Tax Credit Office: FHL losses

SteveL88

Hi

I just wanted to check if this is the right board to discuss problems with the Tax Credit Office.

The dispute relates to the treatment of Furnished Holiday Let (FHL) losses in 2010-11. The Tax Credit Office maintains that the losses are not allowed to be deducted from total income in 2010-11 'because the law changed'.

I maintain that the law did not change as originally intended by the previous Labour government but was delayed until 2011-12 to allow for a consultation period. I have referred to HMRC documents which show this to be the case.

"At Budget 2009 the previous Government announced that the FHL rules would be withdrawn from 6 April 2010 (1 April 2010 for companies). That change will not now take place. Instead, the FHL rules will continue to apply during 2010-11, and the government will consult over the summer about plans to change the tax treatment of furnished holiday lettings from 6 April 2011 (1 April 2011 for companies)."

They do not accept this and have referred me to the Technical Manual (their bible) which says:

"Prior to April 2010 there were special tax rules concerning the commercial letting of furnished holiday accommodation, as although chargeable to income tax as property income, some of the tax treatments available to traders were available to qualifying landlords. From April 2010 any income from this source should be treated as property income."

I still maintain that this is referring to incorrect law: not only did special rules apply prior to April 2010, they will still apply until April 2011 per the HMRC document referred to above.

Because their Technical Manual says things changed from April 2010, I am unable to make any headway when phoning them. They are 'unable to comment'. We have ground to a halt.

In the technical manual it also states:

"The figure used for tax credit purposes should be the same as that agreed for income tax purposes".

HMRC have accepted my self assessment which deducted the FHL losses from total income. Therefore, I argue, the Tax Credit Office should accept the losses and reduce my income accordingly.

Has anyone else been on the receiving end of this ruling? Any ideas how best to proceed?

The impact of their decision as it stands is that we 'owe' them over £3k due to apparently overpaid tax credits. This is causing us a huge amount of stress.

Thanks in advance.

Steve

Icequeen99

You might get somewhere by contacting one of the tax charities like https://www.litrg.org.uk or https://www.taxaid.org.uk or failing that CAB.

IQ

SteveL88

Good idea. Thank you.