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Credits backdating

Where a tax credit claim has been made by a couple who were not together in the previous tax year, the household income will be the sum of the income of each adult in that tax year.Other changes don’t have to be reported until the end of the year.It is not uncommon for companies to either forget – or simply be unaware of – the need to include the suitable documentation with these end-of-year accounts, and thereby miss out on the rewards for their R&D activity.

However if your current year income falls by more than £2,500 your award is instead based on your income in the current tax year, plus £2,500.There are three kinds of changes that affect your tax credit entitlement: a) changes that must be reported to HM Revenue and Customs as soon as possible; b) other changes of circumstances; c) changes in your income.It is essential that you tell HM Revenue and Customs as soon as possible about the changes below - if you do not tell them within one month you might have to pay a fine.You can report an estimate of your lower income straight-away, which may lead to an increase in your tax credit payments.Alternatively you can wait until HMRC carry out their end of year review, in which case you will receive any arrears owed as a lump sum.With the average claim estimated to be in excess of £60,000 per year for applicable costs, such a cash injection will undoubtedly serve your business well.As you can see, the opportunity to backdate a claim for missed R&D tax credits should provide peace of mind that your business will still be able to benefit from such rewards, even if you failed to submit details alongside your end-of-year accounts.This means that any backdated claims will be processed in one go, meaning that a significant injection of cash could soon be forthcoming into your business account, enabling your to reinvest and continue undertaking R&D work.Of course, as mentioned above, the process for making a successful R&D tax claim can be complicated, so it pays to sit down and discuss the circumstances of your claim with an experienced R&D tax advisor.If you and your business have been busily involved in research and development activity, it can be easy to overlook such matters as making your R&D tax claims.Either due to lack of awareness, uncertainty over eligibility, or being dumbfounded by the complexity of submitting your claim, missing the deadline for the qualifying period could well see your business missing out on thousands of pounds that is rightfully yours.


  1. In 2006/07, 135,975 issues relating to social security benefits and tax credits were brought to the Scottish CAB service. These account for nearly a third of all issues. 30.6% brought to Scottish bureaux and mean that, social security was the largest overall area of enquiry for CAB clients. Of these issues, 11% related to.

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