Seemingly HMRC is introducing errors into self-employed individuals’ tax returns, resulting in their failure to pay sufficient National Insurance.
According to the Telegraph, the errors relate to changes to the NI system announced by the previous government. From April 2015, workers’ “Class 2” National Insurance contributions have been declared on self-assessment tax returns. Previously they had been paid to HMRC by direct debit.
The £2.80 per week charge is supposed to be paid by all self-employed individuals and partners in partnerships, and counts towards individuals’ entitlement to state pension and maternity leave.
George Bull, a tax expert at accounting firm RSM, said he and his colleagues initially detected a few cases of this error and were now seeing new incidences emerging on a “daily basis”. It was not affecting every self-employed individual’s return, Mr Bull said.
HMRC’s frontline staff have acknowledged the errors to accountants, and say they are due to a “technical fault” with HMRC systems that has been “reported internally”.
The concern is that individuals will either not spot the “correction” made by HMRC or believe that the removal of NI contributions from their return is correct.
“The problem is self-employed who file who see an adjustment coming through, which is probably in their favour and small – the risk is they will breathe a sigh of relief and think they don’t owe HMRC any more and leave it at that.
Then after 30 days, on the face of it, the whole thing is final. The issue is not so much the repayment itself, but the fact that if the NIC record is amended to show zero contributions for a year, people risk losing benefits as their record will become incomplete.”
HMRC initially denied the problem.
It later admitted the errors, but claimed that they affected only a “handful of people”.
Tax does have to be taxing.
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This is neither an error or a technical fault. These are cases where the tax payer has ticked the box on their return asking to pay VOLUNTARY contributions and then have not paid them by the due date of January 31st 2017. Rather than chase people for an amount, which was only voluntary in the first place, HMRC set it's systems to remove the unpaid contributions from the tax payers statement after 30 days. I hate to say this, but it actually quite sensible.
ReplyDeleteAlso, errors are being found where an incorrect National Insurance number is on Self Assessment record. It's not uncommon for a temporary number to be on the record for years. Unsurprisingly, the class 2 NI charge is linked to the NI system via the National Insurance number. If that's wrong the whole system falls apart. Tax staff don't have the computer access to correct the NI number on the SA record and the process to do it literally takes months. It's a pack of lies to say it's a few cases.
ReplyDelete@ 20.36 You are quite correct, however the cases you mention mean that the NI contributions don't get put on the SA statement in the first place and I agree there are a lot of them. Also NICO are setting up a duplicate record as they can't trace the SA records which not linked to a correct NI number. This is resulting in duplicate SA records being set up and penalties going out to some for non filing when they have filed under their usual reference!
ReplyDeleteHowever these are not the cases referred to by George Bull in the Telegraph article that is linked to above. The 'now you see them, now you don't,' NI contributions only affects the statements of the voluntary contribution late payers.
The public pay their tax and NI from their hard earned - the force of law means they do it whether they like it or not - and they could not care less what systems are linked etc etc.
ReplyDeleteHMRC initially DENIED it but lated it ADMITTED it but downplayed the scale. So in other words HMRC lied?
When paying all this money to the tax office the public expects them to have adequate systems in place. They also expect them to be honest. Its what they're paid for and really is quite simple.
Disgusting behaviour; no wonder the public do not trust HMRC.
approximately 10% of our clients were affected, most of which had their tax returns submitted electronically before June 2016. The class 2 NIC was removed even when the level of self employment was over the threshold. Quite a few clients were subcontractors who got over refunded by £145.60. I think HMRC have remarkably large hands if they are quoting a handful of 'customers' have been affected!
ReplyDelete