Terms & Conditions

[ROBCRIDDLE]

Hi, I have an interesting case where a customer is disputing an overpayment created. The O/P has arisen because on a recent review they declared that they had some additional income on occasions where the partner has sold a painting here and there. Upon further investigation, this had been going on since the start of the claim, 2014 ish, no records were kept of sales / expenses and we were provided with estimates of net income in order to calculate entitlement. I would point out that the art is put up in local galleries, which they have to pay for, and also listed for sale on facebook and other websites. The customer’s partner also has a linkedin page describing them as a self-employed artist.

They insist it’s a hobby, not self-employment. They are not registered with HMRC so they do not have a UTR number. We have therefore included it as a misc. income, which I do not know whether the Pension Age Regs allow.

The estimated net income is low enough that earnings disregards would wipe it out, but I am not sure whether we can class it as self-employed income, whether we can allow expenses as they do not have a UTR number, or whether they are actually self-employed at all!

I would welcome some opinions on this!

[pbirks]

well, tghe see themselves as self employed enough to hacve a linked in page that says they are self employed and they advertise their work on social media, websites and galleries.

do something you love and its never work, but this looks to be self employment!

[Mike Hughes]

Self-employment is defined by numerous factors including tax and employment law and how the person may have described themselves is but one of those and, depending on other evidence, it may be a fairly inconsequential factor at that. I may describe myself as a “comic genius” or “superb acoustic guitarist who has played on multiple best selling recordings”. Would you take that at face value or conclude I am a deluded fantasist? Perhaps the correct answer just might be that further investigation is required.

Might I also venture to suggest that the correct term for “additional income on occasions” is… capital.

[peterdelamothe]

I use this type of example in an hbinfo training course.

Dictionary definition of income…..money that is earned from doing work or received from investments:

I am dubious that this is income. I doubt this is how they pay for their living. They are retired and in receipt of pension income I take it.

Painting materials are expensive. They may be selling bits and pieces to cover costs but are they making a profit? Is this earnings? I suspect HMRC wont be interested unless the paintings sell for a decent amount. You can buy very good amateur paintings for a few pounds at auction. I bought one for £3 once. Picture of a ship. Sold it for £20.

So you take it to Tribunal and the first question to you is “are you suggesting this couple are committing tax fraud”? Hard to answer because you are really.

Personally I dont think this is income or capital but if YOU decide it is you cannot just ignore the rest of the regs. If they are self employed in your view then you must deduct expenses, notional tax (not NI if pension age but notional income tax ) and then take off earnings disregards as appropriate. That leaves a figure of nil to add.

This cannot be “other income” in any instance in my view. They are painting. That is either work or income or it is not. See the definition above.

[Mike Hughes]

There is long-standing case law which supports the contention that such things must be income or capital. There is no “neither” option. As they’re apparently a pensioner there’s also no provision for the capital to be treated as income. Unless the OP has some facts to which we have to be privy this is straightforward capital for me.

The dictionary definition of “income” has little relevance here. The benefits definition is quite specific with regard to frequency and periodicity.

[peterdelamothe]

Mike. The question was also about tax/hmrc and not just about benefits. A Tribunal would certainly be interested in that issue and it is very relevant in my view. “Benefits” does not exist in a vacuum even though for many of us long termers on here we probably think it should!

[Mike Hughes]

Thus the opening sentence of my last but one post.

[John Boxall]

Interesting……..

Like Peter I have bought a painting in an exhibition, I also got a photo on the front page of what was then the Bristol Evening Post in about 1990. Funnily enough the Clevedon paper also used it and paid better.

The photo sale was a one off, I was just in the right place at the right time and its the only one I have managed to sell so clearly it isnt ‘income’

On the other hand some years ago I interviewed a claimant who liked to go to Rock Concerts, he had the right equipment and contacts and managed to get a picture published from most of the concerts he went to.

Was that income? We discussed it, he went to concerts to take pictures – Rock and photography were his hobbies but did he manage to sell enough photo’s to make it a business? Interesting question that we didnt come to a decision over.

Now in this case as far as I can see if you have decided that its an income then as Peter has said the only classification you can give it is that its profits from Self Employment.

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

Wilkins Micawber, Ch12 David Copperfield

[Mike Hughes]

I am going to say “capital” one more time. It’s not screaming work done in expectation of payment.

A “self-employed artist” has an element of oxymoron about it and says nothing. None of the other evidence being put forward here makes an especially compelling case for employment let alone self-employment.

[Kevin D]

A rare dip into contentious waters….

The legal test, paraphrased (a lot): …gainfully employed, other than as an employee

Depending upon the frequency of “sales” and the amount(s) being obtained from sales, the facts as stated seem to point towards this money being capital, just / on the balance of probability. If the frequency justifies, then income but it’s hard to see how it’s unearned income – surely it must be earnings (self-employed). As a pension-age case, I can’t see how it fits into any of the “income” types if not s/e.

Cautionary note: be wary of info on LinkedIn profiles, especially where that info is by way of drop-down menus and/or limited by specified options on the site. As far as I can see, the options don’t allow for “hobby” or “pursuit” or similar. Arguably, hobbies / pursuits shouldn’t be in that section of the profile but there doesn’t appear to be anywhere else for that kind of “crossover” scenario.

• This reply was modified 2 months, 3 weeks ago by Kevin D.

[Mike Hughes]

Very good point re: LinkedIn. I had forgotten that. I quit it years ago having been one of many whose personal account and email address was hacked.

I will also keep pushing the “this is capital” angle on this.

I note that work is work done in expectation of payment. If you paint some pictures and some sell and some don’t then it’s hard to make a case that’s in “expectation” so much as it’s nice if one sells but no crisis if they don’t.

This is one of the least compelling and most circumstantial cases for “income” I’ve come across in a while.

[John Boxall]

If the claimant declares it as income surely in the first case it is income?

Clearly if we were to treat it as Capital AND it took them over the £16000 limit then there may be a more ‘interesting’ argument, but as far as I am aware this is not the case.

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

Wilkins Micawber, Ch12 David Copperfield

[Mike Hughes]

I think if the declaration was as the OP described i.e. “additional income on occasions”, which for me is the very definition of capital then deciding it’s income before anything else would be unjustifiable.

[ROBCRIDDLE]

Thanks for the comments all. I will weigh all of this up with the evidence I now have!

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