Tax credit claimants advised to check their renewal paperwork

(2 minutes to read)

LITRG: ‘HMRC’s glitch, along with the fact that the renewals process looks different for many people this year, means that it is crucial that claimants check their renewals paperwork very carefully’.

With HMRC writing to tax credit claimants after omitting important income figures from their renewal notices, the LITRG is advising that people check their paperwork carefully.

It’s also urging HMRC to use the full extent of their powers to correct any issues that may arise later due to this glitch.

If tax credit claimants don’t let HMRC know by 31st July that the figure they hold is wrong or just an estimate at this stage, they risk either receiving less tax credits than they are entitled to, or receiving too much, which will be taken back, perhaps, unexpectedly, from any ongoing tax credit payments.

This current situation is due to HMRC now automatically renewing most tax credit claims this year in light of pandemic.

Automatic renewal means that HMRC state the claimant’s circumstances on a renewal notice and the claimant only needs to contact HMRC if the income shown or circumstances detailed are wrong. Otherwise, HMRC will finalise entitlement for 2019/20 and put in place a claim for 2020/21 on 31st July (or shortly after).

LITRG’s understanding is that this issue affects claimants who have income that HMRC do not know about such as:

  • Self-employed claimants
  • Those who receive taxable social security benefits
  • Those with other types of income such as rental income from property.

To auto-renew these cases, HMRC have used the last income figure they have on record in their calculations, but these figures do not appear on the actual notice.

Thinking of appointing Dolan Accountancy?

Give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.

Email Jaime

Victoria Todd, Head of LITRG, explained further, “HMRC’s glitch, along with the fact that the renewals process looks different for many people this year, means that it is crucial that claimants check their renewals paperwork very carefully.

“Auto-renewal can be helpful for claimants with more straightforward circumstances where HMRC have earnings or pension information from the tax system. Although we understand why HMRC tried to move more claimants into the auto-renewals process this year, in many cases HMRC do not have enough up to date information about a household’s income to finalise their entitlement accurately. In normal times, that would have been regarded as an unsuitable approach. That is why those people must usually fill in a declaration form (either on paper or online) to confirm their income for the year just ended.

“Claimants who receive an auto-renewal notice are told to check the income figure that HMRC say they will use to finalise entitlement for 2019/20 and set the claim for 2020/21. Unfortunately, HMRC now understand that in around one million cases, the notices do not actually include the income figure that HMRC have used in calculating the award that the claimant can check.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

dav1