London Black Cab driver UC under SE claims - a few clarifications

seatbeltnoob

Hello

This is not my claim. I am a UC claimant as a business owner. This is for a friend of mine whose just terrible with math and is struggling with their claim. They recently had to claim UC becasue of a disability - massively reduced hours.

They had their first self employment review and the case worker asked them to resubmit all their stiff. I had a look and they did everything tits up. Like they just posted an estimated monthly profit based on their tax return figures. No turnover, no expenses, they just put 1 figure of profit into their monthly earnings.

I only know my claim very well. I gave some wrong advice to them in the past so I need to be sure I am helping them correctly. (e.g. in my circumstance I cant claim a share of motoring cost, I have to claim mileage only, I did some business travel with my personal car). I just skimmed through the handback and black cabs are special adapted vehicle for business use so they can claim direct expenses (not mileage).

question 1)

For black taxis, do they apportion all their expenses based on the business/personal split for UC claims. E.g. they drive 20% personal and 80% business. Would they claim 80% of their insurance, fuel, meter calibration, mot, servicing, repairs etc. Or can they claim 100% of the cost under UC?

Question 2)

Now this doesnt apply to me because mine is a vat registered ltd company. I keep receipts for everything. But how strict are they with receipts? the driver told me that he takes the taxi for a valet once a week. But he has never been given receipts for it, the carwash are cash only busiensses. I have advised them from now on pay more money and use a car wash that will give them a receupt. Because without the receipt you cant claim that.

Question 3)
Can they switch between claiming actual expenses incurred one month and switch to mileage method another month and vice versa. Or do they need to stick to the same method throughout their claim?

errmm.. that's it. I had more questions but I forgot what it was.

edit: oh yeah, where is the pesky UC claims pdf handbook, googling gives a more brief version, not the xhuaustive one.

Thanks for reading and help would be appreciated.

huckster

This is all set out on the Government website link below. 

Business expenses you can report to Universal Credit if you are self-employed - GOV.UK

It would be interesting to know, whether you and your friend have read this already and it has not answered the questions.  If people are having difficult understanding what the Government are trying to communicate, there is a feedback section at the bottom of the website 'report a problem with this page'.

""Other vehicles like vans, motorcycles, black cabs

You can claim expenses for other vehicles like a motorbike, a scooter or a vehicle that is specially adapted for business use (such as a van, black cab or driving instructor dual-control car).

To claim expenses, you can choose to use simplified expenses or actual costs.""

Q1 The Government information does not mention any percentage calculation method for the vehicle expenses in regard to apportionment business/private, edit however as Yamor has pointed out below the Government online website linked to lacks clarity. And of course if it is possible to apportion the expenses between business and private use, then this should be done.

Q2.Yes keep all receipts. They may be requested  There could be a new process starting soon in different parts of the country, where self-employed have to attend the Job Centre to show all evidence and if not attended or not provided, the UC claim may be suspended.

Q3  What does the Government guidance say. Does it say a claimant cannot switch between simplified and actual costs ? If it does, then perhaps I have missed this.

Yamor

Q1. The rules are clear that if there is some private use, then you have to apportion the costs appropriately. See the UC Regs 58(1)(B), and also the ADM guidance at paras. H4206-H4208 here:
https://assets.publishing.service.gov.uk/media/67f64e46e3c60873d6c90d9a/adm_h4.pdf

Q2. Definitely keep all receipts as that is the easiest and best way to provide evidence of expenses. But that doesn't mean it would be impossible to claim expenses without a corresponding receipt. For example, for low value expenses, evidence on the business bank statement will often be sufficient.

Q3. The UC rules do not contain any restriction on swapping between the two methods. However, they would expect you to keep consistent. For example, if you try and use actual expenses for the APs in which you have high expenses, but flat rate deductions for the APs in which you have low expenses, then they would certainly push back against that.
The tax rules (on which the UC flat rate deductions rule is modelled) actually contain specific provision disallowing claims for actual expenses if the flat rate deductions have ever been claimed, and also disallowing flat rate deductions if a claim has been made for the original purchase cost of the vehicle (known as "capital allowances").

sheramber

The tax rules (on which the UC flat rate deductions rule is modelled) actually contain specific provision disallowing claims for actual expenses if the flat rate deductions have ever been claimed, and also disallowing flat rate deductions if a claim has been made for the original purchase cost of the vehicle (known as "capital allowances").

For as long the claim is for that vehicle. 

You can change  the method when you change the vehicle.

seatbeltnoob

Thanks @huckster @Yamor and @sheramber

I didn't get a reply for a while so I went away and assumed I had to figure it out on my own. But thatnks all for contributing.

It's clarified a lot for me. I have just went with a common sense approach I looked at the claimants annual accounts and saw their accountant was claiming actual costs (not mileage) at a 90:10 split, 90% business 10% personal. So I thought I'd keep it the same and not confuse them further with two different sysyems. A bit of paper napkin math shows they are better off on this method as the mileage method would net them for less allowances.