Contractors claiming benefits?

[simplicity]

A colleague told me she is on benefit as she only takes a minimal wage from her company. She's on £200 a day and said she's a single parent so it makes sense to claim what she's entitled to. I'm not too sure what she is saying is right. Surely she can't do this. Her argument is she's an employee of her company and otherwise she would have to spend the whole company income each month on bills etc.

[Old Greg]

A colleague told me she is on benefit as she only takes a minimal wage from her company. She's on £200 a day and said she's a single parent so it makes sense to claim what she's entitled to. I'm not too sure what she is saying is right. Surely she can't do this. Her argument is she's an employee of her company and otherwise she would have to spend the whole company income each month on bills etc.

It sounds like she's building up the company reserves and claiming Working Tax Credit.

[psychocandy]

Thinking about it I guess in theory its above board. Its your company if you want to pay yourself minimum wage and invest the rest in your company and keep it there then its up to you? After all no-one can force you to pay yourself more. Separate entity ltd company and personal income etc.

Never thought of that. Got me thinking now ;-)

Dunno though because I guess it'd only work if partner (if you have) didnt work either.

(As an aside I know someone who does the dodgy offshore thing, claims his income is zero and claims loads of tax credits etc. Accident waiting to happen that one is.)

[Pondlife]

Does someone want to PM Psychocandy a link to this or shall we wait for him to find it by himself.



Edit: Too late.

[Old Greg]

Does someone want to PM Psychocandy a link to this or shall we wait for him to find it by himself.



Edit: Too late.

Yes, looks like he's got one of those RSS feed thingies. Never worked it out myself.

[northernladuk]

Thinking about it I guess in theory its above board.

I think you have it the wrong way around. In theory it is tantamount to fraud bearing in mind the whole reason for benefits etc... What you are saying is you guess it is possible to do. Two different things.

Either way it's ******* ridiculous.

[GlenW]

A colleague told me she is on benefit as she only takes a minimal wage from her company. She's on £200 a day and said she's a single parent so it makes sense to claim what she's entitled to. I'm not too sure what she is saying is right. Surely she can't do this. Her argument is she's an employee of her company and otherwise she would have to spend the whole company income each month on bills etc.

I hope it is illegal and that she gets caught.
Even if it isn't illegal it is immoral.

[eek]

I think you have it the wrong way around. In theory it is tantamount to fraud bearing in mind the whole reason for benefits etc... What you are saying is you guess it is possible to do. Two different things.

Either way it's ******* ridiculous.

Yep it's ******* ridiculous and yep it probably is fraud. However explaining why its fraud to the Benefits agency would be so complex that I doubt much would be done about it, because the person at the agency would not understand and explaining it to a jury in simple enough language would be near impossible.

[blacjac]

I think you have it the wrong way around. In theory it is tantamount to fraud bearing in mind the whole reason for benefits etc... What you are saying is you guess it is possible to do. Two different things.

Either way it's ******* ridiculous.

I'm not so sure....

On a £200 per day contract, that's a turnover of 45k + VAT assuming billing 45 weeks a year.
Even if you took the whole lot as salary so no CT, at 45k per year you are still entitled to some tax credits of you have kids in childcare - HM Revenue & Customs: You work 16 hours or more and pay childcare: entitlement tables

However this is leaving the company with nothing, so in between contracts the company and director(s) are screwed.

I find it hard to argue with keeping some money back in reserve - purely from a business perspective.

Fair enough, if your only taking minimum wage then it might be taking the P a bit, but the OP says 'minimal'...
At 45k turnover how much would you want to be leaving in the company warchest?

[kal]

A colleague told me she is on benefit as she only takes a minimal wage from her company. She's on £200 a day and said she's a single parent so it makes sense to claim what she's entitled to. I'm not too sure what she is saying is right. Surely she can't do this. Her argument is she's an employee of her company and otherwise she would have to spend the whole company income each month on bills etc.

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!