Housing Benefit and tips from work

Hi there
I know that bonues including tips from work are assessed as income for MTB.  However I wondered if someone might be able to clarify if an assumed sum is assessed for Housing Benefit where a claimant is in a job role where tips are an expectation?  My client is a taxi driver working approx 16 hours per week.  HB are assuming £19 per week in tips even though this is not realised.
Many thanks.

Have they said which Regulation they are using to do this? I can’t see one. Hopefully HB Anorak or one of the other HB regulars will spot your query and have a full answer, but for the moment I wonder if this is a ‘rule’ that’s been snatched out of thin air….

I don’t think there is a Regulation that fits this exactly - notional earnings is the closest one but not a true fit, especially if the claimant is self-employed.  What the Council is doing is making an “adverse inference”, an approach that grew out of the decision in R(H) 3/05 and has been refined over the years.  The essence of this approach is that if, to put it bluntly, the Council does not believe the claimant is telling the truth it will assume the worst about the particular issue.  This can lead in some cases to no entitlement at all, but in the case of tips it isn’t necessary to be quite so drastic and the Council will simply assume that the declared earnings must be supplemented by a typical amount of tips (10% is a popular estimate).

Where someone works in an industry where tipping is traditional I think there is some onus on the claimant to explain why they don’t get tips or only a very small amount.

Minicab drivers are a particularly difficult claimant group from the decision maker’s point of view.  All transactions are conducted in cash, there is no easily accessible audit trail, so the DM is more dependant than in most other cases on the claimant’s word.  Some Councils go to extraordinary lengths to verify minicab earnings and they still feel very suspicious.  I think the way they see it is slapping on 10% for tips is very much the lighter side of an extremely uneven set of scales.  Assessment of earnings can amount to more of a negotiated compromise than an accurate calculation.  Some of the methods employed include:

- using a mileage/fuel/fares matrix to check whether all the amounts shown in the self-employed accounts are internally consistent with one another: if you drove that many miles and spent that much on fuel, you should have received roughly this much in fares ... hmmm, yes that just about stacks up, or no these figures don’t stack up
- getting minicab operators to supply a list of all jobs and quoted fares referred to Driver X between two dates (in London anyway, don’t know how it works elsewhere)
- attaching no weight to the word of certain discredited local accountancy firms, i.e. if the accounts have been signed off by Acme Accountants, they might as well not have been signed off at all

I am sorry I cannot offer anything much more constructive than that.  Your client may be caught in the crossfire between a cynical Council and a notoriously tricky client group.  But as far as the law is concerned adverse inference is the mechanism relied on here.  Your client’s task is to persuade the Council that on this occasion they are mistaken and the amount of tips he has declared is absolutely accurate.  If they accept that he is credible in all other respects, that’s a good start.

Many thanks for your reply -  really helpful