenses.

http://www.hmrc.gov.uk/capital-allowances/basics.htm

Fillyboo

I wasn't told it was classed as capital expenditure but the cost of the camera being taken off the expenses meant the difference was classed as income which triggered the overpayment. I am not 100% on the figures without getting my file box out but that's around what I remember as it was a while ago.

BigAunty

Fillyboo wrote: »

...

I had gone over the rules for expenses and housing benefit claims but information is light so I had thought the equipment cost was ok, since I believed it came under 'supplies' since its a tool directly used in the making of my items, even though it had a dual purpose. ....

.

I haven't heard of the term 'expenses to grow a business either'.

Is it possible that supplies is similar to stock and is more about something that the customer directly receives rather than something that remains within the business or decrements with each client? Did you buy this item in the early part of your business?

Or is it possible that it is the dual use of the camera that is the issue but the staff member hasn't explained it very well - the following council say 'We only allow expenses that are purely for business purposes.'

The following guide published by Hackney Council has a bit of info on what they include/exclude as a legitimate business expense which is different from what the HMRC may accept. They make it clear that items that could have a home and business use could be excluded from calculations.

They are also clear that capital expenditure and what they consider start up costs are not acceptable so again, perhaps that's why the camera has been included.

The following are also examples of expenses that are not allowed.
• Money used to set up or expand a business.
• Capital spending. (This is spending on a capital item for
expanding the business, for example a new taxi or a property.)

http://www.hackney.gov.uk/Assets/Documents/self-employed-advice-htbandctb.pdf

Here is a link to how an item is considered capital expenditure under the broad definition and I think a camera very well might.

"Generally capital expenditure will result in the acquisition, disposal or modification of an identifiable capital asset...If it is no part of the company’s trade to deal in the asset in question then the expenditure is likely to be capital."

http://www.hmrc.gov.uk/manuals/bimmanual/bim35010.htm