Not sure that this is ok? Benefits related AIBU

[Secrets2tell]

I have name changed as my previous username has identifying posts.

So my cousin runs her own business selling personalised goods. She claims housing benefit due to a low income. Background info so I don't drip feed...she went through a messy divorce and it was a hard time for her and started from scratch and so I am possibly being over worried and should leave her to get on with it.

Today she showed me a picture of her new unit filled with stock. I commented that she had come so far in 18 months from starting a new business and claiming HB and she replied that she was still struggling financially and claiming HB as she still had a low income. She did rather well over Christmas and has reinvested her profits in stock and rent on the unit.

So she is spending profit on stock to build the business while claiming a low income. I told her I think she will get in trouble but she said it was fine.

AIBU to think that this could land her in a lot of trouble?

[Gspain]

Yes. If found out she could be in big trouble with the benefits folk and tax folk.

[NotStoppedAllDay]

Yes I think it will

What else is she claiming?

[KungFuPandaWorksOut16]

Is she even declaring any of the income? Because if not, yes she will get into trouble.

[IAmAPaleontologist]

I think she is very sensible and that investing in the business, if it is showing gradual increase in profits, is the fastest way to coming off benefits.
however I have no idea of the legalities of it. presumably she draws a low salary from the business. I'm not sure what would be considered taking the pics and what other assets are considered for benefits.

[gamerchick]

Do you want to report her just to be sure?

[RoundTheBend]

Is she a limited company? If so, the money she is investing is not hers, it belongs to the Company. She may only be able to pay herself a very small wage and so is therefore not deceiving anyone.

[Wtfdoipick]

The unit and stock are legitimate business expenses. She isn't doing anything wrong.

[BarbaraofSeville]

If she is a sole trader her wages are her profit. Her profit is her sales less expenses and I'm sure that within reason it is legitimate to claim stock and rent as expenses, eg a counting a years worth of rent would be fine but not 10 years for example. A years worth of stock would also be fine as would a bit more, especially if she can get larger quantities cheaper or has unpredictable sales for example.

[Secrets2tell]

Not a case of wanting to report her. She said that she sends the HB details of her wages by sending in profit and loss sheets and If it was a problem they would query it so she is being truthful with them and AFIK not committing fraud. I just "think" someone has made a mistake.

[WorraLiberty]

I commented that she had come so far in 18 months from starting a new business and claiming HB

Oh my fucking God. Tell me you did not say that!?

Could you not just have commented that she's doing really well?

[Secrets2tell]

Thank you for confirming that for me. I worry too much for my own good sometimes

[Looneytune253]

To be fair though, if she's ploughing the money back into the business her profit will still be a low income so it doesn't seem like she's doing anything wrong? As long as she's declaring everything.

[BratFarrarsPony]

in this situation, HB is claimed on the last year's figures.
If I were you I would butt out.

[Lucked]

I think what she is doing is legitimate, otherwise company's could never grow.

[Secrets2tell]

Worra not in so many words. We sat together with her in tears at the council doing the original claim and I referenced the day not the reason we were there.

[TheTantrumCometh]

If she is declaring everything then no, she won't be in trouble for it. They have the facts and figures and know the thresholds for amounts etc.

If she's not declaring then yes, she'll be in the shit

[AndNowItsSeven]

She is doing nothing wrong. Can't you just be proud of her achievements?

[SantasLittleMonkeyButler]

She will be asked to supply her annual accounts (whether formally prepared or Self Cert) to the local Council at set intervals.

So long as her accounts are honest & accurate, she has nothing to worry about. If the Council - or HMRC for tax credits - decide that she is no longer entitled to benefits, they will inform her.

She seems to be doing well in her new business, hopefully she will be on a decent earned income within the next year and have no further need for benefits at all.

[StereophonicallyChallenged]

Her assessment for hb etc will be based on her annual taxable profit, although I think there is a certain level of assumed profit, ie NMW x however many hours per week she is required or allowed to work.

Buying stock and renting a unit are perfectly legitimate business expenses for anyone why wouldn't they be?

[WorraLiberty]

Not in so many words?

You said I commented that she had come so far in 18 months from starting a new business and claiming HB.

So I just took that to be true.

[HelenaGWells]

There is a transition period if you are self employed where you move from the income support benefits system over to the working tax credits system but it is different depending on individual circumstances. There can be a period where you are earning and claiming if your wages are low. As long as she is declaring her income then she's absolutely fine.

[Secrets2tell]

Of course I am proud of her. Don't confuse my concern with jealousy ANIS

[expatinscotland]

You're not worried, you're being a busybody. Butt out. She's an adult. Comments about her being on benefits are blow the belt.

[januarybooze]

What's your point, Worra?

[Secrets2tell]

Expat i am happy to be a busybody if it ensures that she does not lose everything through a mistake over benefits. The last two years have been horrendous for her and I would not wish it on my worse enemy. I am happy to see that this is not the case and she will be just fine.