Having decided not to introduce any reforms to the national insurance contributions regime in his November pre-budget report, Alistair Darling's 2008 budget instead included a consultation document on suggested improvements to how NICs are collected from the self-employed.
Where possible, HMRC tries to get the self-employed to pay their Class 2 NICs by direct debit. If such an arrangement does not exist, the taxpayer is sent quarterly bills which must be settled within 28 days.
However, HMRC's consultation document, 'Improving the collection of National Insurance Contributions from the self-employed' (available as part of HMRC's 4.3MB supplementary documents download) notes that confusion arises when the Class 2 notifications arrive around the same time as Self Assessment statements showing liabilities that include Class 4 NICs.
The main suggestion raised in the consultation document is to incorporate any Class 2 NICs in arrears in the self assessment statements. It also asks for views on whether aligning the quarterly NIC Class 2 due dates with the 31 January and 31 July SA payment dates - or setting these as the two due dates for Class 2 contributions.
According to the government's regulatory impact assessment, the proposals should improve taxpayers' understanding of NICs and help to reduce their administrative burden. The RIA also estimates that the move would help to reduce the amount of irrecoverable NICs 2 debts by £3.5m a year - but at the cost of £11.2m for a new computer system and £300,000 in annual running costs.
There may be some costs for tax payers and representatives in familiarising themselves with new arrangements, but these would be "insignificant" according to the RIA.