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Tax Credits Amendments

Tax Credits Amendments

If a 2013/2014 first year trading loss is partly relieved by carry back to 2010/2011 and 2011/2012, can the tax credit awards for those two years be revisited and amended in an upward direction? I've not come across this before but can't see why not.

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17th Feb 2015 16:46

My understanding is that once finalised Tax Credits can not be revised. Losses are set off against all other income of self and spouse in the year they arise and balance carried forward against the profits of the same trade only.
However I stand to be corrected as Tax Credits seem to be a black art - it is difficult enough to get straightforward ones correct without any added complications.

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17th Feb 2015 17:36

No correction necessary

Anne is right.

The impact of trading losses on the calculation of income for tax credit purposes is enshrined in the tax credits legislation.  It has some similarities to income tax rules but is not identical, and among the differences are:

Carry back of losses is not available under the tax credits legislation.

Sideways relief (including v spouse income) is mandatory, even if there were no IT claim (against own income).

So it means keeping yet another loss usage memorandum on your permanent file (to go alongside your class 4 NIC running memo).  At least until tax credits die completely.

With kind regards

Clint Westwood

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17th Feb 2015 21:38

Thanks

to you both. Tax credits must of course be based upon the taxpayer's income at the time.

 

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17th Feb 2015 23:05

We have found terrible problems with losses and tax credits this year. Often these are not known until after July but when doing estimated renewals they would not allow employment or benefit figures to be reported as estimates which in turn meant that losses when known could not be set against them. At times it was an never ending circle and as we all know the phone operators are totally useless.

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