Can Universal Credit force me to make a change of circumstance and backdate it to start 18months ago

biz_owner

Hi,

So we were asked to move over from Tax Credits to Universal Credits 18 months ago, I am a director of 2 companies and I get a salary from one of them so I have always said I was employed. My wife is a shareholder in one of the companies and have been classified as Employed.
In the last meeting withe the work coach, they are asking us to now make a Change of Circumstance to say we are self-employed. Having read around, this seems to be the way UC treats directors and shareholders of companies. Can someone please confirm this?

My real concern is that they want me to backdate to Dec 2021 which is crazy as we have met work coaches and at no time were we told that we should have been treated as self-employed. This is going to obviously be very bad as the company does make extra profit that we use to buy new stock that we sell online. So we always keep this surplus income for new products etc....

I would appreciate anyone just letting me know if UC can force me to backdate the start of self-employment to Dec 2021?

Thanks, 

HillStreetBlues

AFAIK  yes they can backdate as you might have been claiming an incorrect amount.

With UC any debt is recoverable no matter who's fault it is. (so even if your WC told you wrong info and that caused an overpayment, that overpayment can be claimed back).

calcotti

As a director of your company you are treated as self-employment for UC purposes (whilst also employed). This is intended to prevent claimants manipulated how they pay themselves which the intention of distorting them benefits entitlement.

UC will need to correct the whole of your claim (although that will be difficult to unpick).

Your 'self-employed' earnings are your share of the difference between the business income minus the business expenditure on a cash basis. The salary and employer NI will although as a business expenses.

Each month you will have the PAYE salary plus the self employed earnings.

I am not clear what the role of your wife is, why is she classed as a employee and does she get a wage.

biz_owner

calcotti said:

As a director of your company you are treated as self-employment for UC purposes (whilst also employed). This is intended to prevent claimants manipulated how they pay themselves which the intention of distorting them benefits entitlement.

UC will need to correct the whole of your claim (although that will be difficult to unpick).

Your 'self-employed' earnings are your share of the difference between the business income minus the business expenditure on a cash basis. The salary and employer NI will although as a business expenses.

Each month you will have the PAYE salary plus the self employed earnings.

I am not clear what the role of your wife is, why is she classed as a employee and does she get a wage.

Yes my wife does some of the admin tasks (invoices, payments, entering data into an accounting system). She gets a salary based on that. She is only a shareholder in one the companies but not a director. I guess she will still be considered self-employed as well?

calcotti

biz_owner said:

calcotti said:

As a director of your company you are treated as self-employment for UC purposes (whilst also employed). This is intended to prevent claimants manipulated how they pay themselves which the intention of distorting them benefits entitlement.

UC will need to correct the whole of your claim (although that will be difficult to unpick).

Your 'self-employed' earnings are your share of the difference between the business income minus the business expenditure on a cash basis. The salary and employer NI will although as a business expenses.

Each month you will have the PAYE salary plus the self employed earnings.

I am not clear what the role of your wife is, why is she classed as a employee and does she get a wage.

Yes my wife does some of the admin tasks (invoices, payments, entering data into an accounting system). She gets a salary based on that. She is only a shareholder in one the companies but not a director. I guess she will still be considered self-employed as well?

I would think that she is not self-employed because a shareholder is different (but it's a minefield!)

tomtom256

If she is salaried and has no control of the businesses, she wouldn't be self-employed.

Yes they can force it, as the claim is wrong, failure to do as asked, could result in the claim being closed back to the start date, with an overpayment.

Technically it could also be deemed as fraud, as you would be aware you are self-employed and failed to diclose this, when making your claim, but that would be hard to prove legally.

TELLIT01

It seems company directors are treated differently on UC to the way they were on ESA.  On ESA a company director was classed as an employee.  No wonder people get confused. 

" Employment and Support Allowance (ESA) is a state benefit that provides financial support to people who are struggling to work due to illness or disability. It is available to employees (including directors) and the self employed."

tomtom256

TELLIT01 said:

It seems company directors are treated differently on UC to the way they were on ESA.  On ESA a company director was classed as an employee.  No wonder people get confused. 

" Employment and Support Allowance (ESA) is a state benefit that provides financial support to people who are struggling to work due to illness or disability. It is available to employees (including directors) and the self employed."

Not really, as ESA is completely different to Universal Credit, check https://www.gov.uk/universal-credit/how-your-earnings-affect-your-payments

See the how your earnings affect section, clearly states "there are different rules if you're self employed" with a link to https://www.gov.uk/self-employment-and-universal-credit which again clearly states "This also applies to company directors, even those paying themselves by PAYE."

Not really sure how it could be made clearer?

Jyana

This is sounding very much like an issue someone posted a few days ago, except it also included a second possible problem of a property their brother lived in which they didn't charge rent for. I can't seem to find the posts now though. 

I'm pretty sure that the wife was down as a shareholder in that situation too originally, but then it was mentioned she did do some admin work which is why she was claiming wages. And the reason for not calling themselves self-employed was due to needing the funds for stock, therefore it couldn't be put down as earnings, as it is here too. Wish I could find those posts, I'll have another look in the morning when I'm more awake! If it's not the same person, the advice in them will still be useful to pass on I'm sure. 

poppy12345

Jyana said:

This is sounding very much like an issue someone posted a few days ago, except it also included a second possible problem of a property their brother lived in which they didn't charge rent for. I can't seem to find the posts now though. 

I'm pretty sure that the wife was down as a shareholder in that situation too originally, but then it was mentioned she did do some admin work which is why she was claiming wages. And the reason for not calling themselves self-employed was due to needing the funds for stock, therefore it couldn't be put down as earnings, as it is here too. Wish I could find those posts, I'll have another look in the morning when I'm more awake! If it's not the same person, the advice in them will still be useful to pass on I'm sure. 

That was my thoughts too. I looked to see if i can see those threads but you're correct, they are not here.

I remember looking at the members profile and seen they had started 4 threads but could only see 2 of them.They probably contacted MSE to have the first 2 removed. Seems like they did the same this time..

calcotti

poppy12345 said:. 

I remember looking at the members profile and seen they had started 4 threads but could only see 2 of them.They probably contacted MSE to have the first 2 removed. Seems like they did the same this time..

if that has happened it is very annoying and wasting the time of those who voluntarily give up time to try and help others.