Housing Benefit & Council Tax Reduction For Small Business Owners
(Sole Traders & Limited Company Directors) .
Looking At Income And Capital.
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Full-Day Workshop (9:30 - 4:30)
Benefit claimants who run their own small business will be either a self-employed sole traderor the owner/director of a private limited company. While the day-to-day working lives of sole traders and directors may not seem to be much different in practice, the financial structure of the business means that very different issues arise when it comes to assessing income and capital for HB and CTR. This was recently highlighted when it came to eligibility for Government assistance during the Covid pandemic.
The Workshop begins by clarifying exactly what it means to be self-employed on the one hand and a company owner/director on the other: We will “demystify” the different ways on which small company owners receive income from their business in the form of salary, dividends, and directors’ loan accounts.
We then look in more detail at self-employment. The first step is to select an “assessment period” of past earnings, which will form the basis of our estimate of the claimant’s income going forward. Should this always be the period to which the claimant’s most recent accounts apply? What if the claimant has not been working long enough to have a set of accounts yet? What about seasonal work? Assessment periods for benefit awards in 2022/23 may well include Covid grants paid during 2021: SEISS and, in some cases, grants for business ratepayers. How should these be accounted for?
Self-employed claimants are usually asked to provide accounts, but should we ask for additional evidence to demonstrate that what the accounts say is true? What sort of evidence might we ask for that is reasonably easy for the claimant to obtain and for us to process?
We also look at the rules governing the deduction of business expenses from self-employed earnings: What is allowable and what is not? What about items with mixed personal and business use (especially vehicles) - can these ever be “wholly and exclusively” business expenses?
Our final topic on self-employed earnings assessments is when the estimate should be reviewed, and whether it is ever necessary to reassess earnings retrospectively (whether to the claimant’s advantage or disadvantage) - how do the grounds and time limits for revision and supersession work in relation to self-employed earnings?
Moving on to small company owner/director, we begin by looking at the capital value of the claimant’s shareholding: when is it reasonable to take this into account as capital, and how can it be valued?
If we disregard the claimant’s shareholding, or value it at less than £16,000, how do we go about identifying the true amount of income the claimant receives from his/her business? Company owners may from time to time receive salary, dividends, repayment of loans owed to them or new loans advanced to them - which of these payments count as income?
Many small company owners say that they do not receive any salary from their company because it cannot afford to pay them, even though a salary is shown in the accounts (typically just under the threshold where Class 1 NI becomes payable) - how should this be accounted for?
Delegates will see some specimen small company accounts and will have an opportunity to understand how to interpret the numbers and the terminology contained in the accounts. Perhaps the most confusing aspect of an owner/director’s finances is the director’s loan account or current account - a running tally of the amount owed by the company to the director, or by the director to the company. How does this affect our assessment of income and capital?
A Workshop are presented by Peter Barker, a hugely experienced trainer, appeals presenter and submission writer. He started as a local authority appeals officer in the 1980s, and for many years he has represented local authorities in England, Wales and Scotland at both First-Tier and Upper Tribunal level. Tribunal Judges frequently comment on the high quality of Peter’s submissions. He combines a wealth of first-hand experience with expert knowledge of adjudication legislation and has a real enthusiasm for the topic.
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