Every year many people across the UK get a tax credits renewal pack. If you do get one you need to check your renewal forms and make sure you pass on the correct information to the Tax Credits Dept.

This article can help you find out some of the information you need to check, how to work out your personal income(s), and how to avoid common mistakes.

Check the information presented

Renewal packs usually include the an Annual Review notice (TC603R) plus an Annual Declaration form (TC603D or TC603D2). And everyone needs to renew by 31 July or whatever date is shown on letters from HMRC. A tax year runs from 6 April one year to 5 April the next.

The important information that you need to check on your Annual Review notice is:

• your personal circumstances shown are correct and as expected
• all the changes you have reported during the last tax year are included as sometimes there can be mistake
  

If there is anything incorrect you must tell HMRC straight away. Especially if anything is wrong on your notice or if anything has changed and they have the wrong information.

If previously you have claimed tax credits as a single person - or as a couple your notice should say this, a couple is known as a 'joint' claim.

You should be making a 'joint' claim if you are:

• married
• in a civil partnership
• living together like you're married or in a civil partnership

Your form should also show the country you live in most of the time. It doesn't matter if you sometimes go to other countries for holidays for up to 8 weeks (and in some cases up to 12 weeks) as this is usually still allowed. And you may also be able to get tax credits if you live outside of the UK for a valid reason. But you will need to confirm these extra conditions with HMRC before applying for them.

Your work or benefits should also be reported, showing the country you work in most of the time with the number of hours a week you usually work. It can also show you if you got any benefits, for example Income Support or Employment and Support Allowance.

If you have any disabilities your notice will explain if you were paid the disability part of Working Tax Credit. This also applies to severe disabilities and their allowances receivable.

If you have a child or children then your notice should show the correct information about them. You can usually get Child Tax Credit for a child up to 20 years old, with the conditon that they are in full-time education or an approved training course.

And if you work are working at least 16 hrs per normal week and have to pay for a registered or approved child minder or carer, you may be able to get an extra Working Tax Credit payments to help with these costs too.

How to work out your total income for your Annual Declaration

It is worth noting that some social security benefits are taxable, such as contribution-based JSA (Job Seeker's Allowance), and as such they will count as income when you make a tax credits claim. Other types such as Disability Living Allowance, don't count as income. So be careful to be sure if your benefit is taxable. If your not sure ask rather than guessing and getting the claim incorrect.

If you're in employment, you should have a P60 from your employer at the end of the tax year (5th April), which will show your earnings and tax paid for the whole tax period (6th April to 5th April). You need to include income from all types of jobs you have had in the tax year so it may need several P60's for filling it in.

If you cannot find your P60, then don't worry as most payslips usually show a running total of all earnings and tax paid for the year. If you still cannot get the full information you can provide an estimate but make sure to give the actual income figure no later than 31 January or again it can mean having to pay tax credits back at a later date if you've claimed to much.

You must also remember to add in:

• all taxable 'benefits in kind' you may have received, eg car mileage allowance payments for using your own car, or a company car, usually on a P11D or P9D forms from your employer
  
• all other payments you received, for example tips or strike pay, bonuses etc

If you're self-employed your income will be the net profit you made in the tax year. If you haven't had a profit or loss drawn up prior to sending in your tax return, then you will need to give an estimate of your profit and again you must provide an actual by the 31st January or you may have received too much or less in Tax Credits.

If you made a Net Loss on self employment, just give a figure of zero. But please do note if you had any other income during the year, you can take the loss off this income.

Be careful to get the best advice and support

Bear in mind that other income like pensions, shares, income from property (sale or rental), income that you receive from abroad and savings need to be also declared. If in doubt the best thing to do is ask a professional as the self employment and other incomes can become a bit tricky and you could end up claiming less or more than your due.

Tax Affinity Accountants are experts is tax and accountancy. Based in Kingston upon Thames they cover the whole of the UK and help make sure clients get the correct amount of tax credits for their situations. Visit www.taxaffinity.com for more information or if you feel you need help in filling in the forms. Follow Tax Affinity on twitter at @tax_affinity to find other useful tips and advice.

Its a question we often get asked - How do you appeal a tax penalty?If you've been unlucky enough that HM Revenue & Customs (HMRC) have imposed a tax penalty on you, a taxpayer then you or your appointed agent (usually accountant) are allowed to lodge an appeal against the penalty.

But the crucial thing is knowing that the grounds upon which to make the appeal will depend on the nature of the penalty and its circumstances.

Example:

A penalty for late filing of a tax return can be appealed on the grounds that the tax payer had a fair and reasonable excuse for having to file the tax return late. A sample of some of the reasons that are valid are as per below.

• There was no tax return actually due
• No notice to file a tax return was ever received by the tax payer
• If the taxpayer was ill, or had an accident, or something happened in the family
• A HMRC employee gave the wrong advice about the filing deadlines or filing online
• For direct taxes, if a taxpayer relies on third party who did not file the return this could be a valid excuse
  
• The taxpayer had posted a return on time and it got delayed or lost in the post
  
• If a taxpayer thought that the online filing system had worked and it later turned out that it did not eg Internet or website failure.

Tax related penalties for errors in tax returns and important tax related documents causing an undervaluing of tax, or over claiming of an income related loss or allowable tax relief can also be appealed on the grounds that the taxpayer tried to take all reasonable care and that:

• The error caused was by a third independent party (including HMRC), and it was reasonable and fair that the taxpayer placed his/her total reliance on that third party
• Accidental error i.e. the mistake was a one off and should be suspended because the taxpayer had tried to take all reasonable care over his/her tax affairs
• If the penalty is deemed unfair and excessive, or miscalculed in some way which does not allow for the correct decrease of the amount in law
  
• And if the penalty should be reduced to 0% because the taxpayer had taken all reasonable care as far as they could.

If a penalty letter or notice is received. You should never ignore it but try to follow the instructions with the letter and if no instructions are with the letter then call HMRC and ask how you may make an appeal. You can also write to HMRC, and make a written appeal. But don't ignore it hoping it will go away, because it won't.

And try to remember, while HMRC seem quick to apply penalties they are also fair to review them and normally always offer an opportunity to review all penalty decisions. But if the penalty still applies following the review, the tax payer shouldn't lose heart and can always make an appeal to the First Tier Tax Tribunal, if they feel that their appeal is truly justified.

Making an appeal in a Tribunal.

Normally this will involve the preparation of 'trail bundle' which is basically a pack of documents that contain copies of all papers that the defendant is going to be relying on in the case and they have to be disclosed together with, if appropriate and possible, any legal case law that applies.

Papers:

The bundle may contain different stuff and it usually depends on the nature of the case, e.g. if a taxpayer is appealing a late filing penalty because he was ill and unable to submit the return, then he possibly needs only to bring a doctor's official certificate or hospital and medical records showing this to be the case.

While in the course of an appeal a taxpayer or their appointed representative will be required to present their case and then present their evidence to the Tribunal, calling any persons as witnesses if they feel it will help their case.

Evidence:

Simply like all legal cases the quality of evidence is whats important. Each party in the case will have a keen interest to expose the other party's and their evidence or witnesses as an untrue or unreliable to base the decision on. The judge will decide based on these presentations.

In some cases an appeal can be lodged to the Upper Tax Tribunal if it is felt that the First Tier Tribunal decision was incorrect. In most cases however it never gets to this point as the vast majority of appeals are handled by HMRC themselves at the earliest stage.

Tax Affinity Accountants are experts in Tax and Accounting for businesses and individuals. Based in Kingston upon Thames they cover the whole of the London area with many satisfied clients. If you have any tax appeal requirements please feel to call or visit our website at www.taxaffinity.com.

Follow us on twitter @tax_affinity to find more useful hints and tips.

Small firms get more time to get ready for RTI submissions

HMRC has announced that it will be extending the new Real Time Information (RTI) reporting rules for businesses with fewer than 50 employees from October 2013 until April 2014.

This new extension now means that businesses are not required to change their approach halfway through this tax year. But small businesses are still required to report through the new system on a monthly basis, rather than each time they pay their employees.

This allows many businesses that pay weekly (or more) to report monthly instead of everytime they pay a member of staff.

HMRC, says that more than 1.4 million employer PAYE schemes are now reporting in real time since the start of the new tax reporting requirements in April. According to HMRC 83% of SMEs and more than one million micro employers have already started to report PAYE in real time.

HMRC goes on to say that from April 2014, all employers in the UK will need to plan to be reporting in real time, but also say it is continuing to work with businesses over the coming months to identify whether there are any specific circumstances that it needs to cater for the long term.

HMRC's director general for personal tax, said: "The roll-out continues to exceed our expectations. We will now write to the minority of employers who are not on board, to establish how we can help them meet the requirements of reporting in real time."

This extension for small businesses with less than 50 staff, till April 2014 is very helpful for SME's. It will help them continue to engage positively with RTI and to keep the costs of RTI reporting as low as possible.

At Tax Affinity Accountants we are experts in Payroll and are already helping our clients submit their payroll information on time and regularly to HMRC, feel free to contact us if you need help in your RTI complaince at www.taxaffinity.com.