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Any other breaks from self-employment MIF requirements, apart from illness?

bristol_1
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Hi
Can anything be done to put the MIF requirements on hold, apart from the self-employed worker being off sick?

I have a client who lives with his wife and 5 kids, baby born 05/01/22. He is a self-employed Uber driver. His wife is quite poorly and recovering from illness after the birth, currently in bed most of the time. He anticipates she will get better slowly. He is doing the school run, food, childcare, etc. and while he has a claimant commitment to work and earn equivalent to the MIF of 35 x NMW, this is going to be really difficult for him at present.  He’s not been MIF’d yet but surely will in the coming months due to reduced ability to work. He is not in a start-up period. His claim to to UC was made after 1/8/21 so the suspension of the MIF does not apply to him.
The only thing I can think of is to apply for a DHP if his s/e earnings are below the MIF and his UC reduces. Anyone have any other ideas?

CPAG says -
If you disagree with a decision to apply a minimum income floor, you can ask for a revision and then appeal. You may be able to argue, for example, that your self-employment is no longer organised or regular and you no longer have an expectation of profit.

Anyone with experience of this?

It’s already super difficult for them - he has lived in the UK for years but all the family arrived in the UK in Sep from Afghanistan and were brought from there by the British army. They only get 2 child elements for the 5 children due to 2-child limit, and there’s issues with the child benefit, only 2 x CB in payment due to documentation issues with when the family arrived in the UK and the new child not registered yet. The family are on such a low income.

UB40
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He could claim that he is a ” worker ” and that his employment with Uber fails the UC ’ gainful self employment ” test and therefore the MIF cannot be applied.
Some employers such as Uber and Pimlico Plumbers use ” self employment ” as a mechanism to avoid employers NIC, holiday pay, sick pay etc and have recently been losing high profile cases in the Supreme Court. I will come back to you later with more details regarding the ” gainful self employment ” test.

https://www.bbc.co.uk/news/business-56123668    Uber drivers are workers not self-employed, Supreme Court rules

https://www.personneltoday.com/hr/pimlico-plumbers-loses-holiday-pay-claim-in-case-with-huge-implications/

Charles
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I would consider nominating him to become the responsible carer for the children. The MIF would not then be applied until the youngest is 3 years old.

bristol_1
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Hi Charles, thank you yes I did consider this but then the wife would have all WRR and the lead carer can’t be switched back more than once in a year, can it?
Wife could I suppose put in sick notes for a period but her condition is expected to improve. After her period of sickness ends, she would have all WRR, speaks no English and arrived in the UK 6 months ago, has 5 children and in their relationship traditionally does all the domestic labour - household tasks, childcare etc. ... I could put this to client as an option though.

UB40 - many thanks, this sounds interesting but may not have an immediate effect if UC don’t accept his claim to be a worker if Uber don’t treat him as such and say he is self-employed - I will read through the cases though

Charles
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Right, I thought you might be concerned about that.

By the way, the nomination can be changed more frequently “where the Secretary of State considers that there has been a change of circumstances which is relevant to the nomination”.

UB40
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Hi bristol_1,
Here is an informative summary from the Institute of Chartered Accountants…..
      “Uber drivers are workers. What does that mean for tax and employment?
        This ‘worker’ definition is a halfway house between self-employed and employed. It entitles workers to the national minimum wage and benefits such as statutory holiday pay, but not the full employment rights of an employee, including redundancy pay and minimum notice”
The Uber driver can carry on paying HMRC tax on a self employed basis but is a ” worker ” as far as employment law is concerned.
I cannot see how the DWP can ignore the Supreme Court ruling and as a worker, the claimant would not be ” gainfully self employed “.

https://www.icaew.com/insights/viewpoints-on-the-news/2021/april-2021/uber-drivers-are-workers

Charles
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Universal Credit uses tax law terminology, so I don’t think an employment law status of “worker” will help at all.

UB40
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One must be careful not to conflate self-employment with ” gainful self-employment”.
UC are happy to accept self-employed earnings from claimants who are not UC “gainfully self-employed ” but who are self employed for ” tax law “. This is explained in the UCD5 the leaflet issued to claimants at the Gateway interview.

    “If we decide you’re not gainfully self-employed, you’ll need to:
• report your self-employed income and expenses to us each month”

Uber now accepts the ruling of the Supreme Court that the drivers are workers and not self employed. At the Gateway interview the Uber driver would be asked as part of the gainful self-employment test if he has his own business which he can develop. The answer would be No and he would fail the gainful self employment test. A MIF cannot be imposed without a determination of gainful self employment.

Charles
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UB40 - 10 February 2022 10:53 AM

One must be careful not to conflate self-employment with ” gainful self-employment”.
UC are happy to accept self-employed earnings from claimants who are not UC “gainfully self-employed ” but who are self employed for ” tax law “. This is explained in the UCD5 the leaflet issued to claimants at the Gateway interview.

    “If we decide you’re not gainfully self-employed, you’ll need to:
• report your self-employed income and expenses to us each month”

Uber now accepts the ruling of the Supreme Court that the drivers are workers and not self employed. At the Gateway interview the Uber driver would be asked as part of the gainful self-employment test if he has his own business which he can develop. The answer would be No and he would fail the gainful self employment test. A MIF cannot be imposed without a determination of gainful self employment.

This is very interesting. Have you seen this happen in practice?

I still don’t think it is legally correct - the law does not allow for failing the “gainful self-employment” test base on that - see Reg. 64 of the UC Regs. Even Para. (c) of that Reg would seem to be fulfilled by Uber drivers.

UB40
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In practice .....a lot ! I was previously a UC SIL ( Service Innovation Lead ) and trained staff in self-employment.

If anyone would like assistance with UC claimants in the gig economy navigating the self-employment minefield, I would be happy to help 😊

Charles
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Thank you, this is very relevant for many of my clients.

Is there any published guidance referencing the need to have “his own business which he can develop” in order to be gainfully self-employed? (I’m just still worried about advising people based on this because the law doesn’t seem to require this to be gainfully self-employed!)

Peter Turville
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Leaflet UCD5 advises claimants what to bring to their new claim interview (including evidence of self-employed earnings).

In UC it is necessary to distinguish between “employed earnings” UC Reg. 55 and “self-employed earnings” Reg. 57 to determine how they are calculated within the assessment of income.

ADM Ch H4 para 4012 states (for the purposes of identifying self-employment and self-employed earnings)  ‘The concept of trade, profession or vocation has its origins in tax law’.

Self-employed earnings will count as earned income regardless of whether a person is considered to be ‘gainfully self-employed’ for the purposes of Reg. 62 ‘minimum income floor’. “Gainfully self employed” is defined in Reg 64. Only if all three criteria in Reg. 64 are met can a MIF be applied.

But it is not a requirement for a claimants to be ‘gainfully self employed’ for them to be considered as self-employed, or perhaps more importantly, for their earnings to be treated as “self-employed earnings”.

Crudely if a claimant is “gainfully self-employed” a MIF can be applied (subject to the ‘start-up period rules etc) but they will not be subject to additional conditionality. If they are not they may, instead, by subject to additional conditionality.

From the case I have posted about previously https://www.rightsnet.org.uk/forums/viewthread/14618/ it appears a case manager or DM must determine if a claimant with self-employed earnings is “gainfully self-employed” for each AP by completing the “verify self-employment completed” screen (inc. section 2 ‘Gainfully self-employed decision) following the claimants having reporting their s/e earnings for that AP.

What happened in the above case was UC imposed a MIF retrospectively (and a resulting £7.5K overpayment) despite the “verify self-employment” screen showing that (with the exception of 2 AP’s) that it had been determined that the claimant was not “gainfully self-employed” (in some AP no determination was made at all or elements within it were contradictory).

All of the above in the case only became clear following a SAR as the SSWP had not produced this vital evidence in her submission to the tribunal.

Our case perhaps demonstrates that DWP (or the UC IT system if all relevant determination screens are not fully completed by a human) can confuse the meaning and application of the relevant definitions and provisions within the UC Regs. leading to a ‘failure of process’ and an erroneous ‘outcome’ decision.

UB40
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Hi Peter,
I disagree with your statement .”..Crudely if a claimant is “gainfully self-employed” a MIF can be applied (subject to the ‘start-up period rules etc) but they will not be subject to additional conditionality.”

The MIF is not applied if the Work Coach has decided that the claimant is not gainfully self-employed. The work coach is mandated to follow the ALP and Section 3 of the ALP, the MIF , is bypassed as per below.

2.5 From the information supplied, is the claimant gainfully self-employed?
Yes - go to section 3
No - go to step 5.4 of section 5
Record evidence used to reach your decision

5.4 Action required:

- select ‘Yes’ to the question ‘Is claimant required to report self-employed earnings?’ on ‘Verify
Self- employment’ to-do
- select ‘no’ to the question ‘Is claimant gainfully self-employed?’ on the ‘Verify Self-
employment’ to-do
- complete the ‘Verify Self-employment’ to-do
- explain to claimant the need to report earnings at the end of each assessment period.
- claimant must ring on the last day of the assessment period to report earnings received
from self-employment that Assessment Period.
- reporting should take the form of ‘Cash in, Cash Out’ accounting
- inform the claimant there are allowable expenses and that we may ask for receipts

! Important: Explain to the claimant that they will need to report their earnings at the end of every
Assessment Period and failure to make contact and report self-employed earnings
will prevent any payment of Universal Credit being made. The claimant will receive a
to-do on the last day of each AP remind them to report earnings.

(end of process)

What the minimum income floor is
[See Memo ADM 04/20] [See Memo ADM 15/21]
H4060 The minimum income foor is an amount of earnings which a person treated as having in an
assessment period. The minimum income foor applies1
where the claimant
1. has been determined to be in gainful self-employment (see ADM H4020 et seq) and
2. would normally but for the minimum income foor be subject to all work-related requirements

[ Edited: 10 Feb 2022 at 03:51 pm by UB40 ]
Charles
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Can you post a copy of the full ALP? (Or a link, if it’s available online.) Thanks!

UB40
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Hi Charles,

If you email me at .(JavaScript must be enabled to view this email address), I will see what I can do.

Peter Turville
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UB40 - 10 February 2022 03:43 PM

Hi Peter,
I disagree with your statement .”..Crudely if a claimant is “gainfully self-employed” a MIF can be applied (subject to the ‘start-up period rules etc) but they will not be subject to additional conditionality.”

The MIF is not applied if the Work Coach has decided that the claimant is not gainfully self-employed. The work coach is mandated to follow the ALP and Section 3 of the ALP, the MIF , is bypassed as per below.

2.5 From the information supplied, is the claimant gainfully self-employed?
Yes - go to section 3
No - go to step 5.4 of section 5
Record evidence used to reach your decision

5.4 Action required:

- select ‘Yes’ to the question ‘Is claimant required to report self-employed earnings?’ on ‘Verify
Self- employment’ to-do
- select ‘no’ to the question ‘Is claimant gainfully self-employed?’ on the ‘Verify Self-
employment’ to-do
- complete the ‘Verify Self-employment’ to-do
- explain to claimant the need to report earnings at the end of each assessment period.
- claimant must ring on the last day of the assessment period to report earnings received
from self-employment that Assessment Period.
- reporting should take the form of ‘Cash in, Cash Out’ accounting
- inform the claimant there are allowable expenses and that we may ask for receipts

! Important: Explain to the claimant that they will need to report their earnings at the end of every
Assessment Period and failure to make contact and report self-employed earnings
will prevent any payment of Universal Credit being made. The claimant will receive a
to-do on the last day of each AP remind them to report earnings.

(end of process)

What the minimum income floor is
[See Memo ADM 04/20] [See Memo ADM 15/21]
H4060 The minimum income foor is an amount of earnings which a person treated as having in an
assessment period. The minimum income foor applies1
where the claimant
1. has been determined to be in gainful self-employment (see ADM H4020 et seq) and
2. would normally but for the minimum income foor be subject to all work-related requirements

Hi UB40

I’m not clear why you disagree.

A MIF can only be applied if the claimant is “gainfully self-employed”. In other words all three criteria within Reg. 64 apply for the purposes of Reg. 62(1)(a). One cannot be applied if they are not “gainfully self-employed (but see below).

The determinations regarding the three requirements in Reg 64 criteria are recorded on the “verify self-employment completed” screens at paras 2.2 - 2.4. Only if the answer to all 3 is “Yes” can (or rather should) “Yes” then be ticked at 2.5.

However, it appears from our case (I have the print out of the screens in front of me) a work coach can tick “no” to one or more of 2.2 - 2.4 and still tick “Yes” to 2.5. In other words the procedures allowed a MIF to be applied even though the criteria were not met.

Part of the issue may be that work coaches should be required to apply the legislation rather than being ‘mandated to follow internal procedures’ (which in our case clearly demonstrate are not ‘fool proof’ and allow erroneous determinations to be made). Thus illustrating the problems with DWP attempting to apply legislation by following procedures (generated for the purposes of IT systems) rather than equipping staff with the skills necessary to apply the legislation (or at least recognise when following, or failing to follow, the procedures results in erroneous decisions). I say that as a former Supplementary Benefit assessor back in the day before any computerisation when we had to understand the legislation and guidance (the Yellow’ and ‘Blue’ books - a copy of which were available to each assessment team and we were expected to know how to use them - in return for our measly LOII grade salary!!

Ianb
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Nothing to add but following this with interest.
If I understand what you have said Peter, you are saying that the gainful self employment test is something the Case Manager or Work Coach is expected to work through every month.. If true that would seem to yet another outstanding feature of the automated UC process that was supposed to result in significant administrative savings for DWP. More importantly I don’t see how they could make such a determination based solely on the reported income and expenditure.

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Charles - 10 February 2022 03:51 PM

Can you post a copy of the full ALP? (Or a link, if it’s available online.) Thanks!

copy attached - may not be the current version - see paras 2.2 - 2.4 & 2.5 showing how a MIF was applied in this case despite all of the criteria not being met!

edit - removed as the redactions are still showing - will try and re-scan & attach.

edit - re-attached (fingers X’d)!

[ Edited: 10 Feb 2022 at 05:09 pm by Peter Turville ]

File Attachments

tbidmead
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deleted

[ Edited: 10 Feb 2022 at 04:57 pm by tbidmead ]
Peter Turville
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Ianb - 10 February 2022 04:33 PM

Nothing to add but following this with interest.
If I understand what you have said Peter, you are saying that the gainful self employment test is something the Case Manager or Work Coach is expected to work through every month.. If true that would seem to yet another outstanding feature of the automated UC process that was supposed to result in significant administrative savings for DWP. More importantly I don’t see how they could make such a determination based solely on the reported income and expenditure.

It certainly appears that it is a requirement that the test is applied for every AP by completing the screens (see copy i have posted above). It is not clear on what basis this is completed every month (given that in our case it generated by the system every AP even though it wasn’t completed every AP).

I’m assuming completion was based on the ‘To do’s’ a s/e claimant is required to complete every AP, the regular (but not every AP) meetings our client was required to attend with his work coach (one who specialised in working with self-employed claimants) and any other info. via journal entries etc. Again it is not clear if it was completed by the same work coach or someone else (or automatically by the system?).

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tbidmead - 10 February 2022 04:52 PM

Just flagging that I can quite easily read the redacted info on this attachment. You might want to delete and reupload.

thanks - that’s annoying as its not obvious as the PDF shows on my screen!!!

UB40
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Hi Peter,
I agree with your statement ” A MIF can only be applied if the claimant is “gainfully self-employed”. In other words all three criteria within Reg. 64 apply for the purposes of Reg. 62(1)(a). One cannot be applied if they are not “gainfully self-employed (but see below”.
I cannot comment on screen 2.5 which I am not familiar with and obviously with your client caused a gross error.

As far as I was concerned after the Gateway interview was completed and a determination made on gainful self-employment the CM’s job was to verify the reporting of the monthly S/E earnings. The CM does not determine gainful self employment , as Ianb has remarked ” More importantly I don’t see how they could make such a determination based solely on the reported income and expenditure.”
The whole point of the Gateway interview is to conduct the in depth investigation to make the determination as per UCD5.

      “If you are asked to attend an interview you’ll need to bring evidence with you showing:

• your business name and address
• your Unique Taxpayer Reference (UTR) - HM Revenue & Customs (HMRC) sends this when you register for Self Assessment
• the date you started trading as self-employed
• the time you spend each week doing self-employed work
• your earnings from self-employment
• any marketing activities you’re undertaking
• anything else you’re currently doing to increase your earnings
• your VAT registration number if you’re registered for VAT

The types of evidence you can bring include:

• lists of customers and suppliers
• invoices, receipts and contracts
• transactions record or cash book
• trading accounts
• letters from HMRC
• bank statements
• payslips (if you work for someone else as well as being self-employed)
• marketing materials, such as business cards and flyers
• your business website address (if you have one)
• a portfolio of your work (for example, if you’re a photographer)
• a diary of business meetings or scheduled work
• a cash flow statement, including actual or forecast figures
• your business plan
• business certificates, such as insurance or professional accreditation certificates
Bring as many of these documents as possible. You can also bring any other evidence to support your claim.
If you don’t bring evidence showing the information listed above we may not be able to assess your entitlement and it may not be possible to award you Universal Credit.

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UB40 - 10 February 2022 05:02 PM

Hi Peter,

I cannot comment on screen 2.5 which I am not familiar with and obviously with your client caused a gross error.

see copy of the ALP I have re-posted ffor para 2.5 and my other reply regarding the frequency with which it appears the ALP should / is completed. There is no indication on the ALPs (or elsewhere in the info supplied under the SAR) who did / should have completed the ALP for each AP - one was clearly generated for each AP. In my clients case we hold copies for 20 successive APs.

UB40
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Hi Peter,
I am after all familiar with the ALP you have uploaded. It is the ALP that is within the Initial Gateway Interview To Do that is sent to the Jobcentre Work Coach.
It is only created once when the claimant initially reports self employed earnings ( any earnings not on RTE ).
I think what may have happened is that his first IG interview was not successfully cleared from the Build and it was still appearing on his account.He then re-entered the To Do every AP and it looked as if he was reporting a new self employment.Thus a new self employment Gateway interview was created and had to be cleared
.
The work coach obviously has a training need 😊 as you have remarked regarding 2.4

H4022 A claimant is in gainfully S/E where for the purposes of UC, the Secretary of State has
determined that
1. the claimant is carrying on a trade, profession or vocation as their main employment and
2. their earnings from that trade, profession or vocation are S/E earnings (see H4012 et seq) and
3. the trade, profession or vocation is organised, developed, regular and carried on in expectation of
proft.
In order to be in gainful self-employment for the purposes of UC, 1., 2. and 3. have ALL to be satisfed. If
any of those are NOT satisfed then the claimant cannot be in gainful self-employment.
1 UC Regs, reg 64

Victoria Naughton
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Apologies for the late reply – I have only just read this. 

Bristol_1 can I check why your client is not in a start up period?  If he claimed UC after 1/8/21, his GSE decision must be within the past 12 months.  Has he previously had a start up period or a MIF in an earlier UC claim? 

If not, my understanding is that the start up period should run from the AP of the GSE decision even for pre-existing self-employments.  It used to be the case that the start up period did not apply to self-employments which had existed more than 12 months before the claim, but since 23/9/20, the provision was changed so that the start up period only starts running from the beginning of the AP of the GSE determination.  An unusual case of UC becoming more generous.

See amendments to Reg 63(1)(a) UC Regs, as amended by SI 2019/1152.  The explanatory memo to the SI (para 7.37) makes this particularly clear.  ADM H4100 also refers.

We are seeing UC routinely getting this wrong for our members who claimed UC during the pandemic, most of whom are self-employed and are having GSE decisions around now.  We have submitted various MRs on this exact point, and we await replies.

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Hi Victoria,
The client has been working for Uber since Feb 2019 and claimed UC as a single person from end of Jun 2020 - end of May 2021, then UC ended while he went abroad, and then he made a new claim for UC when he returned to UK accompanied by the rest of his family in Sep 2021, once again working as an Uber driver.
I think he has already had the start-up period; although his initial UC claim was 11 months, in CPAG it says that the start-up period continues to run even if your UC stops and starts during the year & you can only have one start-up period for the same self-employment.

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Hi, in that case I definitely think there is a missing start up period. 

GSE interviews were suspended from March 2020 because of the pandemic, as was the MIF (Reg 2(1) The Social Security (Coronavirus) (Further Measures) Regulations 2020). 

GSE interviews only re-started in summer 2021 – theoretically from 1/8/21 but in practice mostly in the autumn/winter.  So if his only other UC claim was Jun 2020 – May 2021, he can’t have had a start up period yet because he won’t have had an earlier GSE decision. 

See the following for information about reintroduction of the GSE interviews, especially the Written Statement link at the bottom:
https://www.rightsnet.org.uk/welfare-rights/news/item/reintroduction-of-the-minimum-income-floor-over-period-to-31-july-2022

Hope this helps.  I’m speaking to a lot of people with missing start up periods at the moment.  Two today.

bristol_1
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Very interesting, Victoria! (and also all the other posters with various points made here -all very useful)
I will ask him to write a message on his journal about the start up period.
Thanks