Help, self assesment & overpayment tax credits

partypoma

Oh no!
I am slightly shaking in my boots!
I started a business from scratch when my 4 year old son was born. It seemed a better option than returning to a minimum wage job when childcare is so expensive and as a single parent I was able to work from home for the first year.
The 1st full year of propper trading was the 2008/2009 tax year where my income was £12,000 or there about. For the past 6 years I have had an accountant deal with my self assessment for me, I usually have little contact with them, I just send the details to them and they send me back the tax form completed and a letter saying how much I have to pay (if any) and a letter for tax credits confirming my income and estimating the income for the next year. When I got this letter last year estimating £10,000 for the next year, I phoned it through as I had expansion plans, but added a few thousand to the estimated figure to account for that. The man on the end of the phone was very sympathetic and said not to worry you have a 25k boundery.... lol I thought this was fine.

I was summonsed to my accountants office today to my surprise.. Had to be today, he has obviously glanced over my return for 2009/2010 and as he said it was an unprecidented shock. He said that it was very rare to see such a dramatic growth.. ect ect and appologised ect. A bit of a shock to me too, though I knew I was doing quite well didnt realise how well. Anyway, I think my income for 2009/2010 will be around 35k. have to say I am quite happy that that is good, but obviously I have an enormous tax bill to pay at the end of this week. I have the money in the bank its no problem and I have also formed a ltd company today to try to "salvage" 2010/2011... I have been however recieving tax credits since april 2009 at the rate of a single parent earning 12k. Ok, so I would be able to find the money to pay the tax credits over 2 years back however it would take all of my expansion plans for the business for this year and the following to an abrupt hault. I know that I will probably get shot down in flames for recieving money that I technically do not need, whether knowing it or not, BUT! please bear in mind that throughout the past year I have been able to create 3 flexible part time perminant jobs to 3 employees who happen also to be single parents.

Please do not get me wrong, I have not spent any excess money, any money is still in the bank. I have been living semi frugally for the past couple of years putting all money back into the business as I was under the impression that this would be better for the future. My expansion plans over the next year would involve buying property and employing more people. These plans are slightly dashed though. Well to start with I am looking at 11k income tax, also vat payment, then if I have to pay tax credits back for the past 2 years its another 12k, it leaves a serious dent!

Any Advice comments will be welcomed and taken on board!
Sorry for such a long post! Thanks in advance for reading it!