Tax credits help needed!

ynwa

Hi. I'm self employed and I think I've been totally thick and messed up my last few tax credits claims.

Basically what I did last year is enter my profit from my 2006-07 tax return when in fact I think I needed to put my 2007-08 profit (which I didn't have so should have estimated). I've realised this because my new application form is asking for 08-09 which I haven't got yet.

As it happens my 07-08 profit is substantially higher than my 06-07, so it would appear I've been over paid tax credits. I'm assuming whether I tell them or not they'll find out and probably tell me they want some money back.

The time has come to apply again but whilst I'm probably entitled to something, I'm wondering if it might be best to not re-apply, but not sure if it'll make the slightest bit of difference.

I'm a complete dunce-cap when it comes to this, so if anyone can work out what I'm on about and offer any advice it'd be much appreciated.

System

They will eventually realise that the profit you declared on your tax return does not match what you declared on your tax credit declaration. I would advise you to let them know the error and continue to complete your annual declaration for this year as usual, using estimated income if your books aren't ready yet.

The reason I suggest this is so that your claim remains open. You think you might have an overpayment and if you do then it is easier for them to claw back that overpayment via your current claim rather than demand it back in one lump sum. If you don't do your annual declaration your claim will terminate and they will ask for all monies owed back at once.

Not wanting to doubt your business acumen but in the current climate lots of self-employed people are finding that business in not as good as it was. If that happens to you your entitlement to tax credits may increase and so there will be more money available, via your claim, for TCO to claw back for any overpayment you may have.

I hope that makes sense.

ynwa

Many thanks for that, I'm hoping they'll do as you say and simply reduce or end my payments rather than ask for any back, but I guess we'll see. I can't believe I've made this mistake, I must have just assumed that I should use the last tax return I had available. Hopefully it'll teach me to read through things properly in the future.