I know that tax credits awards from 6 April will initially be provisional payments under s24(4) TCA 2002 and reg 7 Tax Credits (Payment by the board) Regs. Are there any regs which specify how these provisional payments are to be calculated? (or if there aren't any regs, has anyone seen any info on how they will be calculated)?

The thread at

http://www.rightsnet.org.uk/dc/dcboard.php?az=show_topic&forum=102&topic_id=118&mesg_id=118&page=#119

touched on this but wasn't conclusive.

I haven't seen anything but I was told on the tax credit helpline that no overpayments will be deducted - so if currently entitled to full CTC but also have WTC or CTC o/p then they could expect full CTC in new tax year (until they decide what to do with the o/p I presume!)

Info from IR TC Renewal Seminar:-
1. From 6.4.04 "provisional" payments will be made at the rate of the last issued 03-04 entitlement. No overpayments will be deducted at that stage.
2. When the 03-04 award has been finalised (could be up to 6 months), an 04-05 award will be issued. If the amount of the "provisional" payments was too high, then payments for the rest of 04-05 will be reduced so that the correct amount is paid in the year as a whole. Also, at this stage, recovery of any overpayments will start - using guidelines in COP 26.

One of our Low Incomes Tax Reform Group members, Liz Lathwood, has written what we think is a very good analysis of the "year-end" problems which you can find here:

http://www.tax.org.uk/attach.pl/2342/1325/lathwood.pdf

We will be posting related issues on our website at www.litrg.org.uk over the next few months and if you have follow up points on Liz's article then do use our Contact page to quiz us. We may not know the answers but we will try hard to find them.

Does this mean that if someone has had a change of circumstance leading to a drop of income part way through 03/04 that the provisional TC will assume 04/05 income to be the same as 04/04 rather than lower...leading to underpayment at the beginning of the year.
Or am I just worrying about nothing ?