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spyguy

Tax Credits - Self Employment Scam

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Bumped into at lest 2 people, possibly 3, who have been down the self employed tax credit scam. All have completed their 12 months as budding entrepeneurs. All are deep sh1t as their money has been cut.

Fro those not in the know, this is how I understand the scam:

Rather than jump thru hopes for your (wait for it) 16h (or 24h) work requirement - a couple of shifts at Tesco's, work at hairdressers, whatever. You declare yourself as self-employed so do not have to work the 16/24h for your money.

However, at the end of 12 months you get your money docked 35 x NMW.

Its great if you are genuine doing a business or are planning on getting a job at the end.

You'd have to be fckign stupid to do it otherwise.

So, why?

Is the job centre pushing people on to it?

Or (what I think in the cases I know of) they have not checked what happens after 12 months.

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You lost me?

What happens after 12 months?

This is precisely what enabled me to start a new business 10 years or so ago and kept me going for at least 18 months.

I've only met musicians who have been asked to prove how many hours they've been working. Worst case scenario they've had to pay back a years tax credits. What's 35X NMW?

Who on earth thinks most starting a new business makes anything like NMW for at least the first 3-5 years?

Mine wasn't profitable for 4 years.

I make (pay) a lot now.

Edited by byron78

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However, at the end of 12 months you get your money docked 35 x NMW.

Where do you get this bit from?

My understanding is that people do the self-employed thing because you're not answerable to some twerp at the job centre who is incentivised to dock your JSA for any reason. Secondly, you're not encouraged to apply for any job regardless of suitability or chances of actually getting. Thirdly, not having to go down the job centre as often.

Having a quick Google it looks like they're trying to shut down this route via Universal Credit by asking for evidence that you're in a proper, organised self-employment via a 'gateway interview' (who thinks up these names?).

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Where do you get this bit from?

My understanding is that people do the self-employed thing because you're not answerable to some twerp at the job centre who is incentivised to dock your JSA for any reason. Secondly, you're not encouraged to apply for any job regardless of suitability or chances of actually getting. Thirdly, not having to go down the job centre as often.

Having a quick Google it looks like they're trying to shut down this route via Universal Credit by asking for evidence that you're in a proper, organised self-employment via a 'gateway interview' (who thinks up these names?).

Dont know if this concerns a gate way interview but a mate of mine had an adviser who basically advised them how to play the game i.e how much to declare/earn before it has a negative effect on the amount they received in WTC and how to fill in tax returns

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It's all kind of funny in a way- some parts of the system are doing things that other parts of the system presumably would frown on but it's all allowed to continue in order to fudge the employment statistics because the current incumbent bosses of all these factions want to be re-elected.

A similar thing happened in the Thatcher years- huge numbers of unemployed people were 'advised' by the job center staff to redefine themselves as disabled in order to reduce headline unemployment counts.

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It's all kind of funny in a way- some parts of the system are doing things that other parts of the system presumably would frown on but it's all allowed to continue in order to fudge the employment statistics because the current incumbent bosses of all these factions want to be re-elected.

A similar thing happened in the Thatcher years- huge numbers of unemployed people were 'advised' by the job center staff to redefine themselves as disabled in order to reduce headline unemployment counts.

Can remember that, when i finished my apprenticeship with no job at the end i went to sign on only to be asked to sign on the sick as i had a cold there was no choice it was on the sick or sweet FA

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I'll add some more detail.

Of the 2 I definitely know of, both were encouraged onto self-employment over a year ago - first half of 2013.

Both had ideas of doing some stupid hobby business that had zilch chance of paying.

My confusion relates to - Why?

They were both doing the minimum - 16h/24h.

For some reason they were called into the dole hole and had this idea pitched at them.

I don't know if they were led onto this or were just over confident of their abilities.

Anyhow, they had a year of not doing the 16/24h jobs. Actually both did fck-all after a token month of working; neither are hard-working.

Luxury!

Come 12 months - Bam!

The dole hole has docked their tax credits by an amount equivalent to 35 x NMW(min. wage)/week.

Both are now struggling to get their hours back - I think both need to get 35 hours.

They struggle to get 10h.

So, their income went up by 10/20 NMW (from 24h NMW) when they went on the scheme.

Now its dropped, both drastically trying to get enough hours to qualify for tax credits.

After ~6 years of doing sod all and having no hassle beyond doing the bare minimum hours, both are dragged into the dole hole and forced to look for jobs and risk sanctions.

I mention on this thread as one of the idiots has a mortgage FFS!

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Of course, the tax credit 'scam' is a cheaper option for the taxpayer when it comes to the under-employed / de facto unemployed.

Very similar to 'being on the sick' in the 80s an exercise in smoke and mirrors. It has been positively encouraged. I believe Self-employment has reached 4.5m.

Citizens Income could be such a boon to both the people and economy if they removed the shackles.

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I'll add some more detail.

Of the 2 I definitely know of, both were encouraged onto self-employment over a year ago - first half of 2013.

Both had ideas of doing some stupid hobby business that had zilch chance of paying.

My confusion relates to - Why?

They were both doing the minimum - 16h/24h.

For some reason they were called into the dole hole and had this idea pitched at them.

I don't know if they were led onto this or were just over confident of their abilities.

Anyhow, they had a year of not doing the 16/24h jobs. Actually both did fck-all after a token month of working; neither are hard-working.

Luxury!

Come 12 months - Bam!

The dole hole has docked their tax credits by an amount equivalent to 35 x NMW(min. wage)/week.

Both are now struggling to get their hours back - I think both need to get 35 hours.

They struggle to get 10h.

So, their income went up by 10/20 NMW (from 24h NMW) when they went on the scheme.

Now its dropped, both drastically trying to get enough hours to qualify for tax credits.

After ~6 years of doing sod all and having no hassle beyond doing the bare minimum hours, both are dragged into the dole hole and forced to look for jobs and risk sanctions.

I mention on this thread as one of the idiots has a mortgage FFS!

Universal Credit?

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There is no 12 month rule in tax credits for the self employed.It is being introduced at some stage in Universal Credit.The Jobcentre have nothing at all to do with tax credits and have no say over them.Only the HMRC do and they have very very little say.No Jobcentre can dock your tax credits.

From the UC regs

"For UC purposes, if a person is in gainful self-employment in an assessment period, and their earned income (ie their gross profits along with any employed earnings) in that assessment period amounts to less than a minimum amount (the minimum income floor, MIF), they are treated as having earned income equal to the MIF.

The amount of the MIF is, very broadly, equivalent to the national minimum wage for each hour that the claimant is expected to work – usually 35 hours a week)."

There is no such rule in tax credits.

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There is no 12 month rule in tax credits for the self employed.It is being introduced at some stage in Universal Credit.The Jobcentre have nothing at all to do with tax credits and have no say over them.Only the HMRC do and they have very very little say.No Jobcentre can dock your tax credits.

From the UC regs

"For UC purposes, if a person is in gainful self-employment in an assessment period, and their earned income (ie their gross profits along with any employed earnings) in that assessment period amounts to less than a minimum amount (the minimum income floor, MIF), they are treated as having earned income equal to the MIF.

The amount of the MIF is, very broadly, equivalent to the national minimum wage for each hour that the claimant is expected to work – usually 35 hours a week)."

There is no such rule in tax credits.

I guess so.

Neither said an exact rule.

They've both been nudged from tax credits -> self employment -> JSA.

They may be getting their advice from someone looking at UC and responding as if UC was universal.

Who knows? They don;t.

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Friend worked in one of the belfast benefit office. He was encouraged to move people into self employment. Nail bars, hairdressers, taxi drivers. Get them off the unemployment stats and remove the need to sign on. It's a massive scam I've been going on about for years.

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Friend worked in one of the belfast benefit office. He was encouraged to move people into self employment. Nail bars, hairdressers, taxi drivers. Get them off the unemployment stats and remove the need to sign on. It's a massive scam I've been going on about for years.

I know the self-employed tax credits is a scam.

What seems new is what happens after 12 months.

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Friend worked in one of the belfast benefit office. He was encouraged to move people into self employment. Nail bars, hairdressers, taxi drivers. Get them off the unemployment stats and remove the need to sign on. It's a massive scam I've been going on about for years.

Getting people into work to reduce the unemployment count? What will they think of next ! Fiddling the figures!!! Its a disgrace

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But seriously folks, many businesses aren't going to provide a sustainable income for the creator for a time, would you rather have unemployment or under employment?

Doing something is a start.

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Its great if you are genuine doing a business or are planning on getting a job at the end.

You'd have to be fckign stupid to do it otherwise.

So, why?

Is the job centre pushing people on to it?

Because if you actually do it, it is beneficial?

And maybe people will actually get around to doing it if given some time?

I don't see much of a scam here.

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There is no 12 month rule in tax credits for the self employed.It is being introduced at some stage in Universal Credit.The Jobcentre have nothing at all to do with tax credits and have no say over them.Only the HMRC do and they have very very little say.No Jobcentre can dock your tax credits.

From the UC regs

"For UC purposes, if a person is in gainful self-employment in an assessment period, and their earned income (ie their gross profits along with any employed earnings) in that assessment period amounts to less than a minimum amount (the minimum income floor, MIF), they are treated as having earned income equal to the MIF.

The amount of the MIF is, very broadly, equivalent to the national minimum wage for each hour that the claimant is expected to work – usually 35 hours a week)."

There is no such rule in tax credits.

Well if UC is partially or wholly scrapped/ reworked as you have prophesied, then one hopes this actually quite sensible rule makes it across to whatever tax credit system is left. It's the obvious way to police the self-employment eligibility.

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But seriously folks, many businesses aren't going to provide a sustainable income for the creator for a time, would you rather have unemployment or under employment?

Doing something is a start.

I don't think self employed tax credits are a bad thing. Probably formalises a lot of 'paid odd jobs' that are taken on to make life under JSA bearable.

I'd prefer it if they moved all the unemployed onto the same scheme and closed down the job centres.

Hiring State employee's to sanction others is a nonsense. Either the jobcentre staff can find their clients jobs or they can't. And if they can't they should be fired and the Jobcentres closed down

The State has managed to create a vastly expensive nonsense industry, including crony's who's only purpose is not to find clients work, but to harry them into signing off.

The 'harrying of the North' continues. Clearly 'Norman' thinking is still ingrained over one thousand years

Edited by aSecureTenant

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But seriously folks, many businesses aren't going to provide a sustainable income for the creator for a time, would you rather have unemployment or under employment?

Doing something is a start.

Indeed. Plus the tax credits scam is only possible with G Brown tax credits at the first place. What a great idea to subsidise people earning under 40k pa -> 70% of UK population .. :(:(:(

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But seriously folks, many businesses aren't going to provide a sustainable income for the creator for a time, would you rather have unemployment or under employment?

Doing something is a start.

True there is social benefit in supporting self-employment - no question at all. The point is about policing for fraud and how long a genuine claimant (in spirit/ethics I suppose) should be subsidised by the tax payer for their business attempt (via tax credits). For me a year is reasonably generous.

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