Proving Hours Worked for Tax Credits as a Company Director

WillowCat

verveuk wrote: »

I will see if I can get the payslips changed

With regards to employment contract. From what I've read so far if I were to do one of these - would I then have to be paid the minimum wage by law? At the moment my salary would not be minimum wage

As you're a single parent you could write yourself a contract for 16 hours p/w, it would be more than minimum wage if you're paying yourself £660 per month.

WillowCat

blondebubbles wrote: »

But they'd then lose the 30 hour element and be overpaid.

True, I was only thinking of minimum hours. They should probably think about paying themselves more - up to the personal tax allowance is usually regarded as most tax efficient, as although employees NI is payable, the employers NI can be reclaimed under the small business exemption (up to £2k) and the NI is less than corporation tax payable if taken as dividends.

FBaby

Much of the work I do is back office (accounts, marketing, etc) so is not directly reflected in invoicing, We also sell products so its not possible to document any time on any invoicing

Surely it is not that hard to provide paper evidence of what you do? How many emails do you do (show emails), how many phone calls do you make (show phone records), what marketing products have you produced (show the end result), etc...

I do find very odd that someone claiming to work 30 hours would actually question how they can prove it is they are actually doing work. I would have no problem doing so regardless of pay slips or contract.

verveuk

blondebubbles wrote: »

But they'd then lose the 30 hour element and be overpaid.

I wonder if it would be possible to have my payslips updated just to show hours worked?

If I'm not in a employee contract then would min wage still apply?

verveuk

FBaby wrote: »

Surely it is not that hard to provide paper evidence of what you do? How many emails do you do (show emails), how many phone calls do you make (show phone records), what marketing products have you produced (show the end result), etc...

I do find very odd that someone claiming to work 30 hours would actually question how they can prove it is they are actually doing work. I would have no problem doing so regardless of pay slips or contract.

It would be no problem to list all the tasks I perform in the company. I can show what I have 'produced' also e.g. adverts for products, I'm not sure how I can show emails apart from printing every single one for the duration of the period they are requesting, etc

But I guess this would just boil down to if they accept they task list I submit or not

Thanks

skateykatey

To the OP. How long have you been a director and claiming tax credits? And, has your wage stayed the same for this entire period.

The issue at hand here is some claimants working on a self employed or director basis for a large number of years and with very low earnings, which are then subsequently topped up by WTC.

The question then needs to be asked if they are in actual remunerative work.

To explain better, consider that some customers may be SE artists or authors and spend a great many hours working each week but never actually make any money or only sell very little and haven't done so for many years. Would you consider them to actually be in remunerative work? I wouldn't...

leveller2911

verveuk wrote: »

Thanks for the reply...

45 hours, but after receiving the letter and reviewing the hours its probably a little less at 40 hours

Basic minimum tax salary which is £660 pm - plus any dividends I take - all my income is declared to them

Its working and child tax claim

How much in dividends are you taking each month?.........

leveller2911

skateykatey wrote: »

The issue at hand here is some claimants working on a self employed or director basis for a large number of years and with very low earnings, which are then subsequently topped up by WTC.

Its a loop hole that this and the previous government should have closed years ago. Company directors paying themselves minimum wage and claiming maximum WTC whilst paying themselves an extra £28k a year in dividends...

I'm not saying the OP is doing the same but many,many are.

NYM

blondebubbles wrote: »

Where is the loophole?

Dividends needs to be declared to tax credits.

Exactly.

HMRC are not that gullible when it comes to paying from the Public Purse,

Deliberately paying a low income to qualify for tax credits is against the law

Limited company Directors have the flexibility to adjust their earnings each year. Many choose to leave money in their company if they don’t need to draw it down as salary and dividends. In effect could be tempted to pay themselves very little simply to qualify for tax credits.

HMRC is wise to this potential scam, and there is legislation in place that prevents company directors from deliberately depriving themselves of income purely for the purposes of qualifying for benefits. Directors retaining profits in a business for sound commercial reasons won’t attract undue attention from HMRC, but massaging earnings around the tax credit threshold will.

Child tax credit element has no working time requirement.

However, Directors should also be aware that HMRC are disqualifying directors of limited companies from claiming the working tax credit element who do not have an employment contract with their company and are not paying themselves for the qualifying 16 hours at National Minimum Wage (NMW).


OP...Consult your accountant and consider updating, or putting into place, the correct employment contract and company paperwork.

FBaby

I'm not sure how I can show emails apart from printing every single one for the duration of the period they are requesting, etc

Surely a screen shot of the page(s) would suffice? How long is the time period they request confirmation of work?

I would do:
Day 1: did three hours of emails (screen shot as evidence). Made phone calls from 11 to 2pm (copy of telephone bill), then work 3 hours on computer to produce advert (show advert).

The same for each day, then it's all very clear.