UC - Being Employed and Self Employed

om4r

Hey All

Apologies on this topic as it has been discussed but my circumstances are a bit more unique.

So i have been claiming UC for over 1 year now. I am employed but i also own 10% shares in a business which i am employed by

I never delcared the shares on UC as never realized i had to as i dont get any extra income from the business as in dividends etc

UC are now telling me that i am employed and self employed and need to state as such which i did and now they want me declare the business accounts onto my UC and treat it as extra income

Just need to clarify even though i only recieved a wage through PAYE do i still need to do this. Again i get no income from business other than my wages which is declared

Thanks alot

Yamor

It is difficult to give a definitive answer, but two questions could help establish the position:
1. Are you a director of the company?
2. Who owns the other 90% of the company?

huckster

More explanation is required.

Presumably you attended a Gateway intervention appointment at the Job Centre and provided all information they asked for?  

It so, did they find you gainfully self employed?

Are you part owner and employee of the same company?

Unless more information is provided, very difficult to understand the exact situation.

oddballdave

Shares are Capital, not income. UNLESS you are ALSO a Director of the company. Regulation 77 of Universal Credit Regulations 2013. You are not a business owner, so you should not be treated as self employed. Tell them you are going to buy a share in Tesla (because they are very cheap at the moment) does that mean you will need to get Elon to tell you the income and expenses of the company each month?

om4r

Thanks for the responses.

I am a director of the company. The other 90% is owned by 3 other directors of the business

The job centre haven not established anything yet as they want to see evidence for the business. I am part owner and employee of the business i did not provide any information in the gateway meeting as this was a 1st for me and didnt actually take any evidence in

om4r

To also add instead of going through this headache as i get peanuts to be honest from them. The claim is existing but now its nothing as wage has gone up.

Can i just cancel it UC? I have nothing to hide but i cant understand the logic of providing 12 months of bakj statements whic i dont have access to it have it requested and then doing this dance every single month

NedS

om4r said:

To also add instead of going through this headache as i get peanuts to be honest from them. The claim is existing but now its nothing as wage has gone up.

Can i just cancel it UC? I have nothing to hide but i cant understand the logic of providing 12 months of bakj statements whic i dont have access to it have it requested and then doing this dance every single month

I am guessing they will still want you to report the income of the business for the last 12 months, to determine your 10% share of that income, as you may have been overpaid UC since the start of your claim if you have not been declaring it.

om4r

This 10% share is not something i have seen.

If i remove myself as director and get paid 0 as settlement then which is what will happen then?

kaMelo

As a director with a 10% share of the company then, outside of some complex share arrangement, 10% of the company profits are yours too. This is what UC are asking you to do, declare the company income, expenditure and your share of the company profits in each assessment period.

If you are saying you have seen no return from your 10% share then why not, is the company not profitable?

om4r

The company is not profitable. Apart from wages no profits are taken out for anyone as there really isnt any. A slow sinking ship you can say

Yamor

om4r said:

Thanks for the responses.

I am a director of the company. The other 90% is owned by 3 other directors of the business

The job centre haven not established anything yet as they want to see evidence for the business. I am part owner and employee of the business i did not provide any information in the gateway meeting as this was a 1st for me and didnt actually take any evidence in

As you are a director, and the total number of other shareholders is fairly low, that would all point towards saying that Reg 77 does apply in your case, which would mean that your share of the profits should count as self-employed income for you each month.
(Even if the company is not profitable overall, it is still very possible that individual months were profitable, and that you had not yet built up enough losses prior to those months to cancel out those profits.)

However, this is not at all definite, and there are situations where a 10% shareholding is not sufficient. Here is a quote from one of the main pieces of case law in this area (R(IS) 8/92):

"8. No guidance is given in the regulations as to what constitutes being in a position analogous to a partner and presumably it is a question of fact in each individual case. However, some broad principles must clearly apply. Manifestly, a shareholder in such a company as ICI could not on any footing be regarded as a “partner” in the business. He is purely an investor, with no direct or, in practice, indirect participation in its trading activities. But clearly it is not enough to say that the criterion is whether or not the person concerned participates in the business. For it is clear from paragraph (5) that the legislature contemplates that a claimant may be a “partner” even when he is not undertaking activities in the course of the business. Accordingly, participation is clearly not a pre‑requisite of being a “partner”.

9. Mr. Cooper gave, as an illustration of how the provision might apply, the case of a partnership which came to be incorporated. The interest of the partners would be reflected in their shareholding and in those circumstances they could properly be regarded as “partners” within paragraph (4). I think that is right, but, like him, I consider that the language of paragraph (4) extends more widely to encompass other situations. But there must be limitations on its scope. I consider that the word “partner” in itself is suggestive of some limitation. Normally, partnerships are fairly small concerns and involve a limited number of personnel. I am aware, of course, that in the case of the very largest firms of solicitors, and still more so those of accountants, the latter operating on an international scale, the number of partners can be remarkably large. However, these are rather special cases where the rules of the relevant professions preclude operating under a corporate guise. Partnerships are usually fairly small. The second limitation which would seem to me reasonable to impose is that the “partner” should be in a position to exercise some significant influence over the business. In a true partnership, a partner would expect to have some say in the way in which the business is conducted, particularly in view of his unlimited liability for business debts, and by analogy a claimant who is to be treated as a “partner” in a limited company should, in my judgment, also be in a position to exercise some significant influence. If he is not in a position to do so, then I consider that he could not reasonably be regarded as a “partner”. Fortunately, in the present instance, I do not consider that there is any great difficulty. The claimant informed me that the Company had been incorporated in 1938 having been established by one of his ancestors in, I think he said, the 18th century, that he only had 10% of the total shares, and that the working directors had 60% ‑ 70% of the share capital. He stated that he had no influence over them, I rather gather that relationships were not of the best. Accordingly, it would seem to me fairly clear that at the date of claim the claimant was not a “partner”, nor has his status changed since."