Active discussions

Meet the Other Phone. Protection built in.

Meet the Other Phone.
Protection built in.

Buy now

Please or to access all these features

Talk
AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Not sure that this is ok? Benefits related AIBU

65 replies

Secrets2tell · 15/01/2017 15:55

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?

OP posts:
DontTouchTheMoustache · 15/01/2017 16:24

It seems from your posts that despite her being open and honest and declaring everything and her being assessed on that basis you "think" you know better than everyone involved? I agree with PP that you are coming across as a busybody.

HecateAntaia · 15/01/2017 16:27

This reply has been deleted

Message withdrawn at poster's request.

DanglyEarOrnaments · 15/01/2017 16:31

It sounds normal business practice to me.

We've been growing a business for the past few years and there are still odd times where we cannot draw a wage ourselves due to re-investing more than usual on necessary growth expenditure.

I wouldn't expect anything else to be honest. You hope for a higher income further down the line as the growth you invested in occurs.

Original poster
Secrets2tell · 15/01/2017 16:31

Love AIBU Grin

I am worried that there is a mistake with her benefits translates as I hate my cousin and want her to burn in eternal hell for lying and defrauding the benefit system Grin

I did ask the question Grin

OP posts:
SilverDragonfly1 · 15/01/2017 16:33

You're not a busybody OP! Housing benefit offices make mistakes regularly as they are understaffed and the rules are so complicated.

As long as she is sending in everything they ask for, informing them of any of the changes of circumstance listed in the guidance notes as notifiable and checking every award letter to make sure all the figures used in the calculation are the same as the ones she has sent them, she will be fine even if they have made errors as she could not have reasonably been expected to know that the award was wrong. In that case, she cannot be made to repay an overpayment. However, if she is failing to do any of those things, however innocently, she would be liable. So maybe double check that she knows that just to ease your worries!

DontTouchTheMoustache · 15/01/2017 16:34

But even if there was a mistake she has declared everything in good faith so she wouldn't exactly "lose everything", she would.just be put on a repayment plan.

teraculum29 · 15/01/2017 16:39

Dear OP,

I am claiming HB, and my partner is self employed, new business etc

Every few months council is asking to give details about the total income and then ask for business costs, and then provide proofs from time to time as everything need to add up.

If she's declaring everything shes all right.

Rixera · 15/01/2017 16:44

You are allowed to earn money and claim housing. It just gets capped at a certain amount. If she's spending her money on legitimate business costs, and therefore her profits are still within that cap, it's perfectly reasonable for her to still be getting the benefits.

BewtySkoolDropowt · 15/01/2017 16:45

I'm a bit confused as to why investing money in stock and unit rental could in any way mean she is committing benefit fraud.

The other option, presumably, is to take out all the profit and then a) have nothing to sell and b) nowhere to sell it. In which case she would be needing more housing benefit.

People assume that running a business equals minted. It doesn't, and it especially doesn't in the first three years (roughly the average time it takes for a business to move into profit)

lazymum99 · 15/01/2017 16:45

If she has declared everything and given the council all the information they need. And she has checked the statements they send her and the income on them is correct then there is no problem. If there is a mistake and it is the fault of HB giving her the wrong info then the overpayment would not be recoverable anyway.

gillybeanz · 15/01/2017 16:49

I don't understand why she would be in trouble at all, as long as the wage she earns is declared.
We pay ourselves about half of what our business earns so we can invest in stock and pay ad hoc fees to sub contractors.
Then there are business expenses which nobody is expected to pay out of personal income.
We get tc and cb because we have a low income, it's nothing to do with our business profit and loss Confused

CheeseCakeSunflowers · 15/01/2017 16:56

Ploughing her profits back into stock is sensible. When calculating her profit over any particular period she will need to show an opening stock figure and closing stock figure for that period which will be used to calculate her overall profit so as long as she is being honest this is all absolutely fine.

Mumoftwoyoungkids · 15/01/2017 17:02

Sounds like you are similar to me personality wise. One of the (many) reasons my Dh stopped being part self employed was that we weren't sure our marriage could take another tax return:-

Why have you put all that in expenses?
Because they were expenses
But are you allowed to put them in?
Yes dear
Are you really sure?
Yes dear.
But we don't want to get into trouble for fraud!
We won't.
But we might. Perhaps we should exclude all the expenses and just put your profit in.
But I did have expenses.
Well if you don't want my advice.....

NotStoppedAllDay · 15/01/2017 17:04

does she have kids?

amispartacus · 15/01/2017 17:04

If she wasn't receiving benefits, she wouldn't be able to invest money in stock and her business as she would have to support herself with the income from the business - as people who run businesses have to do.

In effect, she is being subsidised by the system as she is investing in her business and being given money to support herself. Her business is making money as she is buying stock.

gobbynorthernbird · 15/01/2017 17:04

OP, your first post doesn't read as though you're worried there has been a mistake. More that you think your cousin is committing fraud.

DanglyEarOrnaments · 15/01/2017 17:04

In our industry we take around 20% ish for our own wage (when we can - unless we have unusually high expenses that month in which case we take lower or none). The rest we pay staff, buy stock and all other usual business bills and expenses.

I don't think there's anything abnormal happening, it will be fine.

amispartacus · 15/01/2017 17:06

Ploughing her profits back into stock is sensible

It's handy when you can claim housing benefit if you don't make enough money, isn't it?

Maybe I should put my profits into stock and claim benefits as well?

gobbynorthernbird · 15/01/2017 17:07

Lol, Spartacus. There are many, many small businesses and self employed people being supported by HB, tax credits, etc.

Gallavich · 15/01/2017 17:08

Goodness me, lots of you don't understand how running a small business works. High turnover doesn't = high profits and how would a business grow if people don't invest profit into stock and equipment?
As long as her accounts are in order she's fine.

DanglyEarOrnaments · 15/01/2017 17:10

ami but then how would she continue forward with her business and eventually earn a decent wage without buying what the business needs to continue?

If she stopped the business now she would be on even more benefits and not contributing at all to the economy now or in the future when her business gains traction.

DanglyEarOrnaments · 15/01/2017 17:12

Galla I know!! If only I could take home all of our turnover instead of just my own wage Grin

amispartacus · 15/01/2017 17:14

but then how would she continue forward with her business and eventually earn a decent wage without buying what the business needs to continue

Looks like I fucked up my business then. Just survived with lots of borrowing for a few years and a low income. Now making a profit but having to pay back what I borrowed.

Maybe I should just have claimed benefits and not borrowed the money to support the business and myself.

amispartacus · 15/01/2017 17:17

It didn't even occur to me to use the benefit system when I started my business. I assumed I would have to borrow the money and be in debt for a few years as I survived.

The business advice centre never mentioned claiming benefits.

CheeseCakeSunflowers · 15/01/2017 17:20

amispartacus the stock she has bought will increase her closing stock figure, it will not reduce her profit figure as the value of the stock she holds will count as profit, so buying the stock will make no difference to the amount she can claim in benefits.