Thursday, July 17, 2008

Have you renewed your tax credits claim?

Renewing claims
If you have been claiming tax credits you should now be familiar with the need to renew claims by 31 July. Failure to renew claims on time is a reason for many substantial overpayments. The overpayment arises because payments between

5 April 2008 and 31 July 2008 are ‘on account’. There is no valid claim until the renewal pack information is given to HMRC. If a claim lapses, a new claim is needed and this can only be back dated for 3 months.

So even if a fresh claim is made immediately, one month’s entitlement has been lost. This is so even if your circumstances have remained the same.

Renewal may be made by phone or by post. It is important not only to renew the claim, but to check that the Tax Credit Office has actually processed the renewal. When you have renewed your claim you should receive a final award notice for 2007/08 and a revised award notice for 2008/09. If you do not receive these you should contact the Tax Credit Office to check if the renewal has been properly processed.

To reduce the dangers associated with late renewals, HMRC has introduced some additional procedures this year:

Claimants who are considered to be at risk of failing to renew will be pro-actively contacted by the Tax Credit Office.

A 30 day waiting period has been formally introduced. This means that claimants who contact the Tax Credit Office within 30 days of the deadline and provide all the necessary information will have their claims re-instated. But with payments stopping and starting, there is a lot more scope for things to go wrong – so renew before 31 July to be sure!

If you renew by post close to the deadline it is wise to send the papers by recorded delivery. If you renew by phone, take details of the date and time of the call (and if possible the adviser’s name) so that a recording of the call can be located easily if there is a dispute later.

Do not delay your renewal because you do not have confirmed income figures. There are two particular circumstances which we have come across where provisional figures might need to be included before confirmation:

Self employed individuals whose accounts have not been finalised
Employees earning less than the taxable earnings threshold – who are not entitled to a P60 (as there have been no deductions of tax or National Insurance). A statement of earnings from your employer may be the only information you have

Do not delay your renewal in these cases. Instead provide the best information you have and tell the Tax Credit Office if the figure is estimated. If you give an estimated figure, you must contact the Tax Credits Office by 31 January 2009 to give the final figures.

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