Tax Credits Self Employment Examination

sambrella0307

Hi can someone help me please, I'm pulling my hair out with this.

My partner started his business in May 2015, and as yet hasn't filed a self assessment for 2015/2016 as it's not due until January 2017. He is under the impression that his business made a loss that year so when I was filling in the tax credits form I estimated his profits for that year as £0.

Now I've just opened a letter (which we were expecting) asking for all these documents which we can provide, however they're also asking for expected profit 2016/2017.. and this is where I am stuck. How can I estimate profit for the current financial year when there is no way of telling what way the business is going to go this year, as we are just under 2 months into the current financial year? I don't know if I'm being naïve, thick or HMRC are expecting me to see into the future.

I contacted HMRC on their live chat service and was told to see a small business advisor for them to help estimate profits for this year. however, again, how are they supposed to be able to estimate the current years profits when we don't know what kind of income he is going to have this year!? :huh:

If anyone has any idea of what I'm supposed to do/how to work it out I would be extremely grateful.

Thank you in advance

HappyMJ

sambrella0307 wrote: »

Hi can someone help me please, I'm pulling my hair out with this.

My partner started his business in May 2015, and as yet hasn't filed a self assessment for 2015/2016 as it's not due until January 2017. He is under the impression that his business made a loss that year so when I was filling in the tax credits form I estimated his profits for that year as £0.

Now I've just opened a letter (which we were expecting) asking for all these documents which we can provide, however they're also asking for expected profit 2016/2017.. and this is where I am stuck. How can I estimate profit for the current financial year when there is no way of telling what way the business is going to go this year, as we are just under 2 months into the current financial year? I don't know if I'm being naïve, thick or HMRC are expecting me to see into the future.

I contacted HMRC on their live chat service and was told to see a small business advisor for them to help estimate profits for this year. however, again, how are they supposed to be able to estimate the current years profits when we don't know what kind of income he is going to have this year!? :huh:

If anyone has any idea of what I'm supposed to do/how to work it out I would be extremely grateful.

Thank you in advance

Just say £5,500 which won't affect your tax credits.

Darksparkle

I suppose it depends on what his business is.

Eg a taxi driver won't know exactly what journeys he'll do but he can probably work out an average of what he earns each week less things like radio costs, fuel etc.

A wedding photographer is normally booked out a year or two in advance.

Or a handyman might only be booked out for the next month.

sambrella0307

Thanks for the reply,

I probably should have mentioned that I do work myself, my income for 2015/2016 was just over £9k so whatever I put is going to affect the amount isn't it? I'm also currently on maternity leave so my income this year will actually be £3848 after deductions.

edited to add the nature of his business is house removals and clearances.

thanks

NYM

This is from HMRC site.. Working Tax Credits Eligibility...

Some self-employed people are not eligible for Working Tax Credit. To qualify, your self-employed work must aim to make a profit. It must also be commercial, regular and organised.

This means you may not qualify if you don’t:

• make a profit or have clear plans to make one
• work regularly
• keep business records, eg receipts and invoices
• follow any regulations that apply to your work, eg having the right licence or insurance

If the average hourly profit from your self-employed work is less than the National Minimum Wage, the Tax Credit Office may ask you to provide:

• business records
• your business plan - find out how to write a business plan
• details of the day-to-day running of your business
• evidence that you’ve promoted your business, eg advertisements, flyers

As your husband has been trading now for a full year, he should be able to forecast anticipated earnings.

FBaby

How can I estimate profit for the current financial year when there is no way of telling what way the business is going to go this year, as we are just under 2 months into the current financial year?

Estimating your future profit is a key part of setting up a business. If you/your OH don't know how to do it, then it puts into question the viability of your business. If you had to rely on a bank loan to keep your business afloat, wouldn't you want to have a good ideal of how money it was likely to make next year? There are tools to do this, but you need a minimum of business acumen to apply it.

Mersey_2

Yes, this is happening a lot of late (WTC examinations for new self employed claimants).


Most however succeed once you send copy docs ie proof of payments into your bank account (even if cash), a list of customers and their addresses (if known) and a mini business plan (including projections). Don't worry, unduly as that's all they are.


After all every HM Treasury tax revenue forecast has been incorrect.