Housing Benefit working out income by adding personal drawings+gross profits? uh?

Heycock

Just a couple of notes.
Firstly, you do NOT have to have an accountant. If your business is run simply, you keep good daily records and you have a grasp of basic mathematics you can do your accounts yourself.
Secondly, you do NOT have to have a separate business bank account when SE. It is ADVISED but is not compulsory. Apart from anything else there may be good reasons for not having one..if bankrupt, you won't be ALLOWED a business A/C...a personal A/C will be difficult enough to get!
Thirdly, it is rare for any public servant to have the slightest idea how business works so you MUST keep good day books and cross reference all transactions on your bank/credit card statements. Make it clear which items represent business income/expense and which personal. You may asked to provide proof. Send copies of day books and cross referenced statements with all benefit claims. Be prepared for some HMRC allowances such as depreciation not to be allowed. HB has a peculiar way with it's definitions of allowable expenses...not always the same as HMRC.
Finally, if the person dealing with your claim isn't capable of making the distinction between drawings and profit, request that your claim is handled by someone with relevant accounting experience.

These things are sometimes made difficult because the people dealing with them MAKE them difficult. Why? Because they can. And if they mess up the worst sanction they face is a nice few days away at a posh hotel for "retraining".

hbgirl

write in and ask for a reconsideration or appeal. HB officers are not accountants but a decent one will be able to grasp what you are saying.
i can see why they made the original decision though due to use of your personal account in that way.

if possible ask for an appointment with an appeals officer or a senior officer. i would think with further evidence re your credit card etc they could revise the decision

System

dktreesea wrote: »

How long have you been running your business?

Thanks dktreesea. I started my business in August 2009

As to transferring money between accounts, all that is for a sole trader is a transfer. There's no implications, or impact, on your profit and loss at all.

Also, gross profits are not what matters for housing benefit. It's net profits, i.e. your taxable income.

Exactly. The personal drawings is just cash movement. It's still the same money moving from an account to the other. It's beyond me why they added my personal drawings to my gross profit.
I could not believe it.

What I don't get is, if you are only earning a net income of £230 a month, however did the housing benefit office get to conclude, in the letter they have sent to you:

"You stated on your self–employed supplement form that you had a gross profit of £3404.00 during the period 1 July 2012 to 31 December 2012."

What were your expenses over that period?

I think this is one of the problems. For expenses, since July 2012 I used only my personal cc so the expenses didn't show up on the business statements. I didn't supply a proof of expenses in a bank statement format because I had read that I didn't have to supply personal bank statements,
but I had explained that in my letter and also wrote a clear list of all my expenses for them. I also asked them to let me know if they needed any other information and I would send it ASAP.

Now it's obvious to me that just providing a list of expenses isn't enough and I need to provide proof, so I'll send my personal cc statements and highlight all business expenses, as some other user suggested (sorry don't remember who, but thank you).
However they never replied to my letter, I thought that they would let me know if something would not have been acceptable.

When they replied (after months) they didn't mention the lack of expenses or anything. Instead they added my personal drawings to my gross profit. No idea why, but I am preparing the whole lot again to be sent, this time I'll make it dumb proof and include proof of expenses on my personal cc statements.


For that period, 1st of July to 31st of December 2012 (though why they are only taking 6 months into account is another departure from their guidelines, which tell them to take a full year's net profit into account if a full year's figures are available) what was your net income/profit?

I have checked again, my net income has not been more than £ 230 per month for the period July to December 2012.

I will have to start from scratch again and resubmit everything.
Thanks

PS. sorry about the multiquote mess, I wrote the replies in the green area at the same time as I wrote this

System

fluffymovie wrote: »

Just to confirm that this isn't actually quite right - for example, HMRC allow costs for depreciation which HB do not allow for so just wanted to be clear that it is not what you declare to HMRC alone that determines how we calculate your HB

Something else that they wrote is this:

''Please also be advised that the gas and electric that you paid has not been considered as an expense because you run your business from home.''

I think these people are on drugs. I have included one third of my monthly usage of gas and electricity for business purposes. I think this has never been a problem before. On their self employed form, there's a field for 'gas and electricity', now they are telling me that it doesn't count.

System

Heycock wrote: »

Just a couple of notes.
Firstly, you do NOT have to have an accountant. If your business is run simply, you keep good daily records and you have a grasp of basic mathematics you can do your accounts yourself.
Secondly, you do NOT have to have a separate business bank account when SE. It is ADVISED but is not compulsory. Apart from anything else there may be good reasons for not having one..if bankrupt, you won't be ALLOWED a business A/C...a personal A/C will be difficult enough to get!
Thirdly, it is rare for any public servant to have the slightest idea how business works so you MUST keep good day books and cross reference all transactions on your bank/credit card statements. Make it clear which items represent business income/expense and which personal. You may asked to provide proof. Send copies of day books and cross referenced statements with all benefit claims. Be prepared for some HMRC allowances such as depreciation not to be allowed. HB has a peculiar way with it's definitions of allowable expenses...not always the same as HMRC.
Finally, if the person dealing with your claim isn't capable of making the distinction between drawings and profit, request that your claim is handled by someone with relevant accounting experience.

These things are sometimes made difficult because the people dealing with them MAKE them difficult. Why? Because they can. And if they mess up the worst sanction they face is a nice few days away at a posh hotel for "retraining".

Thanks for the useful reply. Opening a business bank account was the first thing I have done when I opened my business. I tried to operate the business on the business bank account but for a few months I had to use my personal cc for business expenses, something I won't do again as this has proved a waste of valuable time more than it was worth.

It's best to make sure everything is as dumb-proof as possible.

Yes, I don't need an accountant. It's interesting to hear people try to say the opposite....I actually just make a few sales and have a few expenses. I would no doubt prefer an accountant, but it's easy to understand why I don't have one: I can't afford it.

And if I could, probably it would still not be worth it....I think HMRC would keep me responsible for accounting mistakes even if they would not be made by me. As my business actually operates in a simple way, I'd rather do the accounting myself. I must say I am still on a learning route, but generally I always made sure I am not under-declaring anything and write down everything that was sold and bought by me.

Your last point is interesting, and to be honest I had already decided to ask for compensation.

I usually am no whiner and I don't try to nit-pick everything or to take advantage, but reality is, the HB services messed it up again in 2012 and again miscalculated my HB for a matter unrelated to my business (I had an accident, and they actually wanted me to pay full rent while I could not even walk. Nice.)
I had to seek legal advice and it all was fixed within days.

That's ok. Everyone can make a mistake.

But this time is a tad too much. I supplied the income info in January, and had to chase them for almost 3 months before they finally answered to my letters and complaints. They apologized about the long delay, due to the 'recent economic downturn'. Yeah, tell me about it! I thought I was the one who didn't even get out of the house because I could not afford a Tube ticket.

The long delay is not acceptable.

My only mistake consisted in not supplying the personal cc statements that clearly show my expenses, but I wrote them than if there was anything that they didn't consider acceptable, to let me know and I would provide them with any information requested.
I have nothing to hide. They also owed me money as I was in credit both for rent and Council Tax.

3 months later and I am on a chase again, as in 2012, so this time I am going to get paid for my time, as I could have used it on another business that I am testing, instead of sending more letters because they didn't reply to the previous ones.

I only received the Council Tax refund yesterday after one long chase, which I went to bank immediately before they make some other crazy decisions.

If I would have owed money to them, and I would have delayed the payment by 8 weeks, who knows what would have happened.

System

hbgirl wrote: »

write in and ask for a reconsideration or appeal. HB officers are not accountants but a decent one will be able to grasp what you are saying.
i can see why they made the original decision though due to use of your personal account in that way.

if possible ask for an appointment with an appeals officer or a senior officer. i would think with further evidence re your credit card etc they could revise the decision

Yes, I am sending it all again on Monday. Have tried to make it as clear and simple as possible and will ask for a revision.

Thanks!