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Forum Home  →  Discussion  →  Income support, JSA and tax credits  →  Thread

Self employment: ’Commercial & profitable’

1964
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Deputy Manager, Reading Community Welfare Rights Unit

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Is anyone aware of any case law on this? Assisting client with MR.  Client has been trading as S/E for nearly 20 years. Whilst due to chronic (and incurable) health issues she is unable to work full time she works regular and consistent hours (which she has evidenced), has a regular group of clients, has the required liability insurance and her audited accounts confirm she made a gross profit of over 9k last year (this is again a consistent pattern). Following compliance audit she’s been notified no longer entitled to WTC on basis business is not commercial & profitable.

I just can’t see on what basis they’ve reached that decision based on what she has supplied.

Gareth Morgan
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CEO, Ferret, Cardiff

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On her hours of work, is she making more than NMW?

1964
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Deputy Manager, Reading Community Welfare Rights Unit

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Hi Gareth,

Based on 30 hours pw (her usual working week) she’s just below (she’s making just over 9k per annum whereas based on NMW she’d be making around 10.4k). However, based on the HMRC brief (following the amendments from April 2016) she ticks all the other boxes.

Ruth Knox
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Vauxhall Law Centre

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All I can say is that I have had successful appeals on much lower annual income (around £2000).  (TCO changed decision at last minute)  If self-employment is to be restricted to more than £9000, then the figures for self-employed would drop dramatically.  Ruth

1964
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Deputy Manager, Reading Community Welfare Rights Unit

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I agree Ruth- that’s why I was surprised. Whilst I know they’re cracking down on S/E claimants I would have thought this case was clear cut.

Ant
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Welfare rights service - Lancashire County Council

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I wonder, are HMRC correct in applying this test to Tax Credit awards for 2014-15?
The regulation came into force on 06/04/15. The Revenue and Customs Brief 7 (2015) states that from April 2015 people need to meet the new criteria.
I may spouting tosh, if so please let me know.
ta in advance

SocSec
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Any more updates on this, my client has been told he work Is not commercial, even though hmrc accept it is according to hmrc, profitable and organised and regular. how can it not be commercial ???

1964
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Deputy Manager, Reading Community Welfare Rights Unit

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My decision was revised at MR stage Soc Sec- I think they were (not unusually) trying it on. Hopefully it will be similar with your client.

SocSec
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1964, my case goes to tribunal in November, what arguments did you use to get your case changed please
Thanks

1964
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I argued that the client’s business clearly met their definition of ‘commercial & profitable ’ as per their brief (will now attempt a link!):

https://www.gov.uk/government/publications/revenue-and-customs-brief-7-2015-new-rules-for-the-self-employed-claiming-working-tax-credit/revenue-and-customs-brief-7-2015-new-rules-for-the-self-employed-claiming-working-tax-credit#the-changes

The evidence that she was viably self-employed was pretty overwhelming- sounds like much the same applies in your case (especially if HMRC has apparently accepted the work is regular, profitable and organized). We had evidence of her chronic health issues (which limited the number of hours per week she could realistically work). I think we were just luck that someone sensible happened to look at it at the MR stage.

[ Edited: 18 Oct 2016 at 08:51 am by 1964 ]