Tax credit renewal going back to 2014 why?

wee_minnie

We received the renewal pack and they are looking info on 14/15 as well as 15/16 even tho I obviously already renewed last year? Why is this? The only reason I can think of is that it went from a single to a joint claim but they are asking for my husbands details for 14/15 but we were separated for a year that time and through a lot of work we reconciled (he became a recovered alcoholic and it took him a year to sort himself out and see the light) and as soon as this happened I contacted them to make a joint claim so I don't understand what I have done wrong 😮
To make matters worse, we had a rental property which we had to still maintain while we were separated. I paid for the mortgage on it which I have proof of along with rent coming in showing a loss. I contacted the helpline and at the time they said put '0' for other income, but since then I seen another work sheet saying that this can be counted as a deduction for tax credit purposes? But for the year that we were separated can I do it for that as his name was on mortgage? He was unemployed and living in a different house and as he had no income that's why we mutually agreed I would pay the mortgage. Can I renew over the phone as I would prefer to speak to someone in case I fill in the form wrong

Darksparkle

Your post doesn't make it clear when you were with your partner and when you were single.

As tax credits is based on the previous year's income (subject to changes in the current year) if you were together at any point in the 2015/16 tax year, you need to confirm the 2014/15 income. This is the same for everyone.

On your tax return for 2014/15 and 2015/16 what did it show for property income? A profit or loss?

From TC825 -

Note 3 – property income
Letting property does not constitute a trade, so should not be included in any income from self-employment.
Rental property
If you have a rental property that made a loss, relief for tax credits purposes is generally given in the same way as for Income Tax. If you made a loss, include ‘0’ in respect of this income in your calculation of ‘other income’ for the year.
Losses on property income
Normally, the loss should be carried forward and set off against profits from the same source in the following tax year. Since 6 April 2011, the same rule has applied to furnished holiday lettings, including losses unrelieved at 5 April 2011. If, however, part of the loss arises from capital allowances or from agricultural land, that part
of the loss may be set against other income which you – but not your spouse or partner – may have, either in the tax year in which the loss was made or in the following tax year.
In such cases, the amount of loss relief available for tax credits purposes is based on your tax calculations.

Alice_Holt

Did you have a TC claim as a couple (joint), then claimed as a single person, then reclaimed as the same couple in a joint claim?
If HMRC are now asking for your husband's income during the period of your single claim, it may be that HMRC do not think the separation was intended to be permanent .
HMRC may decide to re-assess your TC claim as a joint claim rather than a single claim. If HMRC issue you with an overpayment for the period of your single claim, do get advice from the CAB / local advice centre.

Some info here;
http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/understanding-living-together/

Married couples and Civil Partners

Two people who are married or civil partners will always be classed as a couple for tax credits purposes unless:

(a) they are separated under a court order; or

(b) they are separated in circumstances in which the separation is likely to be permanent.


The second exception is much more problematic and more frequently used by HMRC when investigating a claim.

The starting point if HMRC assert that a couple are separated in circumstances that are likely to be permanent is to ascertain from HMRC whether HMRC are suggesting that there is no separation at all (and therefore the question of whether it is likely to be permanent is irrelevant) or whether they agree there has been a separation but they believe it to be temporary in nature.

There has been little case law on the issues relevant to married couples and civil partners. The recent case CTC 1487/2013 involves a married couple who have separated and raises the importance of considering whether the separation is likely to become permanent and another leading case R(TC) 02/06 (CTC 1630/2005) which contained the following important passage:

‘Before concluding that a separation is unlikely to be permanent, the tribunal must consider why the separation has occurred and what indications there are that the couple may be reconciled and must conclude that there is at least a 50 per cent chance of a reconciliation. It is unlikely that such a reconciliation will occur before the parties have taken steps to deal with the problems that led to the separation in the first place, and have actually begun the process of arranging to live together again. A tribunal should be slow to differ from the claimant’s own genuine assessment of the likelihood of a reconciliation, although that is a subjective assessment and the tribunal is not bound by it.’


Where the claimant says they are separated from their husband or wife HMRC are likely to continue to treat them as a married couple unless the evidence shows they are separated and it is likely to be permanent. If this proves to be the case then you can appeal the HMRC decision, but will need to show (and provide evidence) that it was intended the separation would be permanent.

Darksparkle

Alice_Holt wrote: »

Did you have a TC claim as a couple (joint), then claimed as a single person, then reclaimed as the same couple in a joint claim?
If HMRC are now asking for your husband's income during the period of your single claim, it may be that HMRC do not think the separation was intended to be permanent .
HMRC may decide to re-assess your TC claim as a joint claim rather than a single claim. If HMRC issue you with an overpayment for the period of your single claim, do get advice from the CAB / local advice centre.

Some info here;
http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/understanding-living-together/

Married couples and Civil Partners

Two people who are married or civil partners will always be classed as a couple for tax credits purposes unless:

(a) they are separated under a court order; or

(b) they are separated in circumstances in which the separation is likely to be permanent.


The second exception is much more problematic and more frequently used by HMRC when investigating a claim.

The starting point if HMRC assert that a couple are separated in circumstances that are likely to be permanent is to ascertain from HMRC whether HMRC are suggesting that there is no separation at all (and therefore the question of whether it is likely to be permanent is irrelevant) or whether they agree there has been a separation but they believe it to be temporary in nature.

There has been little case law on the issues relevant to married couples and civil partners. The recent case CTC 1487/2013 involves a married couple who have separated and raises the importance of considering whether the separation is likely to become permanent and another leading case R(TC) 02/06 (CTC 1630/2005) which contained the following important passage:

‘Before concluding that a separation is unlikely to be permanent, the tribunal must consider why the separation has occurred and what indications there are that the couple may be reconciled and must conclude that there is at least a 50 per cent chance of a reconciliation. It is unlikely that such a reconciliation will occur before the parties have taken steps to deal with the problems that led to the separation in the first place, and have actually begun the process of arranging to live together again. A tribunal should be slow to differ from the claimant’s own genuine assessment of the likelihood of a reconciliation, although that is a subjective assessment and the tribunal is not bound by it.’


Where the claimant says they are separated from their husband or wife HMRC are likely to continue to treat them as a married couple unless the evidence shows they are separated and it is likely to be permanent. If this proves to be the case then you can appeal the HMRC decision, but will need to show (and provide evidence) that it was intended the separation would be permanent.

If they were investigating whether or not it should have been a single/joint claim, OP would have had a letter from compliance. It wouldn't simply be a case of asking for the income on the renewal.

wee_minnie

Your post doesn't make it clear when you were with your partner and when you were single.

As tax credits is based on the previous year's income (subject to changes in the current year) if you were together at any point in the 2015/16 tax year, you need to confirm the 2014/15 income. This is the same for everyone.

On your tax return for 2014/15 and 2015/16 what did it show for property income? A profit or loss?

Thank you so much for your reply, yes we were separated from Feb 2014 - March 2015, so on the renewal do I put my partners income for the whole year of 2015 or can I put it down for the few weeks from March -April 15? Sorry just really confused.




On your tax return for 2014/15 and 2015/16 what did it show for property income? A profit or loss?

We each filled in a tax return for the property both when we were separated and when we got back together, the property has always made a loss and it is negative equity. For the 2015 tax return the account made the loss as £5000 and he allowed as my share £2500 as it was a jointly owned property, he said that it didn't matter that I was paying the mortgage it still had to go as joint.


Normally, the loss should be carried forward and set off against profits from the same source in the following tax year. Since 6 April 2011, the same rule has applied to furnished holiday lettings, including losses unrelieved at 5 April 2011. If, however, part of the loss arises from capital allowances or from agricultural land, that part
of the loss may be set against other income which you – but not your spouse or partner – may have, either in the tax year in which the loss was made or in the following tax year.
In such cases, the amount of loss relief available for tax credits purposes is based on your tax calculations.


The loss has never been outset against other years as the loss keeps getting carried forward, I can't see a box on the renewal form where I can put this in or maybe I am being thick it really just isn't clear to me. I earned 16,000 that year, where do I put the loss of income from the property? Do I deduct it from my salary?

wee_minnie

Alice_Holt wrote: »

Did you have a TC claim as a couple (joint), then claimed as a single person, then reclaimed as the same couple in a joint claim?
If HMRC are now asking for your husband's income during the period of your single claim, it may be that HMRC do not think the separation was intended to be permanent .
HMRC may decide to re-assess your TC claim as a joint claim rather than a single claim. If HMRC issue you with an overpayment for the period of your single claim, do get advice from the CAB / local advice centre.

Some info here;
http://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/understanding-living-together/

Married couples and Civil Partners

Two people who are married or civil partners will always be classed as a couple for tax credits purposes unless:

(a) they are separated under a court order; or

(b) they are separated in circumstances in which the separation is likely to be permanent.


The second exception is much more problematic and more frequently used by HMRC when investigating a claim.

The starting point if HMRC assert that a couple are separated in circumstances that are likely to be permanent is to ascertain from HMRC whether HMRC are suggesting that there is no separation at all (and therefore the question of whether it is likely to be permanent is irrelevant) or whether they agree there has been a separation but they believe it to be temporary in nature.

There has been little case law on the issues relevant to married couples and civil partners. The recent case CTC 1487/2013 involves a married couple who have separated and raises the importance of considering whether the separation is likely to become permanent and another leading case R(TC) 02/06 (CTC 1630/2005) which contained the following important passage:

‘Before concluding that a separation is unlikely to be permanent, the tribunal must consider why the separation has occurred and what indications there are that the couple may be reconciled and must conclude that there is at least a 50 per cent chance of a reconciliation. It is unlikely that such a reconciliation will occur before the parties have taken steps to deal with the problems that led to the separation in the first place, and have actually begun the process of arranging to live together again. A tribunal should be slow to differ from the claimant’s own genuine assessment of the likelihood of a reconciliation, although that is a subjective assessment and the tribunal is not bound by it.’


Where the claimant says they are separated from their husband or wife HMRC are likely to continue to treat them as a married couple unless the evidence shows they are separated and it is likely to be permanent. If this proves to be the case then you can appeal the HMRC decision, but will need to show (and provide evidence) that it was intended the separation would be permanent.

Hi thanks, but we were separated with no intention of getting back together and he had a separate bank account, separate bills etc and he lived at a different address. I suppose none of us knows what's around the corner and when he addressed his issues it made the decision to get back together. If they need clarification on this I have all of the utility bills for myself and the children all in my name at that period of time

Darksparkle

wee_minnie wrote: »

Your post doesn't make it clear when you were with your partner and when you were single.

As tax credits is based on the previous year's income (subject to changes in the current year) if you were together at any point in the 2015/16 tax year, you need to confirm the 2014/15 income. This is the same for everyone.

On your tax return for 2014/15 and 2015/16 what did it show for property income? A profit or loss?

Thank you so much for your reply, yes we were separated from Feb 2014 - March 2015, so on the renewal do I put my partners income for the whole year of 2015 or can I put it down for the few weeks from March -April 15? Sorry just really confused.




On your tax return for 2014/15 and 2015/16 what did it show for property income? A profit or loss?

We each filled in a tax return for the property both when we were separated and when we got back together, the property has always made a loss and it is negative equity. For the 2015 tax return the account made the loss as £5000 and he allowed as my share £2500 as it was a jointly owned property, he said that it didn't matter that I was paying the mortgage it still had to go as joint.


Normally, the loss should be carried forward and set off against profits from the same source in the following tax year. Since 6 April 2011, the same rule has applied to furnished holiday lettings, including losses unrelieved at 5 April 2011. If, however, part of the loss arises from capital allowances or from agricultural land, that part
of the loss may be set against other income which you – but not your spouse or partner – may have, either in the tax year in which the loss was made or in the following tax year.
In such cases, the amount of loss relief available for tax credits purposes is based on your tax calculations.


The loss has never been outset against other years as the loss keeps getting carried forward, I can't see a box on the renewal form where I can put this in or maybe I am being thick it really just isn't clear to me. I earned 16,000 that year, where do I put the loss of income from the property? Do I deduct it from my salary?

You cannot deduct it from your salary, you can only deduct trading income from your salary.

You can deduct it if the property makes any profit in the future which is the same as its treated for tax purposes.

Alice_Holt

wee_minnie wrote: »

Hi thanks, but we were separated with no intention of getting back together and he had a separate bank account, separate bills etc and he lived at a different address. I suppose none of us knows what's around the corner and when he addressed his issues it made the decision to get back together. If they need clarification on this I have all of the utility bills for myself and the children all in my name at that period of time

That is all helpful stuff to keep just in case HMRC try to maintain otherwise.

I hope HMRC wouldn't, and didn't wish to alarm you, but thought it may be useful if you were aware of HMRC's stance.

NYM

:huh:

https://forums.moneysavingexpert.com/discussion/comment/35765753#Comment_35765753