Child Benefits – the son of Tax Credits
I have often bemoaned the fact that the Government (HMRC) consults on some relatively minor issues and fails to consult on major issues such as the introduction of Tax Credits and its impending replacement Universal Credit. The proposals regarding Child Benefit (CHB) are a classic example.
The TC repayment fiasco caused numerous problems, but at least both members of a claimant couple would have submitted a joint application for the Tax Credits in the first place. This won’t be the case for CHB. Take a typical scenario – mother is the recipient of CHB and her partner is the main earner. The partner (I’m assuming he’s a male, he might not be the father) has no involvement with the CHB claim. The CHB claim would have been made by the mother at the time each child was born. The partner would have had no involvement with the claim – he might not have been on the scene at the time.
So what happens if the mother is reluctant to supply her partner with CHB details? What happens if the mother and partner have split up by the time the partner completes his 2013 Tax Return? He may never have had any involvement with the CHB claim, he never signed the original application, he never received any money, he has no idea whether the mother received any CHB or not because she considered it her business for her children. So how is the partner to obtain the information to complete the 2013 Tax Return? HMRC won’t tell the partner because it was the mother who was the claimant and HMRC aren’t authorised to divulge information to anyone else. And why should the partner be liable to repay CHB that he never claimed and never received?
But it gets worse. TC claimants supply their CHB claim number as part of their TC claim. So the Tax Credit Office could match up partners for each CHB claimant. This was the case until last year when HMRC stopped paying the family element of TCs to couples with combined income in excess of £50k. Then in 2011 and again last month the Tax Credit Office issued letters to all TC claimants who didn’t receive payments telling them their claims will cease if they don’t take any action. So HMRC has actively removed details from their files of many of the couples they will now need to target. So how are HMRC going to gather the data? Most of the effected individuals will be taxed through PAYE and not currently required to complete Tax Returns. Are HMRC going to contact all current CHB claimants and ask for income or NI details of their partners?
The whole thing is a mess. And what for? We’re typically talking of about £1752 for two children. Based on current average earnings only a small proportion of claimants will have to repay some or all of the CHB. HMRC could well spend more in administration trying to identify these couples than they will raise in the claw back.
Has anyone got any clearer idea how this is going to work in practice?
- ideas for a bonus scheme for accountants 464 8
- Offsetting CIS tax suffered against CT 152 4
- Why do HMRC have a different FPS liability to the amount I sent? 1,734 23
- another ir35!!!! 1,158 8
- Sage Payroll with 'employees' not having tax or NI deducted 107 2
- Money transfers between companies owned by one person 235 11
- Limited Company - Personal Bank Account 2,375 42
- Sage 50 139 1
- A change from the old Q v NQ debate 377 12
- Cleaners wages at small church -PAYE or self employed ? 216 5
- Associated companies - CT small profits relief 199 9
- VAT on motor expenses 914 33
- Introduction of Goodwill 249 6
- How to account fot Cross-border vat. 128 2
- Sage 50 (2010) 137 3
- sole trader - operating under cis 118 2
- What does it mean?? 393 11
- Paint Manufacturer Flat Rate Scheme 294 13
- Entrepreneurs' relief for trustees - receipt of rent 146 3
- PayPal Transaction Analysis 176 4
- Skandia using wrong address 1,551
- Nil Rate Band Trust - index linked debt by way of charge over property 855
- International interest certificate 473
- NOVA 330
- Subby expenses subject to tax & NI? 238
- Can Limited Company Buy Share of Rental Property? 229
- DOUBLE TAXATION RELIEF BETWEEN A PRIVATE LTD COMPANY AND GREECE (the private Ltd has no employees and its main activity is 214
- Management expenses for investment company 212
- Bonus Bonds 209
- Have we escaped Gift with Reservation of Benfit & Pre-owned asset charges? - Gift after benefit 196