WTC for self-employed shop-keeper? Please help.

Voyager2002

My friend opened his shop earlier this year and since the business is growing and his income is very low, he would like to claim WTC. His claim was refused because they said he did not provide evidence that he was engaged in REMUNERATIVE work.

Can anyone suggest what he needs to say or provide in his appeal?

(He works full-time running the shop, and obviously does get customers coming in, but not enough yet.)

rogerblack

Is his profit significantly under NMW*30/week?
Simply spending 30 hours a week in a shop may not be adequate, if income is low, and it is likely to remain low.

Voyager2002

No, no dependants, no partner, no disabilities.

He provided detailed records of every transaction the business made, but not a statement of profit or loss: I could not tell whether or not he was trading at a profit. He made a comment to me that the business was growing and approaching profitability, but I could not have told this from the evidence he submitted.

Icequeen99

rogerblack wrote: »

Is his profit significantly under NMW*30/week?
Simply spending 30 hours a week in a shop may not be adequate, if income is low, and it is likely to remain low.

Spending 30 hours a week in a shop that is open is adequate, whether income remains low or not.

The test is whether the work is for profit or 'in expectation of profit' A fairly easy argument to make to say that you only open the shop with the expectation of making profit.

I won at Tribunal in a WTC self-employed case dealing with an Ebay shop. The Judge pretty much said the same thing - that if you put things in an online shop to sell, you aren't doing it for any other reason than to make profit. The fact that there were no sales (which is what HMRC relied on) made no difference to the expectation.

IQ

rogerblack

Icequeen99 wrote: »

I won at Tribunal in a WTC self-employed case dealing with an Ebay shop. The Judge pretty much said the same thing - that if you put things in an online shop to sell, you aren't doing it for any other reason than to make profit. The fact that there were no sales (which is what HMRC relied on) made no difference to the expectation.

You got lucky.
The test is not 'with expectation of profit'.
It's 'with reasonable expectation of profit'.
http://www.hmrc.gov.uk/manuals/tctmanual/TCTM02411.htm

Work done in expectation of payment means more than a mere hope that payment will be made at a future date. There should be a probability rather than just a possibility that a payment will be made. If a person reasonably expects payments for work done then the condition is satisfied. However, if the person knew before starting the work that payment was unlikely to be made, the remunerative condition is not satisfied.

Icequeen99

I have successfully argued the same in more than one case.

What you have quoted is HMRC's interpretation. The legislation doesn't require it to be a reasonable expectation.

Edited to add more info as I was on my phone: The point I was making is that HMRC have used their 'definition' above around hope vs actual expectation and they decided in many cases the activity fell on the hope side. But at Tribunal in the cases I have either represented on in person or done written representations for, the Judge didn't apply as strict a definition as HMRC. In the cases where someone had an online store, the Judge said that the fact that no-one bought didn't change the person's expectation when they were doing it, or certainly not in the period of time these people had been trading. Whereas HMRC were saying no sales = hope rather than expectation from the outset.

The HMRC definintion is based on old income support case law and those were cases where DWP were arguing the opposite - that the person was working in expectation of profit. But that case law is persuasive for tax credits not binding and the 'hope' test has never been pursued far enough through the courts for it to be challenged.

IQ

MissMoneypenny

Icequeen99 wrote: »

if you put things in an online shop to sell, you aren't doing it for any other reason than to make profit. The fact that there were no sales (which is what HMRC relied on) made no difference to the expectation.

You can put up any old tat, or overprice items that then won't sell, but can still be given WTC to support your failing business???

I can see why the rules for the self employed are changing under Universal Credit

Icequeen99

MissMoneypenny wrote: »

You can put up any old tat, or overprice items that then won't sell, but can still be given WTC to support your failing business???

I can see why the rules for the self employed are changing under Universal Credit

See my later quote, i was on my phone and probably didn't take enough care in how I phrased that.

What I was saying was that HMRC in such cases said because there were no sales there is no expectation of payment. But the fact that there are no sales does not change a person's expectation (whatever that was) at the start.

In my cases there was other evidence to support this was in expectation of profit, in the case I referred to the Judge did pretty much say you wouldn't go to all of the trouble if you didn't think you would get some profit.

And of course, most of the EBAY type cases are not about whether there is expectation of profit - they are about the number of hours you work and if you are not selling it is much harder to show you are working 30 hours a week. So putting stuff in an online store you know won't sell is one thing, but it would be much harder to justify you are working enough hours.

IQ