subject: Accountants In Leeds Face The Challenge Of Unpicking Tax Credit Rules [print this page] Over the years the UK government has tried a number of schemes for helping the less well off. Over the last few years tax credits have been the main mechanism put in place to help the disadvantaged, those with children and those who work with a small income.
So why is this a problem for accountants in Leeds? The socio-economic nature of the city means there are great disparities of income. There is a healthy financial sector with much of the benefit flowing to the affluent parts of town; conversely parts of the city suffer from extreme deprivation as manufacturing declined over the past few decades. Some of the larger accountancy firms in Leeds have focussed on clients that are better off, assuming that those with lower incomes cannot provide the kind of work that brings in the most fees. As tax credits are loosely based on income tax legislation, this leaves large sections of population in need of an accountant, but without the means to pay for one.
Due to the complexity of the system, an average tax credit claimant will not be able to understand how the system works. It is based on income tax legislation with additional rules regarding household income. There has been a number of stories in the local press of families having to repay large sums of money to HMRC. These stories have acted as a scaremonger to other families, many of which do not submit a claims at all, potentially losing out on thousands of pounds a year. Due to the complexity of the system, an average tax credit claimant will not be able to understand how the system works. It is based on income tax legislation with additional rules regarding household income. There has been a number of stories in the local press of families having to repay large sums of money to HMRC. These stories have acted as a scaremonger to other families, many of which do not submit a claims at all, potentially losing out on thousands of pounds a year.
Accountants need to embrace this problem and help those less well off. It will improve the reputation of the profession as accountants in Leeds will be seen as helping those who need the help most. Modest fees can be charged to cover any costs, with the result being an increase in income for those that need it. Other opportunities may arise if claimants are self employed or runs mall businesses as they may engage the services of the accountant to take care of other aspects of their finances.
Tax credits are a legacy of the Labour government. The Conservative party have vigorously opposed the system before and after the election in May to sue its complexity and the way it penalises those who increase their income. The recent budget has shown some moves to start weaning people off benefit dependency by making some discreet changes to the calculations. Expect to see some major changes in this are in the next few years, which I'm sure will present more of a challenge of accountants in Leeds.
