Contractors claiming benefits?

[psychocandy]

One thing we haven't done yet is actually find out from HMRC if this is right. We know people that do it and even PC who has been through the JSA still isn't 100% sure if he made them aware of his situation and they actually understood it he would be able to claim. This whole benefits idea work for no other reasons than HMRC haven't closed a loophole and also the staff dealing with this do not fully understand the situation. I am sure if they did this would die a rightful death.

To a certain extent I agree it is a grey area. But IMHO all the individual can do is answer questions/fill forms to the best of their knowledge.

I am 99% happy that my claim would be allowed if looked at by a benefits expert.

[blacjac]

You are not decimating your business. You are withdrawing the money you have earned using the chosen vehicle i.e. ltd co. Benefits does NOT exist for us to claim while we store available money away for a rainy day. I can't see how anyone can argue that is right. It's possible but it's not right. They fact you have used a loophole that HMRC have not yet closed down does not make it right.

You are not entitled to it. Pedantry aside you have available money so are in no need of benefits. It's kinda core to the benefits system.

I suppose this is where you and I differ, I do not contract in order to earn a living. I have plans for my business, including premises and staff, I have other customers outside my main contract and overheads that need to be paid in order to be able to continue to provide them a service.
Perhaps this is why our perception differs.

One thing we haven't done yet is actually find out from HMRC if this is right.

Yes I have.
4 years ago I was on the bench for 9 months out of 2010. I had a warchest, but took the minimum I needed to live from it. I phoned the tax credits office and explained the situation to them. I told them what I had in my company, what I needed to pay out monthly, what my current childcare arrangements were, the fact that if I took my kids out of childcare then then I would possibly lose their places and not be able to get them back in when I did start a new contract.

They politely listened and informed me that their only concern was how much money I was taking home per week and how much childcare I was paying per week.
Then they politely informed me that I was entitled to 50% of my childcare costs as tax credits.

Now if you think that me accepting that money that they told me I was entitled to is morally wrong, then I think we just disagree.

[northernladuk]

Yes, totally.

But the year you close the company down then you get nowt.

We might not agree with it, but the whole point of tax credits is to enable parents to work while little Johny goes to childcare.
If you won the lottery this weekend but spent it all by the end of the year, You'd still be entitled to tax credits next year as long as:
a) You are working and ;
b) You are paying a registered child carer to look after little Johnny while you do.

And quite rightly so as she doesn't have a pot hidden away and is saving while being given benefits.

Read the post above about company money being considered.

[psychocandy]

Now first off I'll say this is a bit borderline even for me. Wish I'd though it first mind. But as others have pointed out, there is a distinction between company money and personal money - there has to be.

It might well be a loophole but I dont see how it can be closed. It would be impossible to 'force' companies however big or small to do what the government wanted with the companies money. IR35 I guess tries it though!

I really don't see how this person could ever be done for fraud. Its not fraud. OK so what she's done:-

1. As owner of company, decided to pay employee A (herself) £x amount per year. Perfectly legal. We all pay ourselves the salary we want for out purposes (mainly to be the most tax efficient)

2. As owner of company, has decided not to pay out any dividends. Perfectly legal. We all pay dividends as and when it suits us again maybe taking into tax years etc.

3. As a person, has claimed benefits based on her income which is the salary. Again perfectly legal.

To be honest, it aint right but I don't think us as contractors are the ones to criticise. Remember the old saying, tax avoidance is legal, tax evasion is illegal. This is the same sort of thing.

[blacjac]

What is going wrong is the Jobcentre are NOT asking for this information in either the OP's case or in PC's. If they did I am sure the outcome would be very different.

Again NLUK, you seem to be confusing JSA with tax credits. They are entirely different and tested in a different way.

[psychocandy]

Shocking, no doubt she is also claiming things like free school meals, council tax, dental, prescription charges etc, report her to the benefit fraud police!

I know someone doing the dodgy overseas avoidance scheme who used to do exactly this. Not me BTW - won't touch it.

[northernladuk]

I suppose this is where you and I differ, I do not contract in order to earn a living. I have plans for my business, including premises and staff, I have other customers outside my main contract and overheads that need to be paid in order to be able to continue to provide them a service.
Perhaps this is why our perception differs.

Not really. I see where you are coming from but for every one of you there is 999 people just using it as a tax mule. The OP is one for a starter. It pains me that we do unfortunately get lumped in with the idiots that have no idea how to contract and just see is an alternative way to make a living but there is no differentiator between the two for the moment. I understand your position and in your case you are correct. Take your hat off and look at the reality of it now with 99.9% of contractors not seeing it like you.

Yes I have.
4 years ago I was on the bench for 9 months out of 2010. I had a warchest, but took the minimum I needed to live from it. I phoned the tax credits office and explained the situation to them. I told them what I had in my company, what I needed to pay out monthly, what my current childcare arrangements were, the fact that if I took my kids out of childcare then then I would possibly lose their places and not be able to get them back in when I did start a new contract.

They politely listened and informed me that their only concern was how much money I was taking home per week and how much childcare I was paying per week.
Then they politely informed me that I was entitled to 50% of my childcare costs as tax credits.

Now if you think that me accepting that money that they told me I was entitled to is morally wrong, then I think we just disagree.

4 years ago? Really?

There are many different types of JSA with different thresholds so I am not saying everyone is closed to us. I am just talking about the immortality of claiming something when you know full well you are squirrelling it away in the background.

[blacjac]

Actually, re-reading the OP it seems I am mistaken, the OP is talking about JSA and not tax credits.

In which case I retract most of what I have said - move along, nothing to see here

[northernladuk]

Again NLUK, you seem to be confusing JSA with tax credits. They are entirely different and tested in a different way.

I am sure I am and don't want to get in to the details as I don't know. I just know these excuses about hiding money in the company and claiming is just not right. In fact, it's gone on so long I am really not sure what I am arguing.....

[northernladuk]

I know someone doing the dodgy overseas avoidance scheme who used to do exactly this. Not me BTW - won't touch it.

Erm, yeah thanks for that. Have another beer.