Time Is Running Out For Tax Credit Recipients, Warns ACCA

by Jason Gorringe, Tax-News.com, London

09 April 2008

HM Revenue & Customs (HMRC) will be issuing renewal packs for tax credit applications throughout April, May and June, and the Association of Chartered Certified Accountants (ACCA) is reminding recipients to return the form on time – or risk their payments being stopped.

The application form has to be returned to HMRC by July 31st 2008 so that the taxman can check any changes to circumstances which will affect the payment.

However, HMRC also asks that they are kept up to date about any changes throughout the year, as these alterations can affect the amount received.

Chas Roy-Chowdhury, Head of Taxation at the ACCA warned that:

“31 July is a critical date. If the taxman does not receive the form by this deadline, then payments will stop. This often disadvantages recipients as overpayments are clawed back by HMRC. And if people have not received a renewal pack by the end of June from the taxman, then they should contact the tax credits helpline."

He went on to condemn the implementation of the tax credit regime by HMRC, arguing that:

“While Tax Credits are an incredibly good idea, and while they benefit some people, it is also a system troubled by fraud, overpayments, IT meltdown, record keeping and procedural problems – even the government’s own Public Accounts Committee says that the structure of tax credits is far too complex."

The ACCA taxation chief went on to observe that:“The Committee has said that there is little evidence the tax credits scheme is under control – this has a serious knock-on effect for the UK taxpayer and also importantly for the recipients of tax credits."

“Benefits should be paid through a dedicated and professional benefits system, not through the tax system. The set-up has resulted in tax credits being one of the most complex aspects of the UK’s tax arrangements."

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