Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Gauke: Class 2 NIC measure is a step forward

by
23rd Oct 2014
Save content
Have you found this content useful? Use the button above to save it to your profile.

The National Insurance Contributions Bill as amended in Public Bill Committee has been published on the Parliament website.

Government amendments to schedule 1 (reflecting increases in NIC rates) and schedule 2 (in relation to the defence of reasonable care) were agreed when the committee met on Monday. The Bill will now proceed to the House of Commons Report stage.

MPs heard evidence from tax experts including John Whiting, tax director at the Office for Tax Simplification, Gillian Wrigley of the Low Incomes Tax Reform Group (LITRG), Frank Haskew, head of the ICAEW Tax Faculty, and Baker Tilly partner Andrew Hubbard. Government witnesses included David Gauke, financial secretary to the Treasury, and HMRC officials.

Asked to comment on the possibility of integrating income tax and NICs, Whiting told the committee that most businesses say the difficulty caused by tax and NICs being on different systems and subject to different rules of computation was “one of the greatest sources of complexity, confusion [and] error”.

But he added: “I do not need to tell you that combining the two major levies into one tax is clearly a major undertaking with huge political implications.”

Hubbard welcomed the changes to class 2 NICs set out in the Bill. “But if you were designing a system from scratch would you have two different classes of NIC for the self-employed? Or would you roll it into a single class of NIC, as in an ideal world that is what would have happened. Class 2 is essentially the relic of the old days of the stamp,” he said.

Gauke said the measures would make it easier for the self-employed to comply with the tax system. “They now have one payment system rather than two and they are able to deal with their class 2 NICs as part of the self-assessment system, which is a step forward that has been widely welcomed.”

During a discussion of the Bill’s anti-avoidance measures Gauke said: “Some of the high-profile cases reported in recent months and which have now been addressed go back to schemes that were put in place in 2004, 2005 and 2006. This fundamentally changes the economics, and the business case for pushing these artificial, contrived tax avoidance schemes therefore becomes much less attractive.”

The committee published written evidence submitted by the Chartered Institute of Taxation, LITRG, ICAEW, the OTS and the Administrative Burdens Advisory Board, and the Recruitment & Employment Confederation.

Related articles:

Replies (1)

Please login or register to join the discussion.

avatar
By cjfrisby
28th Oct 2014 12:15

Logically,

 the requirement for self-employed people to register with HMRC (and the associated fine for not doing so) will disappear won't it? Complying with Self Assessment rules ought to be sufficient.

 

Thanks (0)