July Question and Answer Corner

Newsletter issue - July 09.

Q. My company submitted a claim for a tax refund for Â£15,000 in January, but it still hasn't materialised. We really need that cash now. I've chased the Tax Office but get some excuse about security checks. How long will I have to wait for this money?

A. HMRC have imposed extra security checks on many tax refunds in an attempt to block fraudulent claims that have been flooding the system. These extra checks are slowing up refunds to genuine businesses. A six month delay is quite exceptional. Try writing to your Tax Office suggesting you will take the matter to your local MP if you do not receive the tax refund within 10 days.

Q. In the last two years I have lent my company in excess of Â£40,000, but now the company is insolvent and I will not receive any of that money back. Can I claim any tax relief for that loss?

A. Assuming your company was a trading company, as opposed to a company that just holds investments, you can claim a capital loss for your loan. The Tax Inspector may ask you to show the cash was used for the company's trade, rather than simply use to pay dividends, so be prepared to supply the company's accounts if requested.

Q. I was made redundant on 27 February 2009 from a job that paid Â£16,000 a year. Almost immediately I found a part time job that pays about Â£9,400 a year. I made a claim for Tax Credits as I am working 30 hours a week now, but I've received a Nil award. What should I do?

A. Your initial Tax Credits award is based on your income for 2008/09, which was too high for you to qualify for Tax Credits, assuming you are a single person with no children. However, on your current wage you should qualify for about Â£1,200 a year in Tax Credits. Just ring the Tax Credits Office and tell them your current wage rate. They should revise your tax credits award within weeks.