Self-employed earnings review for 2019/20 tax year for HB & CTR claim - on legacy ESA (IR)

Noor711

I wonder if anyone can help.

I am self-employed although I have ceased trading due to illness and receive main phase Income-related ESA (legacy) since the new year and after a work capability assessment, have been placed in the Support Group.  I applied for it when I got ill because I receive SDP as part of my applicable amount for Housing Benefit, and was precluded from applying for UC.  I also receive enhanced rate daily living for PIP.  Before I stopped work (although my business as a sole trader has not closed - just ceased trading due to my illness), I was on WTC working 16 hours per week and received the disability and severe disability elements.  I continue to receive WTC for the first 28 weeks of illness, as a run-on (under Working Tax Regulation 6) and my weekly WTC payments are deducted from my ESA payments, as other household income.  My WTC 28 week run-on expires in July and due to the nature of my illness and my prognosis, it is unlikely that I will resume my self-employed work, and so my WTC claim will likely end and payments stop, after a further 4 week run-on.  

When I was working, I had to provide my local council with annual updates of my self-employed earnings/net profits so that they could accurately estimate my income.  Since, I have been on legacy Income-Related ESA, I have received decision notices from my council to show that I receive maximum Housing Benefit based on being passported on my out of work benefits.  Equally, because of the way my council runs their CTR scheme, I am de facto passported to maximum CTR because the weekly income used in their calculation is based on being on out of work benefits, which is wholly disregarded.

My issue is this:

My council have written to me to ask me to provide my self-employed income information for the last tax year 2019/20 which has just ended.  However, I am not working and I am on out of work passported benefits.  Their uprating/decision notices issued to me for both my HB & CTR in March 2020 (for 2020/21) were calculated based on my being on out of work benefits, not in work benefits as self-employed.  They say if I do not provide this information within 1 month, they may consider suspending my claim.  Is this right?  Am I required to provide details of my self-employed earnings for 2019/20 (stopped working early January 2020, when my ESA claim began)?  The DWP have confirmed to me that I am passported and have passed the HB means test to automatically qualify for maximum HB, so that my HB is awarded based on nil income and nil capital.  In fact, when my ESA claim was being processed, the DWP reviewed my self-employed earnings and capital up to and including the start of my claim (the immediately preceding 12 months - which includes part of the tax year 2019/20 just ended).

I think the complication may be that I continue to receive WTC as a run-on at the moment.  But, those payments are only paid to me under WTC regulations where during a period of sick leave, lasting under 28 weeks, I am 'classed as working 16 hrs or more' as a legal technicality.  HMRC know I receive Income-related ESA and deal with my WTC claim now as a complex case, manually off-system, because of them.  My 'working' status under WTC regulations do not bind the Council to consider that I am therefore working, do they?  I understood that my HB from the Council is passported and that my eligibility for full HB is determined by the DWP who have awarded my ESA.  HMRC WTC regulations are irrelevant as far as the council are concerned.  It is the ESA regulations and HB regulations and even their scheme's CTR regulations (which mimic the HB regulations) which determine whether I am working or not.  You cannot get ESA if you are working (unless it is permitted/exempt work).  I am not doing any permitted/exempt work.  And, my ESA payments have 100% of my WTC payments deducted from them.

I cannot understand why if my HB & CTR has been awarded and correctly calculated based on my current out of work benefit income I am required to provide information about self-employed earnings for the last tax year.

I have written to them to explain that I think they have sent me a review letter in error.  But, I wonder if I am wrong about that?  Would appreciate any insight.  

Thank you.

Noor

calcotti

Contact the council and simply ask them why you need to provide the information given that you receive income based ESA and are therefore passport to maximum HB. Unfortunately if they insist your best bet may be to comply even if they are wrong simply because you don't want the hassle of having your HB claim closed and then having to try and get it reopened.

They amy want the information to check whether your past HB payments were correct.

Noor711

calcotti said:

Contact the council and simply ask them why you need to provide the information given that you receive income based ESA and are therefore passport to maximum HB. Unfortunately if they insist your best bet may be to comply even if they are wrong simply because you don't want the hassle of having your HB claim closed and then having to try and get it reopened.

They amy want the information to check whether your past HB payments were correct.

Thank you Calcotti.

I did write to them to ask why I need to provide this information given I receive Income Related ESA and am passported to maximum HB.

I also did confirm to the council that when processing my ESA claim, the DWP in fact reviewed my self-employed earnings from April 2019 up to and including my last day of work in December 2019, immediately before the start date of my ESA claim in early January 2020.  The DWP required me to complete a form B16 and asked for a profit/loss account for the previous 12 months or audited accounts for the previous financial year.  I gave them a financial summary of January - December 2019, to include income and expenses to derive a weekly net profit figure for that period.  This averaged weekly net profit figure was below my applicable amount for ESA assessment phase payments - which included disability premiums because I get PIP, etc.  I also gave the DWP bank statements to show my capital was below the lower capital limit threshold (below £6,000).  So, I thought because this was reviewed and I was found eligible for Income-related ESA by the DWP,  that it therefore meant that my self-employed earnings were low enough to qualify for maximum HB, because the ESA claim also acts as the HB means test?  Which is why it is a passporting benefit to maximum HB?

What is important I thought is for the council to have up to date current income information.  It is that which determines your HB entitlement, isn't it?  My Income Related ESA payment is my most current, up to date income information.  With self-employed earnings, the only reason you calculate current financial year's earnings using a previous financial year's earnings, is to provide an estimate of current earnings.  Surely, when reviewing my claim for HB & CTR, the council should only therefore be more interested in the reliable current income figure which is from an out of work benefit in current payment and not an estimate of earnings based on last year's net profits?  It makes no sense to me. 

  

Noor711

I forgot to make it clear, their letter to me seeking to review my self-employed earnings from 2019/20 is in their words 'to accurately revise my claim'  to know what I 'receive' (not received?) in self-employed earnings.  So, it looks like it is a standard self-employed earnings review for being on in work benefits.  They have failed to take into account the change in circumstances since my last self-employed earnings review - that I am now not working and I am passported on Income Related ESA, even though my most recent benefit decision notices from the council do reflect the change in circumstances and calculate my claim correctly, based on my out of work benefit.

calcotti

It does look as if they shouldn’t need the information. You will have to see how they respond to your query. However if they insist on having it it is probably better to provide it to avoid your claim being closed.