Tax Credit Investigation

FBaby

So it would seem that there is a discrepency between what you claim as an income (being self-employed) and what your outgoings are. Your position is that you are indeed enjoying a lifestyle that would be expected to be beyong what your income is, but that is explained by previous savings you were able to keep and that it is within the rule to claim tax credits whatever your savings levels are.

If that is indeed the situation, then you have nothing to worry about. As stated above, they will have records of your savings. If you can show that you took £20K out of a saving account and that the next day you went and bought a new car, then fair enough. The problem is if you show that you took £10K a year ago, but then managed to buy a £40K car, a new motorbike, paid off £100K of your mortgage etc....

Icequeen99

You mention that the letter only gives you 21 days to respond.

Does the wording at the start say anything about what section of the tax credits act they are using? Does it threaten to suspend payments if you don't respond?

Depending on what power they are exercising (whether this is a formal notice seeking information and whether it is current year/previous etc) they do have to give 30 days in some cases.

IQ

Gentile

miduck wrote: »

They look at things like this to see if a claimant's outgoings do not match what they declare as income. For instance, it would be unrealistic for someone earning £5,000 a year to be driving a top of the range car.

That has probably sent a shiver through half the posters on this board.:rotfl:

zagfles

bikeman wrote: »

In my case my tax credits claim is based upon being single with two children (cant lie about that). I do hold premium bonds/ISAs; they were purchased over many years when I earnt well. Now my income is low I do have to cash them in periodically to survive. My claim is valid and I should have nothing to worry about. I just dont like the intrusion.

Unfortunately despite repeated attempts I haven't been able to talk to them. Their phone just rings endlessly. If I could understand from them what has prompted this I would be better able to address their concerns.

I think it must be as per shedboy's post. They are either questioning your income, since you're self-employed, or they think you have a partner.

There is a lot of fraud by the self employed not declaring all their income, eg taking cash for work and not declaring etc, so because of this they'll be suspicious if you consistently declare a low income yet have a lifestyle that doesn't seem compatible.

As you built up the capital when you were earning well, it should be easy to provide the evidence to prove this, for instance high declared income on your tax returns in 2000-2005, premium bonds/ISAs bought in 2000-2005, case closed.

It's if you have always declared a low income, yet have somehow managed to build up capital, they'll want to know where it came from and that it's not undeclared income.

bikeman

FBaby wrote: »

Your position is that you are indeed enjoying a lifestyle that would be expected to be beyong what your income is,.

I wish. Actually I am fifty, long term unemployed and am now trying selfemployment because theres nothing else for me. Yes I have savings but I also have two children & no job so I live pretty frugally.

Icequeen99 wrote: »

You mention that the letter only gives you 21 days to respond.

Does the wording at the start say anything about what section of the tax credits act they are using? Does it threaten to suspend payments if you don't respond?

Depending on what power they are exercising (whether this is a formal notice seeking information and whether it is current year/previous etc) they do have to give 30 days in some cases.

IQ

I did actually get 30 days but post was delayed over xmas. It is an investigation into this year. Actually as self-emplyed I am not actually required to provide anything more than an estimate of earnings for the year so this is obviously an investigation into my hours. And yes they have threatened to cancel my current claim but as 90% of my tax credits is based upon having 2 children I think that only 10% is at risk.

I've now taken legal advise and can advise that a tax credits investigator cannot demand lifestyle information. This only be demanded when this becomes a tax evasion investigation.

Secondly, it would seem that there's a bit of a clampdown on the self-employed and reading betwen the lines I have been selected for investigation because I claim to work more than 30 hours but generate below 30 x min wage. I think the focus will be on proving my working hours.

I have been told that as judge, jury and executioner, anything I give them will be ignored. They will not accept anything less than income as 30 hours x min wage which can be patently unfair as like most self-employed I do a fair amount of non-billable hours. The purpose of the investigation is a cynical attempt to reclaim tax credits.

Everything I do goes through the books so I should have nothing to worry about - we'll see...

ps For all the posters here who adopt a holier than thou attitude and come out with comments like good job the coalition are removing tax credits for people have assets. Do you really think it fair that hard working people who buy their own homes and put a bit aside should get absolutely no help when they lose their jobs until they are reduced to the level of those that never bothered? Would you still think that way if you lost your job? Is it in the govts best interest to kick someone when they are down so that they just become a burden to the state or is it better to provide a safety net to get them back into work.

Secondly these muppets, after lobbying by big businesses, set a minimum wage that subsidises the wage bill of large corporations. Exactly the same policy was adopted in the USA, a country where policy is very much dictated by big business and wealthy lobbyists for their own benefit. If the govt addressed this anomally and raised the min wage to the level where tax credits wasn't a necessity for a livable income we would see a marked decrease in the welfare bill. But that wont happen now because they haven't got the balls to take on big businesses. They only have the balls to crush the small man who's striving to make it on his own. They fiddle their expenses, vote for their own wages/pensions yet tar the self-employed and unemployed as all criminals and skivers, and you daily mail readers just lap it up.

real1314

bikeman wrote: »

ps For all the posters here who adopt a holier than thou attitude and come out with comments like good job the coalition are removing tax credits for people have assets. Do you really think it fair that hard working people who buy their own homes and put a bit aside should get absolutely no help when they lose their jobs until they are reduced to the level of those that never bothered?

Do you think it fair that the low paid, perhaps earning £12k a year, paying tax and receiving nothing at all back, should have to see some of that tax payemtn handed over to you and your "estimate" of income, whilst you syphon income into assets?

If you haven't been syphoning money off through your accounts, then showing your account transactions to HMRC will prove that you have been honest and above board, so there's a really simple way to sort this out one way or the other. :cool:

bikeman

real1314 wrote: »

Do you think it fair that the low paid, perhaps earning £12k a year, paying tax and receiving nothing at all back, should have to see some of that tax payemtn handed over to you and your "estimate" of income, whilst you syphon income into assets?

If you haven't been syphoning money off through your accounts, then showing your account transactions to HMRC will prove that you have been honest and above board, so there's a really simple way to sort this out one way or the other. :cool:

There you go assuming that a selfemployed person on £12k is somehow getting a better deal than an employee on £12K. Believe me selfemployment at this level is far harder.

Actually the estimate is only until the figures are finalised at year end when earnings are known. There is no advantage. In fact it is a big disadvantage if I under estimate earnings and have to repay overpayments with penalty.

If you were better informed you would know that for tax purposes self-employed business income is lumped in with personal income. It's not like having a limited company, the accounts cannot be seperated. There i sno opportunity to syphon anything off.

The only advantage that some self employed have as they can work cash in hand. As a provider of services to businesses who want receipts this is not something I can do even if I wanted to.

Everything I have done is through the accounts, I have nothing to hide but I am not going to tell them any more than I have to. Big brother is here and if you want to blindly comply with unreasonable demands you do so.

I cant believe you have over 4000 posts here yet are so poorly informed.

FBaby

I personally souls rather comply and be assured that the income I receive and is essential to support my family will not be affected then argue that I don't have to provide some requested info because of my human rights hence raising suspicion and risking losing essential income putting my children in a compromising situation. We are all different and if you think your morals are more important that is your choice.

zagfles

bikeman wrote: »

I did actually get 30 days but post was delayed over xmas. It is an investigation into this year. Actually as self-emplyed I am not actually required to provide anything more than an estimate of earnings for the year

You aren't even required to provide that, and if you do HMRC are not required to take any notice of it (though they usually do).

Is your estimate significantly below last year's actual income? If so, HMRC are within their rights to ignore your estimate and pay you based on last year's actual income.

so this is obviously an investigation into my hours.

Don't see why they'd want an income and expenditure form, copies of statements etc.

And yes they have threatened to cancel my current claim but as 90% of my tax credits is based upon having 2 children I think that only 10% is at risk.

If they think you work below 30 hours then £790 will be at risk, if they think you work below 16 then all your WTC is at risk. I don't see how 90% is based on the children if you're earning less than 30h NMW (about £9500).

Suggest you have a look at the compliance manual...

http://www.hmrc.gov.uk/manuals/ccmmanual/index.htm

real1314

bikeman wrote: »

There you go assuming that a selfemployed person on £12k is somehow getting a better deal than an employee on £12K. Believe me selfemployment at this level is far harder.

Not one fully employed PAYE person on £12k can take their wages in any form of cash in hand. Lots of self-employed people can. Therefore it is more probable that a SE has undeclared income than a PAYE. Some SE will be declaring £12k and taking twice that on the basis of saving the customer "VAT" - whilst the SE saves tax on top.

Actually the estimate is only until the figures are finalised at year end when earnings are known. There is no advantage. In fact it is a big disadvantage if I under estimate earnings and have to repay overpayments with penalty.

You said "Actually as self-emplyed I am not actually required to provide anything more than an estimate of earnings for the year" - what's your point? is it that you don't seem to know what you want to say, as you have now contradicted this?

If you were better informed you would know that for tax purposes self-employed business income is lumped in with personal income. It's not like having a limited company, the accounts cannot be seperated. There i sno opportunity to syphon anything off.

What personal income? And how does that differ from anyone on PAYE? If you were better informed, you'd know that the tax rules apply to every individual in pretty much the same way, but some have more opportunities to evade than others.

The only advantage that some self employed have as they can work cash in hand. As a provider of services to businesses who want receipts this is not something I can do even if I wanted to.

Which none of the people here could have known. Doesn't mean you can't do a few one-off jobs for householders either, depending on your trade.

Everything I have done is through the accounts, I have nothing to hide but I am not going to tell them any more than I have to. Big brother is here and if you want to blindly comply with unreasonable demands you do so.

Well, if you don't wnt to send the inof, don't claim the money from taxpayers

I cant believe you have over 4000 posts here yet are so poorly informed.

yeah, good point. You really pinned that one on me. You are the person pointing out that you have sunk money into your property and into ISAs etc but want money from taxpayers. UC will put a stop to that. :cool: