Tax Credits refuse to believe I am self employed and have BANNED me from claiming!

(8 Posts)
SickOfBeingSoScared Thu 06-Dec-12 20:37:55

Set up a business in May this year. This involved offering free introductory sessions, lots of leafletting/advertising and a lot of research. I had to put my DC in part time childcare and claimed childcare and normal tax credits for this. The business was registered with HMRC. had a website, business cards, business phone line, directory enquiries listing etc.

Two months in, I was asked to provide proof of my self employment in terms of advertising, breakdown of hours worked etc. I supplied proof of everything they asked but they decided that I was entitled to working tax credits as I was not 'working in expectation of payment' as I had not yet produced any income. The letter stated this with no explanation as to how they had reached this decision. I spoke to the compliance officer who decided this and she would not explain, just said I could appeal. I had to immediately give notice to the nursery but pay the months notice which left me a lot out of pocket!

I was told an appeal would take between 4-6 months to reach a decision! I went to my local MP and he said he would help. 6 weeks later, he sends me a letter enclosing an appeal form from HMRC saying that they have said I should appeal, well that was why I asked the bloody MP to step in so I did'nt have to wait 4-6 months for an appeal!!!

I am at my wits end! I should have been allowed more than 2 months to make some money surely. When I first out the claim in, I was told they would base my claim on what I would earn over the whole year and at no point said that I had to generate income immediately. Can anyone advise me on this?

SickOfBeingSoScared Thu 06-Dec-12 20:39:45

Oh, I was also told that 'compliance' had put a note on the system barring me from claiming as self employed even in a different capacity - I mean WTAF!

SickOfBeingSoScared Thu 06-Dec-12 20:42:02

Two months in, I was asked to provide proof of my self employment in terms of advertising, breakdown of hours worked etc. I supplied proof of everything they asked but they decided that I was *NOT entitled to working tax credits (and therefore childcare tax credits) as I was not 'working in expectation of payment' as I had not yet produced any income. The letter stated this with no explanation as to how they had reached this decision. I spoke to the compliance officer who decided this and she would not explain, just said I could appeal. I had to immediately give notice to the nursery but pay the months notice which left me a lot out of pocket!*

SickOfBeingSoScared Thu 06-Dec-12 20:42:57

Bugger!

<Two months in, I was asked to provide proof of my self employment in terms of advertising, breakdown of hours worked etc. I supplied proof of everything they asked but they decided that I was NOT entitled to working tax credits as I was not 'working in expectation of payment' as I had not yet produced any income. The letter stated this with no explanation as to how they had reached this decision. I spoke to the compliance officer who decided this and she would not explain, just said I could appeal. I had to immediately give notice to the nursery but pay the months notice which left me a lot out of pocket!>

TalkinPeace2 Thu 06-Dec-12 21:52:20

The rules for tax credits have changed.
they have decided to stop subsidising 'hobby' businesses.
You therefore have to have earnings equivalent to 24 hours per week at the National Minimum Wage, NET OF EXPENSES.

Therefore until you start getting enough earnings to be greater than your startup costs, you cannot get tax credits to top up your earnings.

They should have been able to tell you that clearly - it was in the spring budget.

stopthatmavis Mon 10-Dec-12 19:12:12

I didn't think that applied till April 2013?

TalkinPeace2 Mon 10-Dec-12 22:08:24

HMRC have discretion,
and they have always been able to disallow loss making sole traderships.
THe clampdown started in early summer.

Leafmould Mon 10-Dec-12 22:22:36

Wow, I didn't realize this had already started. Sorry I'm not much help, op. hope you get it sorted.

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