28 Sep Working Tax Credit Checks

HMRC has ramped up the number of working tax credit checks within the farming community, so it’s important to check if you still qualify.

Tax credits are assessed on profits – not what you draw from the business.  We know that farms are run with a view to generate profits but often – due to significant investment or poor commodity prices – may not have generated a taxable profit for several years.  The milk price over the last 18 months, purchasing machinery or business expansion are all examples of this.

HMRC have strengthened the eligibility criteria for tax credits in recent years by introducing a ‘genuine and effective’ test, in a bid to prevent bogus self-employment and abuse of the tax credit system.  As a result the tax credits office is questioning whether good genuine farmers are trading on a commercial basis.

The checks run by HMRC stretch over a three-page form asking for just about every possible piece of evidence to prove you are in business. The response clearly demonstrates a lack of commercial understanding of agricultural businesses by the tax credits office.

We are currently successfully overturning these decisions, with working tax credit being reinstated – which is worth around £4,780 a year for eligible joint claimants. Should you find yourself on the receiving end of a check, please Contact Us as we are willing to defend your position.