Self employed hours
On the previous thread (Appealing an overpayment) Victoria suggested I find out first what year the overpayment had occured in. I spoke to the intermediaries line today who told me that all of the client’s WTC for 10/11 had been deemed to be an overpayment following a compliance investigation into the number of hours of self employment that she had done. This was on the basis of her declared income for 09/10 which was around £1080 and income for 10/11 of £4518. I was also told that this was below the minimum wage. I was told as well that HMRC had used available evidence to them (self assessment returns?) and invited the client to prove that she had worked for at least 16 hours per week throughout 10/11, which she could not do. Finally I was told that HMRC were conducting a general investigation into all the self employed receving WTC to verify hours worked.
In our case the client says that her hours reduced from 16 to 8 in January and her WTC stopped in February. Her 8 hrs pw stopped in March and she is now on JSA. I will obviously check her paperwork to see if it is worth persiung an appeal/ dispute but;
I am concerned about the general approach taken by HMRC, as given by the intermediaries line
Can anyone shed any light on this? Is there a general check on all the self employed going on, in which case I can expect alot more cases to come my way. Also I am concerned that the minmum wage does not apply to the self employed - taking this logic ,16 hrs pw over 50 weeks say at the minimum wage would mean a net profit of £4744 to pass this test. Are HMRC checking self-assessment returns generally?
Also in my experience the self employed do not tend to keep a record of hours worked all the time (or any of the time) - should they be doing this especially at the margins of 16 hours? Then there is the general problem of the normally working rule, which could catch alot of people if applied rigidly as the rule does not include fluctuations. I have come across clients whose self employed hours fall below 16 but who cannot afford to give up their WTC, as the chances of them finding more work are harder on a lower income and they dont want to claim JSA.
Finally HMRC’s approach does not seem to allow for higher expenses for a period, without looking at the reasons why profit was lower - compliance just seemed to focus on numer of hours. Also no allowance for the other time you can count towards self employment apart from actually working.