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Class 2 NIC again – 28/02/2019

28th March 2019 by

We covered the issues with class 2 NIC in our newsletters on 1 March and 16 August 2018, and 23 March 2017, but problems with corrupted NIC records and incorrect payments/repayments persist.

You will recall that the chaos started for the 2015/16 tax year when class 2 NIC began to be collected alongside self-assessed income tax, as we reported on 8 December 2016.

The root of the difficulties appears to be the legacy computer system (NPS) that holds taxpayers’ NIC records. This is a separate database to the SA system, and changes made on the NPS overwrite the data on the SA computer, not the other way round. When the NPS loses a taxpayer’s record (for numerous tedious reasons), the SA computer thinks that no class 2 NIC is due and refunds any class 2 paid. If this has happened to our self-employed clients we will need to ring the national insurance helpline: 0300 200 3500 and get the taxpayer’s record reinstated on the NPS. If the client has missed paying class 2 NIC for the years 2015/16 to 2017/18 you need to arrange to pay the class 2 NIC outside of self-assessment.

When a taxpayer first registers for self-assessment using the online form CWF1 their details should be added to both the NPS and the self-assessment computer. Do not resubmit the form CWF1 in an attempt to update the self-employment record, that will only cause confusion.

To inform both HMRC computers that the taxpayer has ceased self-employment use the online form. A notification of cessation of a trade entered on the SA tax return will not amend the NPS, and will probably be ignored for SA purposes as well.

Written by the Tax Advice Network

Filed Under: Uncategorised

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02920 448 120
julie.burrows@dfcaccountancy.co.uk
Address:
2 Alexandra Gate
Ffordd Pengam
Cardiff, Wales, CF24 2SA

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Address: 2 Alexandra Gate, Ffordd Pengam, Cardiff, Wales, CF24 2SA
Email: julie.burrows@dfcaccountancy.co.uk