Tax Refund

[Ponkers]

Hi,

I am registered as self employed and submitted my self assessment tax return in January.

Due to me working for about 5 months under PAYE and paying full tax during that time, it said that I was due a tax refund of a few hundred pounds.

This dates back to the tax year before I started my IVA.

When I have been in touch with HMRC, they have said there is a hold or something on the money meaning it has to be processed differently due to my IVA - they knew about the IVA without me having told them.

I tried to contact my IP when I first knew about the possibility of a refund to find out how I stand on it, but despite a phone call and an e-mail, they have never responded.

So, does anyone know what happens in these circumstances? This is money that I shouldn't have had deducted from my wages in the first place, but is it now going to be seen as a windfall? Will I lose it all, or a percentage of it?

[Shining]

Hi Ponkers, I'm sorry I've no idea but will keep this post bumped up until one of the professionals come along to comment.

[MelanieGiles]

I think that it will be treated as a windfall and that you will have to pay the money over to your IP.

[johnh]

Just a quick query. I am likely to get a tax refund at the end of the tax year as the Inland Revenue have had me on the wrong tax code for nearly 10 years! In 2001 I worked for a company who provided health insurance - a taxable benefit. They never changed my coding back when I moved jobs. I only noticed this in November when my circumstances changed. I really don't know how much is involved (maybe £300 or so). As most of this relates to a period pre-IVA I wouldn't have thought it fell into the "windfall" criteria. Am I wrong in this?

[MelanieGiles]

Sorry John - this will definately be a windfall, unless you have the benefit of the £500 threshold.

[Michael Peoples]

The fact that it is pre IVA makes it certainly a windfall as Melanie says. Had your tax been correct you would not have had to borrow so much in the run up to the IVA so creditors are entitled to that money. I know the amount is not really material but the rationale remians the same and makes a lot more sense when people receive rebates of thousands relating to pre IVA periods. If the rebate is post IVA it is generally not a windfall as it forms part of your day to day cashflow.