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Class 2 NI missing from HMRC Tax Calculation

was included on return

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I submitted a tax return on 6th May for a subby with an expected tax rebate of approx £1450. I had included £153 odd for the Class 2   Got a tax calc assessment from HMRC saying the rebate would be approx £1600.  I've been on the phone to HMRC who inform me the class 2 has been added back on and the rebate will be £1450.  

Has anyone else had similar issues, I can't understand why HMRC took it off then put it back on again.

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By Vaughan Blake1
15th May 2019 16:19

This has been happening occasionally ever since Class 2 NIC has gone onto the tax return due to some weirdness which I don't pretend to understand.

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By vinylnobbynobbs
15th May 2019 16:27

This probably because class 2 Ni for 2018/19 is not due for payment until 31/01/2020 so they have not kept it. Your subbie will no doubt get a demand in December.

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Replying to vinylnobbynobbs:
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By lionofludesch
15th May 2019 16:29

vinylnobbynobbs wrote:

This probably because class 2 Ni for 2018/19 is not due for payment until 31/01/2020 so they have not kept it. Your subbie will no doubt get a demand in December.

Yep - that's the one.

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By Wanderer
15th May 2019 16:30

Class 2 NI missing from HMRC Tax Calculation has been reported on here multiple times.

Generally HMRC deny all knowledge of the client being self employed, despite SE pages being included in SA returns for years.

Looks like they have fixed it in your case.

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Replying to Wanderer:
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By lionofludesch
15th May 2019 17:25

In this instance, VNN is correct.

It's because the C2NIC isn't due for another 8½ months.

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By Wanderer
15th May 2019 17:34

Don't doubt it but in the OPs case they have charged it again now (by deducting it from the refund) so there's no consistency.
I've had several cases where they leave the Class 2 as due but also show a 'you have overpaid' line for the same amount. Probably a practical way to deal with such a silly system.

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By lionofludesch
15th May 2019 17:42

I inferred that the taxpayer (via his agent) asked for it to be deducted from his repayment.

As is his right.

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Replying to lionofludesch:
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By legerman
17th May 2019 12:43

lionofludesch wrote:

I inferred that the taxpayer (via his agent) asked for it to be deducted from his repayment.

As is his right.

Strange thing with this was that HMRC had already "corrected" it back to include class 2, and I got a new statement yesterday showing that.

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By Jholm
15th May 2019 17:15

Issue started in the year when class 2 moved from direct debit to self-assessment. It is possible that HMRC never knew (ignoring the tax return content!) that he/she was self-employed. It is also possible that they were never paying class 2 by direct debit in the year prior to the shift.

Check 'tax return options' online when completing a return and see what is shows for class 2. If 'not available', this will happen.

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By SXGuy
15th May 2019 19:24

Because the subbie never registered for class 2. They always rebate class 2 if your not registered.

I don't believe it has anything to do with due dates. We're meant to include it in our calculations for Jan payment so why the hell the dates matter is beyond me.

Simple answer, he never registered. If you recall pre the days when it was a separate bill and you paid monthly or annually, when you registered got SA you had to register separately for class 2. Now its done at the same time.

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Replying to SXGuy:
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By lionofludesch
15th May 2019 19:37

SXGuy wrote:

I don't believe it has anything to do with due dates. We're meant to include it in our calculations for Jan payment so why the hell the dates matter is beyond me.

So if your client's account was in credit but he owed a POA in July, you'd expect that July payment to be withheld from the repayment on the basis that he owes some tax in the future so HMRC are entitled to keep it ?

I respectfully disagree.

The Class 2 NI is specifically due on 31st January and the contributor is entitled to the use of that money until then.

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Replying to lionofludesch:
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By Jholm
16th May 2019 10:55

Correct. Nothing to do with due dates. If ever in doubt as to why, call HMRC.... they will tell you it is because they are not registered as self-employed for NIC purposes. I have seen this endless times and it always the same reason.

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By claudialowe
16th May 2019 11:00

I've had 2 cases this week - one where the calculation totally omits Class 2 (no refund and POA due Jan 20), and second one where client ceased SE August 18, so I time apportioned the Class 2. HMRC have revised to collect a whole year's worth.....................

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Replying to claudialowe:
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By Jholm
16th May 2019 11:14

claudialowe wrote:

time apportioned the Class 2. HMRC have revised to collect a whole year's worth.....................

Need to contact NIC office and advise of cessation date. They update the record and it spills over to the clients SA record. A cessation date on the return alone does not do it.

Massive faff and awkwardly long-winded as per for HMRC.

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By vinylnobbynobbs
16th May 2019 11:37

It is nice to know that once again HMRC are treating all customers in the same manner.

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By lionofludesch
16th May 2019 12:26

I would hotly dispute that HMRC have customers.

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Replying to lionofludesch:
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By vinylnobbynobbs
16th May 2019 12:32

lionofludesch wrote:

I would hotly dispute that HMRC have customers.

Sorry, only teasing - I totally agree!

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By Red Leader
16th May 2019 11:52

To be fair to HMRC, I've had cases where my tax s/w has included a full amount of Class 2 but HMRC have abated the amount somewhat due to Class 1.

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By banny
16th May 2019 14:52

We've had this a few times and were told by HMRC it's because we registered some clients (years ago) using form SA1 rather than a CWF1. With the switch over to MTD if there's no CWF1 then HMRC assume no Class 2 is due. Not 100% sure HMRC know what they're talking about though.

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By Roland195
16th May 2019 16:29

It's another example of how MTD will end up being a time consuming, expensive farce like RTI & IXBRL where HMRC still try to deny self employment registration despite the entries on the tax returns. With so many departments of HMRC still operating as petty fiefdoms, jealously guarding their own area it's never going to change either.

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By lionofludesch
16th May 2019 17:16

Hard to believe that the C2/benefit entitlement problem couldn't have been solved in a more straightforward way.

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By Mr_awol
20th May 2019 16:28

This has been going on for ever.

HMRC told me it was because the tax computer and NIC computer have now been merged into one big super-computer, but that there are numerous occasions where the two don't agree or a taxpayer was on one but not the other. As such, as much as we can declare £30k s/e profits and account for C2NIC, HMRC keep taking it off for clients who 'aren't self employed'.

This was assumed to be a temporary problem when C2NIC was going to be abolished, but unfortunately despite repeatedly claiming to be 'strong and stable', our government (and it's leader) are actually neither of those things - so it's a long term issue. Until either HMRC fix it, or there's another governmental U-turn on the issue, at least.

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By Bob Loblaw
29th May 2019 13:41

Have had multiple instances of HMRC either completely omitting the Class 2 for new starters or ignoring our amendment of the Class 2 for people who ceased self-employment during the tax year.

The strange thing is that we submit the relevant form to register the individuals when they commence self-employment and also fill in HMRC's online form to notify them of the cessation date when they leave. There seems to be very little cooperation between the NI office and the self assessment helpline on this and the information doesn't seem to be passed between the two when it's provided!

I'm currently on my third call with HMRC over the last 2 months over one client who ceased self-employment and should have only had 32 weeks Class 2. We showed the 32 weeks on the return, but the tax calculation comes and HMRC have shown a full 52 weeks. You'd think it would be an easy fix and a few button pushes would sort it out. Some bright spark however has managed to update the case notes to say that they have rectified the issue without actually doing any of the work entailed to have the problem referred on. Best of all they offer no resolution timescale!

It is truly amazing that even when you manually adjust these things on the tax return you file, HMRC will just override the figure anyway!

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By lionofludesch
29th May 2019 13:55

Bob Loblaw wrote:

It is truly amazing that even when you manually adjust these things on the tax return you file, HMRC will just override the figure anyway!

HMRC aren't Self Assessment ready after 22 years, then.

At this rate, by the time they're MTD ready, I'll be dead.

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