Help with tax credits

Help with tax credits

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Just a bit of advice on the tax credit system....

I have received a letter from a former client refusing to pay our outstanding fees. He thought we were too expensive and has now moved to an unqualified....

However, in his letter he also complains with the way in which we dealt with his tax credit claims. I belive the claim is spurious, but just don't have anything on the file which is persuasive either way.

Anyway, firstly in a meeting last June I provided him and his wife with details of their income for 2003-04 and his wife telephoned the Inland Revenue with the information (I don't think this is in dispute). He also states in his letter that he informed the Revenue of his chenge in circumstances when his wife left him at the end of June 2004!

Then, apparantly, there was a tax credit form to fill out and return to the tax credit office. Apparantly this wasn't dealt with and he has now lost tax credit for the period from 8 August to 7 March.

Does anyone know why the tax credit office would have needed a form to be filled in as it would appear to me that they received all the information they required over the phone?

In what circumstances would a return be required to the tax credit office by 31 January? Is this only where provisional information was given to them before to 30 September deadline? Is is possible that the problem has been caused by him missing the 31 January deadline?

Anon

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By AnonymousUser
07th Jul 2005 08:37

Aint Tax Credits a nightmare?
There are some fundamental changes in circumstances (such as separation, or "marriage") that cause an existing tax credit claim to come to an end and a new claim required. A new claim has to be in writing and can only be backdated for 3 months.

You can use the telephone to cancel a claim, or to request a new claim form, or to renew a claim that does not require cancellation/replacement with a new claim (ie notification of income details).

Unless the respective responsibilities of the parties (client v agent) are set out clearly at the outset there is considerable scope for dispute.

From the point at which you were aware of the marital separation I suspect that you are onto a loser in respect of subsequent delays, unless there is documentary evidence that your initial involvement was one-off assistance at which point your responsibility as advisor (on that aspect) came to an end.

The problem I perceive is determining the responsibility for inaction in the period from separation up to your being made aware of the separation.

The client will complain that you had not made it clear to him that he needed to advise you promptly of the marital separation, in order for you to advise of any immediate action then required.

You will counter-claim that (1) client had received correspondence from Inland Revenue that he had not advised you of, despite (I presume) standing instructions to forward IR documents to you, and (2) client had not advised you of marital separation promptly, despite that any reasonable person should anticipate that it would have financial consequences of interest to a professional advisor.

Who will win? I hate to guess, but my instinct is with the client, which is why advising on tax credits is such a mine field. Unless the fees are substantial I would be inclined to walk away, but I don't have the full facts.

In answer to your last question: yes, the 31 January "deadline" is the extension for replacing estimated figures provided by 30 September, and I do not expect this to be relevant to your case.

I would be interested to know if anyone has successfully had a tax credit claim backdated by concession in like circumstances, on the grounds that the system is so complicated that a taxpayer might reasonably think that he has fulfilled his statutory responsibilities.

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