Over the past 3/4 months 6 sole trade clients once I have completed their tax returns are receiving tax calculations that are different to the tax return, their profits are well above the thresholds yet they are getting tax calculations all with Class 2 NI missing?
Anyone else experienced this recently?
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You must be very new....HMRC have been doing this for years.
Class 2 NI does not come from the tax return. It is a completely separate process, essentially the same one as when Class 2 was paid as a standalone item.
Once your client is registered for Class 2 HMRC will stop revising your agent file return.
Tip: when looking at your agents account you can if a client has or has not got Class 2 tagged on their account. Under "information to help keep your tax return"
There are a huge number of problems with class 2, as often you register, and it still doesn't show up.....or they dont take it off, or, many other issues.
As Ireallyshouldknow has said, it has been happening for years.
HMRC say that the client didn't register as self-employed properly even though have filed through SA for years. It is pointless arguing with them. I have brought it to the attention of my MP and his researchers.
The only way to sort it out is preferably the affected clients ring the NI department themselves and arrangement payment directly.
obdurate behaviour by HMRC. the filing of a tax return should be treated as a defacto registration for self employed people.
hmrc often have a point that an individual on theior agent has not done a valid registration that would backup the fact that they are sole trader. The computer cannot be overidden here so one has to face facts that like it or not the independently held class2 NI record needs to be aligned befoee proceeding.
did i perhaps read an article to say this issue was being addressed soon ?
Loads of threads on this.
HMRC will say it's the contributor's fault. Sometimes it is. More often than not, it isn't.
Since reading the replies I have actually found all of the people it's happening to are people we have signed on in the past year and already had an existing Self Assessment record set up!
Since reading the replies I have actually found all of the people it's happening to are people we have signed on in the past year and already had an existing Self Assessment record set up!
And did they set up that record themselves ?
Since reading the replies I have actually found all of the people it's happening to are people we have signed on in the past year and already had an existing Self Assessment record set up!
SA record, not an NI record. Different things.
that tallies with my experience that these are the main clienst with issues.
Note with covid its probably to be expected a few clients did actually cease at some stage (to claim beenfits?) temporarily and probably started back up very soon after - so i suspect if its not complete lack of earlier registration itn could be that they did cease and hmrdc were aware of that fact and for whatever reason hm,rc were not advised of new start date. Could also be hmrc hopelessness too - they are often very sketchy ref reasons for class2 stopping when pushed on the subject!
It always beffudles me. HMRC's "correction" is made in accordance with TMA 1970 S9ZB(1). S9ZB(4) renders their "correction" ineffective if the taxpayer objects.
Why do people not use this simple mechanism to restore the Class 2. If enough did, HMRC may finally get around to joining up their systems.
@steve, because HMRC ignore any such objection, as the computer says no NI is due.
We haved one that has been going for for 2 years now.
The main issue for clients is the qualifying year for state pension, if its "forced" at the tax return end I can guarantee at the NI record end a qualifying year won't be being created.
We have a number of clients with SA on the side and full NI through PAYE and I do one letter (which is ignored) and quite frankly its then HMRC's problem if they cant be bothered to collect the tax we have told (twice, tax return and letter) is due.
Granted, though S9ZB(4) is unconditional. HMRC can't refuse because their computer says "No".
And on the back of that, if they then incorrectly failed to credit the Class 2 as a qualifying year I'd be happy to argue the point at Tribunal.
@steve, because HMRC ignore any such objection, as the computer says no NI is due.
Agree. The problem isn't the legislation.
The problem is getting HMRC's attention.
thanks Steve that's a great help , also noted the comment from Ireally so thanks also for that
I have got one where she has been in a partnership with her husband for well over 20 years and they reject it every year. She isn't bothered but it has to go on the return but gets rejected every year.
I've got another one where the wife became a partner as a result of a full enquiry when SA first came in. The Inspector at the time allowed us to do it and set it up there and then. Her NI gets rejected every year.
Are these clients where the income is between the small earnings exemption & lower limit as these are deemed to have paid class 2 NIC under new legislation rather than the not correctly registered for self-employment cases.
