Serious help needed for 6k tax credits overpayment appeal :(

shedboy94

HB58 wrote: »

I'm sorry that you are going through this. The tax credits system sounds terribly complicated and I don't see how the 'man in the street' can be expected to grasp the ins and outs!

I would suggest that you get some professional advice, your accountant might be able to help, otherwise try somewhere like CAB.

Too late now, I know, but I would advise anyone to follow-up any phone conversations relating to benefits with a good, old fashioned letter and ask anyone you speak to on the phone to do the same. That way you have hard evidence of anything you told them or they told you...

The Tax Credit system can be complicated, but at the end of the day - the tax year ends, you declare your income. If you wait 10 months to declare your income then 99 times out of 100 tax credits won't have the correct information so therefore won't be paying the correct amount. It is everyone's individual responsibility to ensure that tax credits hold the correct information.

tyllwyd

sillysally123 wrote: »

...I have to say probably some people reading this post are asking themselves well if you earned 32k/52k ect then why not just pay the 6k back. I just have to answer - most of this money was paid in other taxes ie income tax paye (of other employees) and national insurance, some was used to expand the business and employ more staff ect.

I would echo what another poster has said - are you sure you have given them the appropriate figures? Was £52K your taxable profit, or was it your turnover? If your taxable profit was in fact £52K, that is well into the 40% tax bracket, and I wonder if you should be thinking about setting up a limited company rather than trading as a sole trader, especially if your business has grown to the extent where you are employing staff. I think you need to go back to your accountant and check that you understand the figures he/she has given you (and then go on to ask if there is more you could do to set up your buisness in a way that is more tax-friendly).

But I do have sympathy with you complaining about the tax credits system - I'm self-employed, and I agree it doesn't work with the way that self-employed people pay tax. I did everything I could to avoid an overpayment a few years ago, telling them everything on time and overestimating my income, but they still managed to overpay me for a few weeks.

tyllwyd

shedboy94 wrote: »

The Tax Credit system can be complicated, but at the end of the day - the tax year ends, you declare your income. If you wait 10 months to declare your income then 99 times out of 100 tax credits won't have the correct information so therefore won't be paying the correct amount. It is everyone's individual responsibility to ensure that tax credits hold the correct information.

To be fair, it's not as simple as that for self-employed people. You often don't have the full information on your income for a particular tax year on the day that the tax year ends, which is why you have until the following 31 January to complete your tax return and pay any tax due. It's very common for tax returns not to be completed until the last moment in January, but obviously if you do that it gives very little time to also notify tax credits of your actual income figure by 31 January, which has caught the OP out.

sillysally123

Was £52K your taxable profit, or was it your turnover?

It was Taxable proffit. A limited company was formed on the first of Feb 2011 - you see it was a bit sudden and unexpected.

It's very common for tax returns not to be completed until the last moment in January, but obviously if you do that it gives very little time to also notify tax credits of your actual income figure by 31 January, which has caught the OP out

Thanks for pointing that out before I were to go on the phone shouting the odds at the accountant. However the thing is for 09/10 the deadline for making your tax return is 31st January 2011. The deadline for reporting your actual income to tax credits is the 31st Jan 2011. A deadline is a deadline, so whether I submit my actual tax return on the 2nd of April 2010 or 30th Jan it really makes no difference, Nowhere does it say on the tax credits page or in any letter that I was said anything other than the deadline was 31st Jan. There is no warning to submit actual income figures 10 months prior to 31st January. Yes also I think that people are not appreciating that this 52k was not paid to my personal bank account in monthly installments like wages. my tax year also changed in this year from oct-oct to april - apr. My personal expenditure for this year was 10k the other 42k was reinvested in to the business to buy new premises eventually. It is not a simple case of adding 12 payments and there ya go thats your yearly earnings. There is a need for an accountant to work out the tax and vat liability as it is very tricky thats why they get paid so much.

To be honest, I am really surprised that you own an apparently successful business but still don't see the sense in putting pen to paper. Especially when dealing with the likes of the tax credits department (or any offical Government body).

As a government body I would have expected them to be honnest. It is not fair to repeatedly tell someone on the phone that there is a 25k disregard and that I would not have an overpayment. I was told by more than one different advisor at different times. Clearly they have no clue how to even work it out themselves.

I think that I have come to realise that possibly the fact that I was giving highish estimates, and regularly calling them to increase it throughout the year was a waste of a phone call. The whole time my actual income was always being based on the 12k which wasn't clear at all. Why bother asking for an estimate if that's the case?

What suprised me was that TC couldn't provide any calculations to back up their overpayment claim - & as your overpayment is much larger than mine, I think there should be some onus on them to show "where it went wrong".

The same for me, no calculations they refused to tell me the figures I had told them and the dates I reported them. No clue how I am going to fill out this form when it comes. Does anyone know what the form looks like? Think I might pay a visit to consumer advise.