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How is restriction of class 4 NI dealt with?

Sole trader + PAYE job

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I am glad that Taxcalc does the calculation for the restriction on Class 4 NI when someone has high employment income + self-employment. I've come across a tax calculation from another firm and they seem to have overlooked this point for a client. I have 2 questions-

1- would HMRC automatically pick this up and issue a revised calculation with lower NI if the accountant hadn't factored this into their calculation? I am guessing not but has anyone seen this in practice?

2- Does all tax return software do this calculation if you enter the Class 1 NI data?

 

Thanks in advance!

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By Wanderer
30th Aug 2019 12:38

Carl London wrote:

1- would HMRC automatically pick this up and issue a revised calculation with lower NI if the accountant hadn't factored this into their calculation? I am guessing not but has anyone seen this in practice?

Probably will. Likely that the other accountant didn't enter the Class 1 information.
Carl London wrote:

2- Does all tax return software do this calculation if you enter the Class 1 NI data?

Can't speak for ALL software however likely that it does. Certainly BTC does.
Thanks (1)
By Tim Vane
30th Aug 2019 12:54

HMRC almost certainly won’t pick it up as their sharing of data with NPS is almost non-existent.

All software does the calculation as far as I know since it is included in HMRCs standard software tests which all tax return software has to comply with. The previous accountant presumably forgot to include the Class 1.

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Replying to Tim Vane:
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By Wanderer
30th Aug 2019 12:56

Tim Vane wrote:

HMRC almost certainly won’t pick it up as their sharing of data with NPS is almost non-existent.

I'm currently finding the opposite. Indeed in a recent case had it where the API picked up the Class 1 but didn't pick up the gross pay and tax deducted for the same employment.
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Replying to Tim Vane:
RLI
By lionofludesch
30th Aug 2019 13:54

It's a bit since I had one of these (probably 15 years) but, at the time, the Contributions Agency did deal with it - albeit sometimes years after the event.

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Replying to lionofludesch:
By Paul D Utherone
04th Sep 2019 13:28

lionofludesch wrote:

It's a bit since I had one of these (probably 15 years) but, at the time, the Contributions Agency did deal with it - albeit sometimes years after the event.


It has been part of the HMRC SA tax computation (Stage 16 from c16.20 onwards for the Reg 100 calc) for the last three or four years and should happen automatically with third party software if you enter the relevant Class 1 figure
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By Duggimon
30th Aug 2019 14:05

HMRC explicitly state on their guidance that they always check for too much NIC and refund it where due.

So I guess that puts your chances at around 50/50.

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By Carl London
04th Sep 2019 10:20

Thanks all for comments.

It seems odd that the tax return itself doesn't have a box for Class 1 NI but the tax return software seems to get this data into HMRC's system... so I guess people who paper-file are supposed to write a white-space note?

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