Low earnings, self employed, WTC/CTC

LoobyLou1

Wondered if anyone has been selected to provide information to HMRC regarding their entitlement to WTC/CTC when they are self employed, low earners?

I was asked for this earlier this year. I submitted a lot of information: invoices, customer lists, bank statements, advertising, social media activities, business plan, a breakdown of a 'typical' week, etc.

I have now had a letter back saying my award will change as my self employment is not 'regular'. I cannot find a definition anywhere on HMRC's website for what is 'regular'.

Self employment is often not regular. It's the nature of the business. The period of time they queried were the first three months of the year, traditionally the worst three months due to seasonal fluctuations. My invoice figures are therefore low. I still spend anything from approx 17-25 hours each week either doing paid work or looking for it. Much of my time in 'dry' periods is spent canvassing potential customers, advertising, networking (both online and face-to-face) with a view to receiving paid work. It seems this is completely ignored? If I were to work for an employer, would they consider the time I spent cold-calling, travelling to meetings in the hope of getting new business, networking, etc. as not being an activity they would pay me for?

I am yet to hear what my new award will be. I am very fearful they will ask for money to be paid back to them. I feel like I should have CAB on speed-dial ..

Interested to hear how others in a similar situation have got on.

tomtontom

If you were to work for an employer, time spent cold calling etc would still attract at least NMW. How much are you earning and how many hours are you declaring? How long has the business been operating?

Alice_Holt

From http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/self-employed/

"Calculating working hours

Under the Working Tax Credit (Entitlement and Maximum Rates) Regulations 2002, the number of hours which a self-employed person is in qualifying remunerative work is defined as ‘the number of hours he normally performs for payment or in expectation of payment’.

The HMRC compliance manual states that any hours which will be costed to the client/customer as spent in producing/providing the individual order or service count when working out hours for self-employment. In addition, the following activities also count:

trips to wholesalers and retailers
visits to potential clients for giving quotes etc
time spent on advertising or canvassing business
cleaning the business premises or space used specifically for business purposes
cleaning a vehicle used as part of the business, for example a taxi
travelling for the purposes of the business, but not from home to their business premises
book keeping
research work, for example where the claimant is an established author. Research carried out be persons who are not established authors, but are working in the hope of one day becoming established will not count.
It goes on to say that:

'The amount of time being spent on these activities may also depend upon how established the business is. If a business is in its early days, it is more likely that the claimant will have to invest large amounts of time and effort in building up business contacts for little or no outcome. However, over time the amount of unproductive time spent in this way reduce considerably. If it does not, it may be an indication that the work is not genuinely remunerative.'"

You may have to challenge the HMRC decision that your work is not regular, through an appeal. The CAB may be able to help you through this process.