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Renewal of Tax Credits by 31 July 2014

If you are a tax credit claimant you should have received your Annual Review and Declaration from the Tax Credit Office (TCO).

Unless you qualify for auto-renewal the Annual Declaration must either be completed and returned or renewed by telephoning the tax credits helpline by 31 July 2014. If you fail to do either this will result in your tax credits stopping and you may have to repay tax credits already received.

Following the introduction of Real Time Information (RTI) last year HMRC know the employment income of any claimant and use this information to prepopulate the Annual Review form. This is fine unless you are also self-employed as they do not include this income even if it is known. A lot of self-employed people prepare their annual accounts up to 5 April and a great many are unable to complete their annual accounts and tax computations by the end of July. In the past it was possible to adjust the income figures to allow for the estimated profit or loss incurred with final figures being submitted by the following 31 January. The TCO are refusing to allow the income figures supplied by HMRC to be amended. This can be particularly significant if you expect to make a tax loss possibly as a result of an exceptional Annual Investment Allowance claim. If losses are ignored by HMRC in calculating the employment income your tax credits will be less than they should be. We have received conflicting advice from the TCO with one officer claiming the original figures cannot be amended and another claiming they can. Neither officer was able to indicate the legislation which supported their statement!

This could be an unintended consequence of the RTI legislation or ill-informed interpretation of the changes to HMRC’s system but clearly it is unsatisfactory that this confusion exists but while it does any claimant who may be affected should make every effort to complete their 2013/14 tax return as soon as possible.

If you are experiencing problems because of these changes feel free to contact us to discuss your own situation in more detail to minimise the loss of tax credits due to you.

Addison & Co

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