Tax Credits assessment methods

James_Wilson_971

Hello all, I was wondering if there might possibly be any real tax credits experts on here; sort of, ex HMRC tax credits people.

I know I'm eligible and that they'll assess me on the current tax year's income (after an initial assessment based on last year's income; since my taxable profits - I'm self-employed - have fallen this year...so they'll give me the tax credits appropriate to my income this year). So, basically, I know I'm eligible for a certain amount of working tax credits.

I'm not really concerned with details about how to submit the form or when I need to fill in any subsequent declarations etc.

I was wondering how HMRC view new tax credits claims. Given I'll have to submit tax returns as well - I'm self-employed as mentioned - for the current year and onwards (I've already put one in for the 'previous' tax year, ie 2009-10), does the fact that you're suddenly claiming tax credits mean you're more likely to get hassling queries/enquiries from HMRC when they consider whether to 'look in to' your return or not, please? Maybe it does because they've got all the more reason to double-check what you've put on your tax return about your income is correct (because on the basis of that information, they'll be allocating money to you in the form of tax credits). So, does it lead to more scrutiny of your tax return? Is this part of the procedure when they get a tax return and they can look up your records and see you've now claimed tax credits? (Or maybe it comes up automatically for new claimants, with some flag on your tax return files?)

Alternatively, do the tax credits people actually look in to individuals' positions like the HMRC can do with tax returns people? or is the tax credit people's job (they are also based at HMRC but on a different side presumably) more just administrative, doing the number crunching and sending out awards letters and the like. Can they/do they scrutinise individuals' positions in the same way the HMRC can over a tax return (if they so decide)?

The reason for wanting to know is just...well to fill out my understanding of what applying for tax credits may involve, now or later. I am aware of other areas relating to claims (having looked at these useful forums, eg). Basically, I am averse to hassle and suchlike, indeed I am trying not to claim any other benefits despite being on a low income, which is a challenge in a city; I want to avoid paperwork and the idea of anyone making hassle for me in life so, such details affect my whole thinking. Though maybe I am being a touch paranoid also (!).

Many thanks in advance for responses!

James

James_Wilson_971

Just one other thing if any real experts are reading this. Does it set off actual alarm bells if you've *not* been claiming other benefits but you claim tax credits? I was thinking it was a good thing, for me not to have been claiming other benefits in the past two years, despite being on a low income - which I've been able to do by staying with friends or being a lodger on a fairly low rent (instead of claiming housing benefit and living in a better place...). However, while it seems like a good thing to have avoided claiming housing and council tax benefit...maybe it hasn't been if it means HMRC, if I make a tax credits claim now, would regard my position as 'suspicious' and therefore want to make queries/an enquiry (because they might, I guess, think my taxable profit figures were underdeclared on my tax returns...wondering how I managed to live the last couple of years on not much money...). It seems like, I've lived extremely cheaply, and been real disciplined to achieve this; but as a result of that and not claiming benefits, maybe (I dunno) I might be more likely to get queried by the tax credits people or HMRC in general, because they would actually have *expected* me to claim benefits rather than live cheaply without claiming them! Is that right? Will I look mysterious to them and therefore more liable for some hassling enquiry/queries?!

Many thanks for any input.
Cheers
Jim

bmj191

Hi Jim,

I'm not an expert in any way, but just wanted to say try not to worry.
I also got nervous about applying to tax credits after a bad experience a few years ago, but at the end of the day, you are claiming for something legitimately and running -hopefully- an honest business.
I had no problem after submitting my first tax return this year. After submitting I rang tax credits and informed them of how much I earnt last year, as simple as that.
As long as you have your books up to date, receipts, etc you've nothing to hide.
Or if your books do need work, do them now, then relax knowing if anything did get questioned you could produce everything immediately and show them everything is correct.
Try not to worry, get it all up to date if needs be, then relax and enjoy working for yourself.

Best of luck :-)

zagfles

bmj191 wrote: »

Hi Jim,

I'm not an expert in any way, but just wanted to say try not to worry.
I also got nervous about applying to tax credits after a bad experience a few years ago, but at the end of the day, you are claiming for something legitimately and running -hopefully- an honest business.
I had no problem after submitting my first tax return this year. After submitting I rang tax credits and informed them of how much I earnt last year, as simple as that.
As long as you have your books up to date, receipts, etc you've nothing to hide.
Or if your books do need work, do them now, then relax knowing if anything did get questioned you could produce everything immediately and show them everything is correct.
Try not to worry, get it all up to date if needs be, then relax and enjoy working for yourself.

Best of luck :-)

Agreed. I'd expect them to be more suspicious if you DON'T claim WTC (how's he living on that?? how can he afford not to claim WTC??).

Also some people do seem to make a big moral distinction between ripping off the taxpayer by not paying all the tax they should be, and ripping off the taxpayer by claiming benefits they're not entitled to, when the end result is exactly the same. So a self employed person who IS ripping off the system by not declaring all of his earnings may not feel guilty about that, but may feel guilty if starts claiming WTC.

So all in all I'd suggest that claiming WTC is LESS likely to result in HMRC being suspicious...