Self Employment no profit

Killerseven

dktreesea wrote: »

It would be pretty hard to be SE and not work at all. You do actually have to show enough revenue through your books to prove you have a viable business. And not just through the books either. Places like the council - if you are claiming HB and CTB - want to see the money going through the accounts, and clear indications as the to source of those funds.


The HMRC may not check so often, but, if they do check and are not satisfied that the business is viable, they could require you to pay back any tax credits you have received, which would in turn trigger repayment of HB and CTB.


So for people who are running a marginal business and relying on benefits for a top up, it's crucial that they do actually have a viable business.

As good as this sounds I think it is absolute nonsense.

There are many so called S.E businesses year after year not making any profit at all. They do just view it as easier than having to to the jobcentre and have all the pressure to look for jobs.

Nobody ever checks, the government is happy because the unemployment numbers go down and they can quote how great their government is doing.

Sorry but your post is wishful thinking.

Maybe it should get like that in the future with UC, but that would make all these bogus S.E people who are officially employed back to officially unemployed again, and the precious recovery that we keep being told will be back to severe depression.

trollopscarletwoman

Killerseven wrote: »

As good as this sounds I think it is absolute nonsense.

There are many so called S.E businesses year after year not making any profit at all. They do just view it as easier than having to to the jobcentre and have all the pressure to look for jobs.

Nobody ever checks, the government is happy because the unemployment numbers go down and they can quote how great their government is doing.

Sorry but your post is wishful thinking.

Maybe it should get like that in the future with UC, but that would make all these bogus S.E people who are officially employed back to officially unemployed again, and the precious recovery that we keep being told will be back to severe depression.

"They do just view it as easier than having to to the jobcentre and have all the pressure to look for jobs."

Lots of truth in that.

patman99

The one major issue is that if you are s/e, then you are exempt from the NMW regs., so there is nothing stopping someone working 20 hours a week for £15 p/hr, but using a 2 book system to issue reciepts for monies received. 1 for the customer showing the true hours and hourly rate, and another with the takings divided over 40 hours for the Tax man to see.

There's a taxi driver inmy area who earns a good whack from the job, but only claims to earn NMW. He gets paid cash, so no traceability.

trollopscarletwoman

patman99 wrote: »

The one major issue is that if you are s/e, then you are exempt from the NMW regs., so there is nothing stopping someone working 20 hours a week for £15 p/hr, but using a 2 book system to issue reciepts for monies received. 1 for the customer showing the true hours and hourly rate, and another with the takings divided over 40 hours for the Tax man to see.

There's a taxi driver inmy area who earns a good whack from the job, but only claims to earn NMW. He gets paid cash, so no traceability.

Fine by me.

dori2o

WantToBeSE wrote: »

I think for too many people see SE (claiming TCs) as an alternative way of not working but still getting benefits.


I went from unemployed and claiming JSA, to SE and claiming WTC. I am actually running a profitable business, with an employee, so have no worries if HMRC check up on me.


However, I think that HMRC should check up on more people who go down this route. I've been trading since September last year, so only 4 months, and have never heard from HMRC about any kind of checks. I presume they can look at my SA and see that I am making a profit, but I would have expected stringent checks. Maybe I'll get them, who knows, but maybe they should be done as a matter of course, say every 3 months.

In many cases I don't think you can blame the person who is claiming TC and is 'working' as self employed.

This government has boasted on and on about how many more self employed people there are now and how this is a sign of how well the economy is doing, when in actual fact it is yet another Tory ploy to fudge the unemployment figures by shoving people into self employment despite them not having a viable business.

Maggies Tory Government did the same thing except they pushed all the unemployed onto Incapacity Benefit.

What makes it worse is that most will not be ready to run their own business. They won't be aware of how to keep proper financial records, or in fact what to keep.

We're coming to the end of January which is self assessment form deadline day and there will be a lot of these people who were newly self employed in the 2013/2014 tax year and they won't have a clloue how to prepare their tax returns, or even be aware that they are due. The first they will realise is when they get a penalty notice through the door charging them £100 for submitting their tax returns late.

Just see how many people give up self employment when the new rules come into force under UC.

dori2o

Killerseven wrote: »

As good as this sounds I think it is absolute nonsense.

There are many so called S.E businesses year after year not making any profit at all. They do just view it as easier than having to to the jobcentre and have all the pressure to look for jobs.

Nobody ever checks, the government is happy because the unemployment numbers go down and they can quote how great their government is doing.

Sorry but your post is wishful thinking.

Maybe it should get like that in the future with UC, but that would make all these bogus S.E people who are officially employed back to officially unemployed again, and the precious recovery that we keep being told will be back to severe depression.

They do check.

I spent some timne last year working in the complaints department at HMRC and a lot of the complaints were about WTC claims that had been termianted as the investigating officer did not consider their self employment to be viable of generating a profit which would support the claimant, or considered that the 'trade' was nothing more than a hobby.

The other thing they look at is the hours declared by the claimant. If the investigating officer decides that based on the evidence (TC claim form, phone call transcripts, TC renewal forms, SA Tax Return, profits/expenses etc) that the hours declared cannot be accurate then they can reduce them to a more realistic amount. Again this could reduce/end a WTC claim which generally results in a complaint being registered.

dori2o

patman99 wrote: »

The one major issue is that if you are s/e, then you are exempt from the NMW regs., so there is nothing stopping someone working 20 hours a week for £15 p/hr, but using a 2 book system to issue reciepts for monies received. 1 for the customer showing the true hours and hourly rate, and another with the takings divided over 40 hours for the Tax man to see.

There's a taxi driver inmy area who earns a good whack from the job, but only claims to earn NMW. He gets paid cash, so no traceability.

If he's a Black Cab driver then thats true to an extent, traceability is very hard unless the driver has a tracking device, but this generally isn't the case for private hire drivers as their 'bookings' are logged by the taxi company that they work for.

I know from experience that in a Tax investigation HMRC cabn ask to see a log of the drivers bookings from the company that they work for.

More and more taxi firms are now also using systems that log each job the driver does, both the mileage and the cost of the fare and in some cases the pick up and drop off points. This is especially useful for customners who have accounts with the taxi company and whom pay their fares on a monthly basis.

So it is a lot harder for the private hire drivers t get away with it now.

CKhalvashi

dori2o wrote: »

If he's a Black Cab driver then thats true to an extent, traceability is very hard unless the driver has a tracking device, but this generally isn't the case for private hire drivers as their 'bookings' are logged by the taxi company that they work for.

Apart from the fact it's almost impossible to properly clear a meter now, and (in cities anyway) most jobs are on the meter.

Very few licensing districts don't use meters in HC, and the last one I knew has now introduced them last September.

dktreesea

Killerseven wrote: »

Very good post.

But soon if people are assumed to be making NMW x35hrs each then many S.E businesses will crumble.

They would be better off getting low stress a min wages job. Running your own business is way harder than just working for a company, depending on what job you do though.

I don't see why the government is using the ever delayed implementation of UC as an excuse for not using the higher of the FT NMW or actual earnings as a basis for calculating self employed people's benefits.


They don't need UC to do this. HMRC is quite capable of it. If people want benefits to prop up their businesses, then surely, at a minimum, the "exchange" should be you don't have to be a job seeker and put up with all the c*rp the DWP put jobseekers through, and you can even work for £1 a day if that's all you fancy making, but for benefit calculation purposes, the state will treat you has have a minimum of your actual income or the FT NMW.


We're not talking about small subsidies here. Over a ten year period, if a family of four only grow their business to a modest profit of , say, £7k a year, that "subsidy" could work out, depending on where you live and if you need housing benefit, to £250k.


Yes, being self employed can be hard work, especially if you prefer to be self sufficient. But under the present regime, it doesn't have to be.


And look at the benefit cap. £26k a year, tax free, is super generous. Why doesn't it apply to working people and non working people alike?

dori2o

dktreesea wrote: »

I don't see why the government is using the ever delayed implementation of UC as an excuse for not using the higher of the FT NMW or actual earnings as a basis for calculating self employed people's benefits.


They don't need UC to do this. HMRC is quite capable of it. If people want benefits to prop up their businesses, then surely, at a minimum, the "exchange" should be you don't have to be a job seeker and put up with all the c*rp the DWP put jobseekers through, and you can even work for £1 a day if that's all you fancy making, but for benefit calculation purposes, the state will treat you has have a minimum of your actual income or the FT NMW.


We're not talking about small subsidies here. Over a ten year period, if a family of four only grow their business to a modest profit of , say, £7k a year, that "subsidy" could work out, depending on where you live and if you need housing benefit, to £250k.


Yes, being self employed can be hard work, especially if you prefer to be self sufficient. But under the present regime, it doesn't have to be.


And look at the benefit cap. £26k a year, tax free, is super generous. Why doesn't it apply to working people and non working people alike?
There are very very few situations where a working family would get anywhere close to £26k in benefits, or are you lumping household income (salaries) into that equation?

Why is it not OK for someone with a small self employed business, that does turn a profit but not at the rate of NMW x 35hrs, to claim TC in order to top up their earnings, yet it is perfectly acceptable to prop up many employers who only survive because of the very same TC system which provides these companies with a huge subsidy which allows them to pay a below cost of living salary.

Should anyone suggest that the NMW be increased to reflect the true cost of living then there is an almighty backlash. These companies would go bust, it wouldn't be fair, and yet it's perfectly acceptable to decimate the lives of people who are working, whose businesses are viable and profitable, just not at the rate of the NMW.

By all means stop those with none viable/Hobby type businesses from claiming WTC, but I fail to see why someone who is hardworking and who is trying to do the right thing, should be penalesde when we allow companies to exist who would not be viable should they have to pay a living wage and not rely on the huge employers subsidy which is TC.

I know this is slightly off topic but the facts are entirely clear when it comes to people in employment. Increase the NMW and you immediately reduce the amount of money paid out in tax credits. It is that simple.