Tax credit problem.

pmlindyloo

Icequeen99 wrote: »

If he has been paying her salary surely that would make her an employee of his business not self-employed. If she is a partner in the business - then that would make her self-employed and she would need to fill in a SA return.

IQ

She could be self employed and invoice him for her services.

This is what happens with my husband and myself - accountant verified. Perhaps I shouldn't have used the word 'salary'.

If she was an employee then the OP should have been paying her NI and tax?

If she was self employed then she should have been paying NI and tax.

I suspect from what the OP has says this isn't the scenario anyway. As I said, rather messy.

Only raised it because she must have some money and if it is a set amount each month then it will show up in her bank statements.

pmlindyloo

Billy_Austin wrote: »

Thankyou for this advice, i would say in all fairness that yes, your second scenario is correct, i don't pay her a salary. TBH I hadn't given the matter much thought, i thought if she wasn't in permanent residence here then we would not be viewed as a couple.

It's not my intention to try and gain any advantage via claiming as a single person, and if this is wrong then i'm happy to correct it. What i could do with knowing is will they expect me to pay any historic claims i made back to them, regardless of whether i gained an advantage by claiming incorrectly? or will they asses what they should have paid me had i claimed correctly, and then ask me to repay anything they have overpaid?

I believe Icequeen is the 'expert' here so will let her answer.:)

Edit.


Having hit the save button I realised that this might sound sarcastic. Blooming forums! Honestly, I really respect your knowledge. I have a general knowledge of benefits but am in no way a specialist. I know that there are people using the forum who 'work in the field' so when they are around hand over to them to give a more detailed/knowledgeable reply.

Icequeen99

pmlindyloo wrote: »

I believe Icequeen is the 'expert' here so will let her answer.:)

Edit.


Having hit the save button I realised that this might sound sarcastic. Blooming forums! Honestly, I really respect your knowledge. I have a general knowledge of benefits but am in no way a specialist. I know that there are people using the forum who 'work in the field' so when they are around hand over to them to give a more detailed/knowledgeable reply.

I didn't take it as such don't worry.

OP - unfortunately yes, they will want the historic money back if you claimed in the wrong capacity even if you would have been entitled to the same amount as a couple.

Everything you have received from the date they treat you as a couple will be overpaid. Normally they only look back at the current tax year and previous tax year although could go back further if they could show negligence on your part.

You will then have an overpayment. This overpayment can be reduced using something called notional offsetting whereby they offset what you would have got as a couple against your single overpayment. However, if they deem the error to be 'deliberate' they won't give you this.

As PML says - you need to sort out her employment situation as either she is self-employed or employed by you but either way you will need to make sure you are doing the right thing. She also needs to think about protecting her national insurance contribution position.

IQ

Billy_Austin

Icequeen99 wrote: »

I didn't take it as such don't worry.

OP - unfortunately yes, they will want the historic money back if you claimed in the wrong capacity even if you would have been entitled to the same amount as a couple.

Everything you have received from the date they treat you as a couple will be overpaid. Normally they only look back at the current tax year and previous tax year although could go back further if they could show negligence on your part.

You will then have an overpayment. This overpayment can be reduced using something called notional offsetting whereby they offset what you would have got as a couple against your single overpayment. However, if they deem the error to be 'deliberate' they won't give you this.

As PML says - you need to sort out her employment situation as either she is self-employed or employed by you but either way you will need to make sure you are doing the right thing. She also needs to think about protecting her national insurance contribution position.

IQ

Thank you for your response.

I would presume that there wouldn't be an overpayment *if* they employed the notional offsetting rule, as we would surely have got more as a couple than i did as a single individual, bearing in mind my partner has claimed nothing> would the fact that i've actually claimed less than i could have got by claiming incorrectly mean that they are more likely to look favourably upon me?

Icequeen99

Billy_Austin wrote: »

Thank you for your response.

I would presume that there wouldn't be an overpayment *if* they employed the notional offsetting rule, as we would surely have got more as a couple than i did as a single individual, bearing in mind my partner has claimed nothing> would the fact that i've actually claimed less than i could have got by claiming incorrectly mean that they are more likely to look favourably upon me?

Depends on what your partner's income is. She must have some income otherwise how does she live?

The fact someone has claimed less can be a useful argument in arguing there wasn't deliberate intention behind the error, but it isn't always successful, it really depends on the circumstances and the compliance officer involved.

IQ

Billy_Austin

Icequeen99 wrote: »

Depends on what your partner's income is. She must have some income otherwise how does she live?

The fact someone has claimed less can be a useful argument in arguing there wasn't deliberate intention behind the error, but it isn't always successful, it really depends on the circumstances and the compliance officer involved.

IQ

So it's basically down to luck and whether the compliance officer takes a dislike to me? Oh well, thanks for the advice, it's been very helpful.

As a matter of interest, if I had a man living with me, would they automatically assume that he was my partner and stop my tax credits?

Only i was thinking, some time ago now i used to share a house with a female friend, we weren't partners but we lived in the same house. Had i been claiming tax credits back then I'd have presumably had the same problem,Unless you had a tax inspector come and live with you 24 / 7 for a month how could you actually prove that you weren't in a relationship with someone you were sharing a house with?

Icequeen99

Billy_Austin wrote: »

So it's basically down to luck and whether the compliance officer takes a dislike to me? Oh well, thanks for the advice, it's been very helpful.

As a matter of interest, if I had a man living with me, would they automatically assume that he was my partner and stop my tax credits?

Only i was thinking, some time ago now i used to share a house with a female friend, we weren't partners but we lived in the same house. Had i been claiming tax credits back then I'd have presumably had the same problem,Unless you had a tax inspector come and live with you 24 / 7 for a month how could you actually prove that you weren't in a relationship with someone you were sharing a house with?

Easily if it is a legitimate sharing arrangement. You would be able to show some sort of lodger agreement presumably, you would be able to show that you have some sort of system to pay bills (e.g. they are all split in half), you would have a system of buying your own food, you could show your bank statement with rent payments coming in, you would have no joint financial credit links (e.g. joint loans, joint commitents) and no-one around you would think or treat you as a couple.

And yes, they do the same if it is two people of the same sex. I have had a few cases like that. If their risk assessment shows any links between two people at the same property it will flag for an investigation.

IQ

Billy_Austin

Icequeen99 wrote: »

Easily if it is a legitimate sharing arrangement. You would be able to show some sort of lodger agreement presumably, you would be able to show that you have some sort of system to pay bills (e.g. they are all split in half), you would have a system of buying your own food,

Actually i didn't have any kind of formal agreement with my friend in the past, i just allowed her to live here in exchange for doing a bit of the shopping / cooking etc and helping to keep the house tidy, at the time i didn't need extra money and it suited me to have some company, i have a similar arrangement with my girlfriend, except she isn't here all the time, my friend was here all the time and was registered for council tax, electoral roll etc. really there was little difference from an outward perspective, other than the nature of our relationships, and really, short of hiding a tax inspector under the bed, how would they know whether two people who live in the same house are in a relationship or not?

To answer my own question there, i've been looking at HMRC's guidelines for detecting undisclosed partners after googling the subject, and it appears they have quite complex criteria based on the DWP's systems for establishing whether people are living together as man and wife, which go as far as asking who does the washing up, though what bearing that has i'm not sure.

you could show your bank statement with rent payments coming in, you would have no joint financial credit links (e.g. joint loans, joint commitments) and no-one around you would think or treat you as a couple.

Obviously i had no joint financial arrangements with my friend / lodger but i don't with my current girlfriend either, it's not that sort of relationship.

And yes, they do the same if it is two people of the same sex. I have had a few cases like that. If their risk assessment shows any links between two people at the same property it will flag for an investigation.

IQ

TBF I'm sure they do, though i remember after i'd graduated and everyone was looking for jobs etc, a friend of mine was sharing a house with a male friend from university, and they were constantly hassled by the DWP over whether they were a couple, and i recall her telling me that they eventually asked one of the inspectors who came round if they would do the same for two men or two women who lived together and he admitted that they wouldn't. though that was 20 years ago so perhaps things have moved on a bit since then.

From what i can see of their guidelines, they have obvious stuff to look for ie financial links, joint loans, bank accounts, shared household expenditure etc. In the absence of these they are looking at a raft of more nebulous considerations, such as who does the housework, and whether people would consider you to be 'together' (how would they know this? do they knock on your neighbours' doors and ask them?).

It strikes me that based on their criteria, assuming you were hard faced enough, you could share a house with a person and even sleep with them, yet still claim you were not a couple, provided your financial affairs were separate, and conversely you could be in a celibate relationship or friendship and still be classed as a couple if you had joint financial arrangements? Would that be right or am I not understanding it correctly?

pmlindyloo

An interesting read:

http://www.revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/understanding-living-together/

Billy_Austin

thanks for that, some useful information there.