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How to prove working hours in-between contracts?

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    How to prove working hours in-between contracts?

    Hi all,

    I have posted the below on another forum but have not really got anywhere.

    The gist of it, I contracted last year as a self employed person, working as a sole trader.

    This year for obvious reasons I have changed to a limited company.

    I hope in a year or two i will not need tax credits but for now there a life line.

    So can I claim working hours as a sole trader and as a ltd when not in a contract? E.G. The finding the contract bit... if so what do we think the tax credits office will officially call the "finding bit", marketing perhaps??

    Many thanks in advance.


    Hi all,
    I have searched for an answer on this but I think my circumstances are a little unusual (I think).

    I was recently “randomly” investigated for working/tax credits, I sent in all the information that I thought was appropriate to prove everything they asked, despite finding some questions irrelevant.
    The end result is they have stopped the working element of our tax credits award so I now have to go through the process again to insure we get it back and do not have to pay back last years “working” award.

    Our circumstances are as follows.

    My partner works 16 hours a week, they is PAYE and the tax credit office have no problem with this.

    I am self-employed and work 10+ hours a week.

    I have been self-employed since May 2013, my accountant has not finalised my 2013/14 books yet as we are still awaiting an invoice to be paid before shutting the company down (sole trader). I changed to a limited company in May 2014.

    I am a contract “project manager”, this means my time is spent primarily looking for work (certainly in the early years of building contacts) followed by working flat out for a three month period when I obtain a contract.

    Obviously it is very easy to prove I am working when I have a contract, however when I am not working a contract I spend a lot of time looking for the next, by means of posting my CV on job sites (weekly to keep at the top of the list), taking calls from recruiters who find me (primarily it appears recruiters find you and applying for posted jobs has minimal results), changing CV to suit roles, preparing for interviews, travelling to interviews etc.

    So what I am scared of is I have not kept a diary thus far, in my ignorance no one told me to so how do I prove to tax credits I have been working when I was not in a contract, and what explanation\activity do I use. I guess I can make a diary retrospectively but it will be very generic, such as posted CV on job boards, waited for phone to ring, if interview obtained prepared, etc…

    I originally supplied the tax credit office with a copy of my NI payments to date supplied by HMRC and a brief overview of my business model, which obviously was not sufficient.
    I have spoken to the tax credit office and the advisor was vague (to an untrained ear like myself) but did keep mentioning marketing and a letter from my accountant.

    As everyone I work for is in theory a “client” is all the time I spend finding that “client” to secure a contract of work classed as marketing?? Would that be the correct tax credit “office” wording?
    What I guess I am asking is will a retrospective created generic diary primarily mentioning “marketing activity” be sufficient (if backed up with a letter from my accountant) for the time I am not in a contract?? Or is it more complicated than that??

    Many thanks in advance for your help.

    PS, when I was working a contract I was doing 50 hour weeks, I never mentioned this to the tax credit office as I assumed as long as I was working more than my stated quota of 10 they would be happy??

    #2
    I have no real idea how the tax credits system works but I am fairly sure that payments will be based on accurate information being provided to the administering body. If you work 10 hours a week I am sure they will need to know that - if your hours increase to 50 hours per week I am sure that they will need to know that too. If you are only declaring 10 hours at £x per hour when you actually worked 50 then you are, potentially, defrauding the DWP. By the same token, if you are looking for work, you are not actually working and not bringing in any income so they will need to know that as well. Honesty is definitely the best policy when dealing with anyone giving you money from the Government coffers.
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    Comment


      #3
      Originally posted by LisaContractorUmbrella View Post
      I have no real idea how the tax credits system works but I am fairly sure that payments will be based on accurate information being provided to the administering body. If you work 10 hours a week I am sure they will need to know that - if your hours increase to 50 hours per week I am sure that they will need to know that too. If you are only declaring 10 hours at £x per hour when you actually worked 50 then you are, potentially, defrauding the DWP. By the same token, if you are looking for work, you are not actually working and not bringing in any income so they will need to know that as well. Honesty is definitely the best policy when dealing with anyone giving you money from the Government coffers.
      I'm guessing he will be bringing in an income personally cause he'll still be drawing a salary, it's just that the hours will go up and down depending on which contract he's on or the level of marketing, admin etc between contracts.

      Personally I found it all a complete pain to have to tell the tax credit people each time my hours changed. Add to that the long forms which asked the same stuff that HMRC already know and the fact that they kept sending two of everything addressed separately to my wife and myself and I'd had enough. I just stopped claiming as it was too much hassle. In our case it wasn't a lot so it didn't matter too much, although I recognise that it wouldn't be easy for everyone.

      Comment


        #4
        This would suggest that income is determined based on profit - not sure if it will help or make things worse Understanding self-employment « How do tax credits work? « Guidance « Tax Credits « Revenue Benefits
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          #5
          Would this not be covered by RTI on your payroll?

          Comment


            #6
            I always thought that if you were employed by your Ltd company and were carrying out work on behalf of your company - whether that work be income generating (in a contract) or not (admin, sales, marketing) - you were just classed as employed / working?

            Therefore, any time not carrying out an activity for the Ltd Co would be classed as 'not working'? For example - if I an unable to get a contract, I can't claim Job Seekers allowance because I'm still employed by my Ltd Co.

            Can you not send them a letter from your 'employer' i.e. your company stating your contract details / weekly hours etc e.g. I can confirm that Mr. X is employed full time by Y Ltd and is contracted to work 40 hours per week.
            Last edited by pacontracting; 3 September 2014, 12:05.

            Comment


              #7
              Originally posted by pacontracting View Post
              Therefore, any time not carrying out an activity for the Ltd Co would be classed as 'not working'? For example - if I an unable to get a contract, I can't claim Job Seekers allowance because I'm still employed by my Ltd Co.
              Yes you can.
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              Comment


                #8
                Originally posted by TheFaQQer View Post
                Yes you can.
                Surely no self respecting contractor would resort to claiming JSA when between contracts

                Comment


                  #9
                  Originally posted by kal View Post
                  Surely no self respecting contractor would resort to claiming JSA when between contracts
                  I think it depends. Some of us are specialist and so well paid, many others don't seem to be are there because its the only work they can get.
                  merely at clientco for the entertainment

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