Application for refund of clas2 NIC re smallearnings exception

Had a nasty choc Yesterday. Opened a letter from HMRC NIC office, and it was about an application for a refund of class2 NIC in respect of a client whose profits where below the small earnings exception for the tax year ended 5 April 2011. Aparently there is a time limit to apply for a refund which is the 31 January following the end of the tax year when the profits where below the limit.!!!!!!!!!!!!!!!!!! That was a first for me. Never had any trouble before claiming back NIC.

Most time limits for claim for tax reliefs etc are at least two years why not the same for class 2. Or is it another way of making money out of the low earners?

When did this come about? Checked the guidance on application for refunds of NIC and one of the first paragraphs states "there is no time limits to apply for a refund..." but if you scrolled right down to the bottom of the guide there you will find a paragraph stating the time limit for application for refund.

Shame on you HMRC for not making it clearer.

This is was the client first period of trading and he did not have much income in that year, on top of it all he is leaving in London and we all know how expensive it is to live there. He is now employed and does a bit of freelance work as well but his salary is low and the refund would have helped to make ends meet.

Taxpayers are penalised if they don't register for SE and NIC on starting a new trade but they are also penalised if they have paid and found that they did not have too.

So I am going to advise him to register for the exception and if he did not qualify then they will have to ask for it..

The way HMRC works these days they might send him a demand in 10 years time once their computer system has caught up..

May I suggest something constructive which will save time and money PUT A TICKED BOX ON THE SELF-ASSESSMENT TAX RETURN TO CLAIM THE EXEMPTION WHEN THE TAX RETURN IS PREPARED. AFTER ALL THERE IS ONE FOR CLASS 4 NIC DEFERNMENT.  THE TAX RETURN APPEARS TO CATTER FOR THE HIGHEST EARNERS BUT NOT THOSE WHO EARN VERY LITTLE AND STILL COMPLY WITH THEIR TAX OBLIGATIONS...

A very frutrated and angry adviser at the unfairness of it all..