Universal Credits - The Book-keepers Forum (UK)

kjmcculloch83 · Expert

Universal Credits

Marky65 · Guru

Hi Kris

Thanks for posting this article

How absolutely ridiculous this is and completely unworkable. Most of us on here have enough trouble getting our paperwork out of our clients each month/quarter to just keep their books up to date, they would never be able to sort them in time for us to let provide this for them

However, on a slightly more positive note, could this become an extra income stream for bookkeepers, where we provide the service of filing this information for our clients through the HMRC website in much the same way that we complete their VAT returns/Self Assessment returns etc

Thanks again

Mark

kjmcculloch83 · Expert

How many can you do though Mark? Even if they gave a month and a week like VAT, but 7 days? Especially given that they are not using GAAP, so it's almost like another set of accounts each month.

I'm not impressed by the whole thing, especially the speed they seem to be trying to push it though. It's almost like they can feel the backlash if people find out.

Kris

Marky65 · Guru

Probably not many in 7 days, but then not many of my current clients claim WTC or anything similar.

I suppose their thinking (erroneously) behind the 7 day deadline is that if you are claiming credits you are not doing much work therefore you won't have much paperwork to deal with

Yes it seems another thing this government will try to push through but at the moment we can only hope there is a U turn on it, like a lot of other decisions lately.

kjmcculloch83 · Expert

I can understand why you would do this if we had times of full employment, but when there are not enough jobs to go round why force people to lay staff off, or to give up their self employment to sit on their arse, or look for jobs which don't exist.

It makes no real sense to me.

Kris

I read that slightly diffently from you Shaun. I thought it was for hours worked rather than 35 hours per week. So for me, I work 20 hours a week so I would need to earn £7072 per year.

-- Edited by kjmcculloch83 on Thursday 28th of June 2012 05:36:18 PM

Don Tax · Expert

Had not begun to think about this as had no reason to suspect it would be any different to tax credits. The whole UC reform is about cutting benefits and costs, so shouldn't be surprised.

I suppose ones take on this and the 16/24 hour couples tax credit issue is whether you trust people in Whitehall or Edinburgh to raise and spend money. If I ever did, I don't any more.

This would be OK if it went hand in hand with a reduction in both Employers NIC and Class 4 - to the great extent where loss of benefits did not inhibit start-ups. We can't afford to reduces taxes, but still need to massively cut outgoings.

I can see a market for one-man-band limited companies as when the £10,000 nil-band for companies about 2000. Complete U-turn on that one, but the then chancellor still had misplaced street cred at the time.

Tim

kjmcculloch83 · Expert

Cheers Shaun, I missed the 35 hour week. In that case... anyone want to offer me a job?

Kris

-- Edited by kjmcculloch83 on Thursday 28th of June 2012 05:56:10 PM

kjmcculloch83 · Expert

Jsut one MP? Thats a waste of all that preparation time!

Thats quite interesting. So if I have a couple of big jobs on one month maybe take in £1500 and get paid on the 30th of the month my benefits are based on that. But if I take it all and reinvest it in the business next month, buy a new computer or whatever it is taken from my earnings the month I spend it. Even if my earnings that month don't cover what I spend?

oh dear. Why will anyone choose to run a business, so much easier to sit on the dole

Kris

-- Edited by kjmcculloch83 on Thursday 28th of June 2012 06:54:55 PM

Shamus · Forum Moderator & Expert

Thanks for posting this Kris.

Not sure if you've read the linked note yet but have a read of this :

http://www.dwp.gov.uk/docs/uc-draft-regs-2012-memorandum.pdf

espechially in relation to proving self employment viability, the minimum income floor and stopping people from incorporating to avoid the legislation. (see sections 158 through 184 bt the whole thing is frightening reading).

This is going to be like IR35 all over again but this time the self employed get to share the suffering.

My opinion is that this will kill any shoots of recovery stone dead.

kjmcculloch83 · Expert

Ready, after 3.... "Turn again Osborne"

Let's face it, we've had so many lately its hard to know which way they're going.

Shamus · Forum Moderator & Expert

kjmcculloch83 wrote:
Let's face it, we've had so many lately its hard to know which way they're going.

Out the door if they continue like this!

Don Tax · Expert

I'm sure the coalition are inept but this system is nothing to do with lack of consultation or a whizz-kid undergraduate. IMO it has everything to do with putting off people from claiming and falling foul of ridiculous deadlines.

Just happened to see this Sir John Harvey Jones interview where he talks about a 'fools paradise'. We should really worry when politicians start telling us that the finances are alright to go on a public spending binge.

http://www.youtube.com/watch?v=rkmL_Zqk0nA

kjmcculloch83 · Expert

Shamus wrote:
kjmcculloch83 wrote:
Let's face it, we've had so many lately its hard to know which way they're going.
Out the door if they continue like this!

To be perfectly honest I think they are doing a far better job than SNP ever did to get scotland to vote Yes in 2014

Shamus · Forum Moderator & Expert

lol Kris.

Just had another read through the 59 page explanatory notes and to me it seems that any self employed person earning less that 11,265.80 per year (after their first year of trading) will be unable to claim universal credits as that seems to be the boundary (minimum wage times 35 hours minimum per week) between the Government regarding the business being a hobby as opposed to work.

As usual it seems that the self employed are being tyre levered into legislation not intended for them.

If the Government enforces minimum wage on business owners then I can see them having to let staff go or close their businesses completely as I for one know of businesses where the owners in these cruel economic times are taking less than minimum wage so that they can continue to pay their staff.

Methinks that there are going to be tears before bedtime with this legislation.

Marky65 · Guru

Is that for real.

How on earth do they think self employed individuals will generate income of over £11,k per year. I do the books for many tradesmens (painters, joiners etc) and they earn nowhere near that amount, what are they and many, many others supposed to do. There work is not a hobby, they spent years learning their trade via apprenticeships.

Absolutely ridiculous

Shamus · Forum Moderator & Expert

Nor me Kris.

it's like the Government have spotted the shoots of recovery are begining to sprout despite their best efforts so they're now employing desperate measures to ensure that all hope of the country getting out of this crisis are totally crushed.

I can see the reason for needing change as the country cannot afford the blank cheques that the previous administration wrote but I can see this combined with RTI adding to the problem rather than being a sollution.

Shamus · Forum Moderator & Expert

Hi Mark,

the amount is not actually written in the notes but I'm trying to read what they're trying to hide and in different parts of the document they refer to a minimum 35 hour week for the self employed and self employed people receiving the National minimum wage. I know the way that their minds work and know that they will extrapolate that assuming paid holidays.

The documents 59 pages but they use big writing so it's really probably only 30 pages (if that) of the documents that we're used to.

Shamus · Forum Moderator & Expert

A few notes from my third read through.

So, it would seem that under the new regime, there's an 11.2k minimum income and 35 hour minimum working week to prove that the business is not a hobby.

Every month the self employed will be expected to report :

income received from self employment this assessment period (cash in);
payments made for the self employment this assessment period (cash out)

Cash out is to be broken down into seven headings of :

regular business costs (e.g. rent, wages, operating leases)
stock purchased for business
expenses (e.g. electricity, phone, business travel
allowable one-off costs (e.g. capital expenditure, finance leases)
income tax payments
National Insurance contributions
personal pension contributions (100 percent of these will be counted as cash out)

The assumption is that the difference is profit giving no allowance at all for reinvestment of earnings to build the business.

All information must be filed within 7 days of the end of the month or any benefits will be suspended / lost.

Additionally, small limited companies are to be treated as though they are self employed.

the whole idea of accruals and prepayments seems lost of the legislation.

In brief, the Government isn't saying it but if you are self employed then in future you are only going to be allowed to give to the system, not take anything out of it.

As for us. if we cannot file the clients information within seven days of the period end (probably because they won't even have their bank statements within that time!) then they lose their benefits and I suspect that we get sued which will see out PII costs rocket.

right, I need an MP, a length of rope, a vat of tar and some feathers...

kjmcculloch83 · Expert

Can I add fuel to this fire? I've just been reading the legislation and it appears that they are allowing you to claim mileage at a rate of 45p per mile for the first 800 miles per month and 25p thereafter. For use of home they are allowing flat rates based on the time used, but not the space used. Shaun, you read it?

Kris

Shamus · Forum Moderator & Expert

I had to stop reading it as I was getting too angry at these idiots who seem to believe that people in business have their work and income spread evenly through the year.

As mentioned in one of my posts above they're basically moving to a position where if you run your own business you need to be in a position to forget about tax credits and if you can't then they are basically making you give up your business.

I've read a few times around the bit about making people attend job interviews within 48 hours, espechially in relation to the line about "If you are working" which to me sounds as though they are angling towards if you are self employed and cliaming tax credits they can enforce you to attend interviews for better paid jobs in order to get you off tax credits.

So, think about that. Your building a business that will turn into something employing people and eventually make a lot of money (hopefully) but they can enforce you to take another job, say stacking shelves in poundland so that they are able to reduce their short term outlay.

Berry, Broadbent and Otley identified such short termism as one of the eight main failings of management causing businesses to fail... Governments doing it with the whole friggin country.

Shamus · Forum Moderator & Expert

Just been having another read and have you noticed that in the actual regulations the self employed are incidental to the docuemt but in the interpretation they form the bulk of the document!

Also, in the interpretation they have the bit about treating limited companies as the self employed where again that is not in the source document.

Basically just shows the axes that those doing the interpreting have to grind...

Which seems pretty typical of Bureaucrats whose only idea of business comes out of university text books and have absolutely no idea of finance, accounting, running their own business, etc.

Why do they remind me so much of the quarter master who cost us the battle at Isandwana by persisting in issuing just 5 rounds of ammunition to each soldier with 22,000 Zulu's bearing down on 1350 Brits.

It seems obvious that those doing the interpretations are doing something similar. They're doing what they are trained to do which is look after the countries money but they're doing it in such a way that they seem to be totally unaware that their actions are at odds with the governments intentions and they are actually destroying any hope of financial recovery for the country by killing off the little businesses before they ever have chance to fly.

Right, where's that folder of information gone from a couple of years back about emigrating to Thailand.

It got shelved when filled with renewed hope for the country by getting rid of Gordon Brown but it seems we're even worse now than we were then.

Wella · Expert

Shamus wrote:
........

Why do they remind me so much of the quarter master who cost us the battle at Isandwana by persisting in issuing just 5 rounds of ammunition to each soldier with 22,000 Zulu's bearing down on 1350 Brits.

..........

Right, where's that folder of information gone from a couple of years back about emigrating to Thailand.

It got shelved when filled with renewed hope for the country by getting rid of Gordon Brown but it seems we're even worse now than we were then.

1350 was just the casualty list. Total contingent 1000 British and 750 native. Worst defeat by a native army in British military history.

And don't forget the sequel Rooke's Drift may have gone more smoothly (possibly less heroically), if the artillery which was available to the them had been supplied with the correct calibre rounds by the QMS.

Lord Chelsmsford used the sequel, and "bigged" it up a bit,plus a few dead scapegoats to take the heat of his monumentous incompetence (sounds familiar)

As for Thailand, can't you reverse the tradition, and become a British Husband? I suspect it may become a new trend. Sure I've seen adverts on the internet.. Oh no that was something else biggrin

-- Edited by Wella on Monday 2nd of July 2012 12:59:15 PM

Shamus · Forum Moderator & Expert

Hi Bill,

Rourkes Drift might also have been better for the British (sorry, Welsh) if the Zulu's were'nt sitting on the hillside behind the farm armed with rifles kindly donated by the English dead at Isandwana... And they didn't have any issue over bullet rationing!

I actually know quite a few British, Swiss and German husbands who have set up in Thailand. Also, despite common misconceptions Thai's don't actually want to come here... They would be quite happy if you just took all of your money there. (Your moving there is apparently completely optional as far as Thai wives are concerned).

The Thai women in the UK that I know are just siphoning money back to Thailand until either they move back their with their husband or divorce and move back there. I don't know any who have the intention to remain in the UK.

Oh just call me an old cynic. wink

Rich · Veteran Member

Very interesting points made so far about the new universal credit, and the Zulu wars have always captured my imagination. Several years ago I saw a documentary on TV that showed evidence that lack of bullets was not a problem as the British troops were issued with boxes of cartridges at Isandwana. However, the Martini- Henri rifles overheated from over firing in the African heat and seized up, leaving the few elite troops Chelmsford left behind to defend themselves and what amounted to the catering core with little more than clubs. The rifles were modified in later years to improve their performance in hot climates.
I think we can draw a comparison here with the new universal credit. Did the people who designed the rifles used in Africa know as little about how they would perform in a hot climate as the people designing the universal credit know about having to work for a living?

Wella · Expert

Rich wrote:
Did the people who designed the rifles used in Africa know as little about how they would perform in a hot climate as the people designing the universal credit know about having to work for a living?

Good comparison smile

I also understand that the ammo box lids were screwed down, and nobody thought to bring a screw driver, so they had to be forced open, which damaged the paper thin brass cartridge cases.

Sorry Shaun, yes indeed a mainly Welsh action.

Was only joking about the Thai husband thing but does seem a viable option. How are they on polygimous marriages. (maybe a mute question, as the wife may have something to say about it)

Shamus · Forum Moderator & Expert

Hi Bill,

Polygamy is now against the law in Thailand but it still goes on... However, Thai women are not the most understanding of people when it comes to this sort of thing and there is a hospital in Bangkok that specialises in sewing mens bits back on.

All in all if your married to a Thai woman and she tells you"Your right, I'm wrong, just go to sleep now" Grab what stuff you can and get out of there as fast as your legs will carry you.

... Think we've gone off topic again. lol

p.s. Sure that a British Government wouldn't make that sort of mistake with our troops guns again... Oh wait... They bought the SA80 didn't they that also doesn't work in extremes of temperature.

Don Tax · Expert

RE: Universal Credits - Centralised Deductions

Shamus · Forum Moderator & Expert

RE: Universal Credits

Don Tax · Expert

Hi Shaun, not at all..... I'd quite trust my Nana re-distributing family 'taxation' but not our law-makers. EG. MP's who play the property market with the London allowance when caught, wave a CGT cheque (whilst trousering the 82% gain). I'm ok with communism as long as it's voluntary and not on a national basis.

Interesting you should mention monastries. I read once that although Bishops lived like princes, on the whole, Abbots didn't and three quarters monastry income was spent on welfare, hospitals alms etc. In other words, it was the NHS of the day and not fully replaced for 300 years. I don't know how far you'd need to go back before you'd find the main European support system was family based and wonder why it survived in SE Asia.

Can't help thinking of the Thatcher quote "There is no such thing as society. There are individual men and women, and there are families". I knew one chap who had great hopes that Credit Unions would begin to serve the same needs that mutuals and co-operative societies did but they don't seem to have taken off in a big way in this country even with bank branches closing in villages.

Anyway, I wonder what Iain Duncan Smith will reply to the APPTG report.

Tim

Shamus · Forum Moderator & Expert

I think that the issue Tim is that Governments try to scale and enforce idea's that work in micro environments but with the pure intent of costs saving which is at odds with the principle of the matriarcic family unit.

It may only be coincidence but the matriarcic system only seems to work where there are basically no (enforced) taxes so it may well be that Western Governments worst enemy for such approach is their own tax system.

The UK tax system was brought in as a temporary measure to pay for the Napoleonic wars so my guess is that would be a good starting point to look for when we began to stray from the family unit to insular existances.

Whoa, sounds as though we've got the starts of a thesis here!

Actually, last thesis that I did was on how Western outsourcing is destroying India specifically in relation to banking market creation strategies.

Shaun.

Wella · Expert

The UK tax system was brought in as a temporary measure to pay for the Napoleonic wars so my guess is that would be a good starting point to look for when we began to stray from the family unit to insular existances.

So what you are saying is it is the French we have to blame for our tax system?

Don Tax · Expert

LOL Bill yes, we can blame the French, but even more so for VAT.

Ahh, I was wondering about the first reference to shipping bank work to India.

Shamus · Forum Moderator & Expert

Hi Tim,

The banks have saturated Western markets with their products and no matter how much they cross slice the cake it is still a cake of finite size.

Moving work to India didn't start with the banks but the opportunities that it opened were not lost upon them.

Major outsourcing / offshoring companies (currently) pay rates a lot lower than the west but attract the best graduates by paying high rates for India. People working in these environments aspire to a better life which has created a market for financial products.

And of course, demand forces up prices increasing bank profits.

The issue of course is what happens when wage demands in India make it more expensive to outsource there?

Already we have seen situation where Indian outsourcing companies have outsourced work outsourced to them to the Phillipines, South America and China.

This caused a banking strike in India as quite rightly they have great price in their outsourcing industry and the actions of some of their firms in offshoring work sounded the first chimes of midnight for them.

Goldman Sachs paper 99 (dreaming in BRICs) envisages that the true powers by 2050 will be Brazil, Russia, India and China. Although my own view is to liken this to a horse race where India took the lead too early which in reality has only made it a target.

My own money would be on China being the real world superpower by 2050 as they are enjoyed astronomic growth but with such growth shackled to a developing infrastructure.

India on the other hand is seeing some becoming incredibly rich whilst the infrastucture is not keeping pace with development.

Will the banks be burned in India? Maybe. debt repayments are tied to peoples ability to repay and when outsourcing moves on then unless real business is in place to replace it the country will fail. I think that companies suh as TATA see that and have a very diversified portfolio.

Looking forwards the world is becoming a single market place and prices / costs will over the next 100 years become global costs and prices with a return to wealth based upon the natural resources that a country possesses.

Wella · Expert

Shamus wrote:
.......
Looking forwards the world is becoming a single market place and prices / costs will over the next 100 years become global costs and prices with a return to wealth based upon the natural resources that a country possesses.

By which time, we will have exported all ours out in the form of raw materials, and finished products. Our own natural resources will be imported back to us in the form of scrap metal from the magnates of foriegn countries.

It is no wonder that it has become viable to re open tin mines down here.

Don Tax · Expert

Shamus wrote:
.........My own money would be on China being the real world superpower by 2050 as they are enjoyed astronomic growth but with such growth shackled to a developing infrastructure.

Mine too Shaun, although I could quite see the boundaries of China shrinking. I believe it is quite diverse linguistically, and I can't see them holding Tibet forever. I bet half the chinese imported there don't want to be 10,000ft above sea level, lol.

The Muslim areas in central Asia don't seem overly contented either. The more people are economically liberated the less they'll have in common with a centralised dictatorship. Who knows, a push for autonomy in special economic zones far from Beijing?

Don Tax · Expert

Just to bring this back on the original track, the LITRG have cottened on to the self employed requirements for Universal Credits and written to the Minister for Welfare Reform. They make almost exactly the same points to everyone at the beginning of this thread.

http://www.litrg.org.uk/Resources/LITRG/Documents/2012/07/Letter_to_Lord_Freud_120712_final.pdf

Marky65 · Guru

Thanks for posting the link to the letter

They have obviously been reading the beginning of this thread, shame the forum didn't get an acknowldgement :)

Mark

Don Tax · Expert

Well the July APPTG report was simply brushed aside due to it's continued reliance on Centralised Deductions (HMRC operating PAYE)

Lets see if the Works and Pensions Committee fare any better.

http://www.litrg.org.uk/News/2012/work-and-pensions-committee-of-mps-scrutinises-universal-credit