How to prove working hours in-between contracts?

1234John

Hi all,
I have searched for an answer on this but I think my circumstances are a little unusual (I think).

I was recently “randomly” investigated for working/tax credits, I sent in all the information that I thought was appropriate to prove everything they asked, despite finding some questions irrelevant.
The end result is they have stopped the working element of our tax credits award so I now have to go through the process again to insure we get it back and do not have to pay back last years “working” award.

Our circumstances are as follows.

My partner works 16 hours a week, they is PAYE and the tax credit office have no problem with this.

I am self-employed and work 10+ hours a week.

I have been self-employed since May 2013, my accountant has not finalised my 2013/14 books yet as we are still awaiting an invoice to be paid before shutting the company down (sole trader). I changed to a limited company in May 2014.

I am a contract “project manager”, this means my time is spent primarily looking for work (certainly in the early years of building contacts) followed by working flat out for a three month period when I obtain a contract.

Obviously it is very easy to prove I am working when I have a contract, however when I am not working a contract I spend a lot of time looking for the next, by means of posting my CV on job sites (weekly to keep at the top of the list), taking calls from recruiters who find me (primarily it appears recruiters find you and applying for posted jobs has minimal results), changing CV to suit roles, preparing for interviews, travelling to interviews etc.

So what I am scared of is I have not kept a diary thus far, in my ignorance no one told me to so how do I prove to tax credits I have been working when I was not in a contract, and what explanation\activity do I use. I guess I can make a diary retrospectively but it will be very generic, such as posted CV on job boards, waited for phone to ring, if interview obtained prepared, etc…

I originally supplied the tax credit office with a copy of my NI payments to date supplied by HMRC and a brief overview of my business model, which obviously was not sufficient.
I have spoken to the tax credit office and the advisor was vague (to an untrained ear like myself) but did keep mentioning marketing and a letter from my accountant.

As everyone I work for is in theory a “client” is all the time I spend finding that “client” to secure a contract of work classed as marketing?? Would that be the correct tax credit “office” wording?
What I guess I am asking is will a retrospective created generic diary primarily mentioning “marketing activity” be sufficient (if backed up with a letter from my accountant) for the time I am not in a contract?? Or is it more complicated than that??

Many thanks in advance for your help.

PS, when I was working a contract I was doing 50 hour weeks, I never mentioned this to the tax credit office as I assumed as long as I was working more than my stated quota of 10 they would be happy??

1234John

Hi,

So when a builder is looking for his next job by means of "quoting" he is also out of work and should be signing on?

1234John

Hi,

I just found this...

http://www.contractorcalculator.co.uk/contractor_tax_credits_hmrc_tax_credit.aspx

And this seems to be my situation...

“To quality for working tax credit, a contractor must be working for at least 16 hours per week and be on a very low, or no income, ie between contracts,” continues Abbott. “Although limited company contractors between contracts may be concerned that they are not working enough hours to be eligible, of course they are still working for their own company, rather than a client.


Any help welcome...

silvercar

MaryMack wrote: »

Sorry, but when you are not working on a contract, the following actions are what are expected of an unemployed person and therefore you will not be entitled to working tax credits.You should be signing on.

The actual work done may be similar but its status is different. A self-employed person working for their own company would be employed by their company to do the task of finding contracts for the company.

Think of someone working in sales: as an employee, they may spend the day phoning potential customers without generating many sales, this is an identical task that they could do for themselves if they were not working for an external company.

1234John

silvercar wrote: »

The actual work done may be similar but its status is different. A self-employed person working for their own company would be employed by their company to do the task of finding contracts for the company.

Think of someone working in sales: as an employee, they may spend the day phoning potential customers without generating many sales, this is an identical task that they could do for themselves if they were not working for an external company.

Hi,

Dose this mean, regardless of if I am a director of a limited company or working for my own company in a self employed capacity the above applies??

First year of trading (approx) I was self employed running a company which will submit books etc, second year (this) I am now a director of a limited company... carrying out the same tasks both years...

I have never classed my self out of work as I have always been working for the good of the company and or a contract.

I do not get paid by PAYE, I get paid by invoices and settle the tax as needed etc...

Even my accountant has made provisions for me to expense out the "office" 12 months a year when running a company self employed...

silvercar

Dose this mean, regardless of if I am a director of a limited company or working for my own company in a self employed capacity the above applies??

Definitely the former would be ok. As for the latter, I would think if hmrc accept that you are self employed it should do. Not my area of expertise.

1234John

Thankyou...

Is there any experts on this forum do you know?

And if everything is a ok, what do i officially report this time as to the tax credits office.

As mentioned the tax credit office man seem to keep mentioning "marketing" which makes sense to me.


Thanks again

leveller2911

1234John wrote: »

I have been self-employed since May 2013, my accountant has not finalised my 2013/14 books yet as we are still awaiting an invoice to be paid before shutting the company down (sole trader). I changed to a limited company in May 2014.

Just a small point which may or may not help but there is no reason why your accountant can't finalise your accounts. The final invoice has been raised (sent to client) ,you don't need to have received payment for the work before you finalise the accounts. If they don't pay the invoice you can claim this back as a loss on the next years.