Self employed claiming housing benefit, travel expenses...what do you do?!

cooie4640

Im totally out of my depth, can you help?

I would like to know how people who are SE declare their travel expenses on their self employed earnings declaration form to the council.

For the last 5 years I have put through 45p a mile, like you do for HMRC. this year, after I had submitted my declaration the council said, oops sorry we got that wrong, we need all your fuel receipts, tax, mot, car maintenance and running costs. I didn't have these as I have been using the 45 p a mile rule, so I had to make a reasonable assumption based on my bank statement to try and work out what I spent. Basically if it wasn't on the bank statement it didn't get included. I large amount of guess work is included.

I feel this is very unfair, I have a terrible memory and have doctors notes to back this up.
I have spoken to an accountant, and he says that when they prepare accounts for submitting to councils in respect of HB, they use both methods, whichever their client is already using.

I my case there is now a £2k difference, probably because I don't recall the maintenance on my car and also because they aren't allowing any capital allowances for the cost of the car.

Can anyone help me? The council are still advising people to use the 45 p a mile rule, I'm thinking about sending someone in So I can covertly record them giving this advice out. Is that legal?


Any help, advice, links etc would be greatly received. X

rogerblack

Fundamentally you have two issues.
Firstly - what are the council legally entitled to require of you.
The fact that you've gotten more lenient treatment in the past isn't relevant.
Secondly - what is reasonable for them to accept - without changes.
If your memory amounts to a disability, then they have to treat you fairly, with respect to that disability.

The council are not - as I understand it - required to publish in advance what exact criteria they will require - or exactly what expenses are allowable or not - this may vary to a degree by department.
This is why you keep detailed records, especially if you have a poor memory.

coffeelover65

5 years been self employed and you have no accounts to simply submit? Not surprised they want evidence, its up to you to provide evidence in support of your claim.

HRMC has rules on you keeping records for tax purposes, so how exactly have are you doing this as I doubt HMRC would be impressed if you tell them all your expenses are based off guessing from a bank statement?

System

cooie4640 wrote: »

For the last 5 years I have put through 45p a mile, like you do for HMRC. this year,
I have spoken to an accountant, and he says that when they prepare accounts for submitting to councils in respect of HB, they use both methods, whichever their client is already using.

cooie4640 wrote: »

I my case there is now a £2k difference, probably because I don't recall the maintenance on my car and also because they aren't allowing any capital allowances for the cost of the car.

Aren't you mixing the 2 different systems? It should be either 45p per mile all in OR the actual car expenses, allowances etc.

Housing_Benefit_Officer

Housing Benefit regulations mean we don't accept many of the expenses and outgoings accepted by HMRC for tax purposes. I have never accepted 45p per mile - I have always accepted the actual expenditure on car tax, repairs, petrol etc - and then asked what percentage of the time the car is used for own use and business use (for example a 50/50 split then I would only accept 50% of the costs of running a car).

There are also detailed rules on depreciation costs and what can or can't be included as an expense - you might be able to reduce your tax bill by reducing you profit by 'depreciation' but for housing benefit purposes we look at actual business income and actual business expenditure - not the mythical depreciation costs.

If you put down figures and can't prove it with receipts of course they won't accept it. If you have put down 45p per mile for petrol and your petrol receipts show substantially less then of course they will demand proof.

If you have paid out for maintenance on your car and the car is a business asset why haven't you kept receipts? And if you don't have receipt the garage will have records and be able to provide you with a copy - unless of course you paid cash in hand.

In all the Housing Benefits Departments I have worked in we have never told people to assume 45p per mile - we tell them to declare their actual expenditure.

HalfPint

Sorry I am unable to help you on your query op, but I thought that for HMRC purposes, as well as keeping accurate accounts, you need to have the fuel receipts that cover your mileage.

HP x

nikkit72

Im self employed and have never given the 45p a mile, let alone heard of it, i give them my car tax renewal form , mots, services, diesel receipts, and work on it, car insurance, breakdown invoices,
cannot believe you are self employed and have no receipts?????? lets hope the tax man doesnt want to come and look at your last 6 years records....... oh sorry sir i am self employed with NO proof except a bank statement.... erm think something fishy going on!

Housing_Benefit_Officer

How can anyone keep a track of their income and expenditure and whether they are making a profit or loss and how much of a profit or loss if they don't keep detailed self employed accounts or a running day to day book. I assume you have a separate business account so you separate your business income and expenditure from your private banking? Of course giving Mickey Mouse figures to HMRC could mean more Tax Credits and more Housing Benefit. From now on I assume your Housing Benefit Department will scrutinise every years accounts so your 5 years of good luck with the Benefits Department accepting your word has just run out.

And good luck with your covert secret recordings - sounds like you have been rumbled and you are not happy about it.

fishybusiness

Housing Benefit regulations mean we don't accept many of the expenses and outgoings accepted by HMRC for tax purposes. I have never accepted 45p per mile - I have always accepted the actual expenditure on car tax, repairs, petrol etc - and then asked what percentage of the time the car is used for own use and business use (for example a 50/50 split then I would only accept 50% of the costs of running a car).

I Used to have this problem, the difference between the calculations required for HMRC and those required by the HB team.

The problem is amplified when just starting out, or your business income is still quite low.

My way around it was to move from sole trader to limited company. All of the business calcs are specific to the company, including mileage claims if using your own car. Mileage can set against the tax bill.

Wages are paid from the company, and as long as the company doesn't have stacks of accrued cash in the bank, the HB team are ok.

I found it simpler to have one system and knew where I was with expenses. Accountants fees are slightly higher, unless of course you deal with the extra paperwork yourself..

It doesn't deal with the problem you have now, but it is food for thought.

cooie4640

Thanks everyone so far, it seems my initial post has been mis understood to some degree. I am not ripping the tax man off, and have no intention of ripping the council off either. I do keep receipts for my expenses, but I was under the impression until I read half pints reply that if you put through the 45 p a mile way, you didn't need to keep records of all the maintenance etc on the car as the flat way to work it out was 45p a mile and I have kept a detailed mileage log which can be checked off against my work order forms. So, I do not have receipts for things like servicing and tyres etc. but good point housing benefit officer, I could try and recall where I had work done and ask if they have any records.
The general point of asking on here was to see if other councils use the 45 p a mile rule, or if it was just ours.

nikkit72

so you dont keep no recipts for maintenance , tyres etc? do you keep receipts for stuff you have bought from another shop? i.e for a tv or computer ? i guess so ! so if something went wrong with the tyres or work you had done, you have no proof to go back to the garage with ??
come on!! everyone keeps receipts just incase....

if it seems suspicious to some of us, think what HB are thinking,i think you are gonna have to take this 2k difference as a learning point, ALWAYS keep receipts for at least 6 years.