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HMRC to collect class 2 NICs from PAYE codes

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1st Nov 2013
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HMRC has said that it will collect outstanding class 2 national insurance contributions (NICs) from PAYE tax codes from April 2014.

This is aimed at those who were self employed but have now gone into PAYE or are paid a taxable UK based private pension, but still owe the Revenue class 2 NICs from when they were self employed.

HMRC said it had been sending payment requests since April 2013 to customers who owe class 2 NICs, and if they’re not paid, the debt can be picked up through their PAYE code from April 2014 or via a private debt collection agency.

If a client has received an incorrect payment request, the Revenue has asked that they contact them immediately.

In addition to this, those who owe class 2 NICs and haven’t paid or contacted HMRC will get an annual coding notice between January and March which will tell them the amount to be collected in April next year.

Relatedly, at the start of the year the government announced it would hold a consultation on using self assessment to collect class 2 NICs, but this relates to those still self employed.

The CIPP’s Diana Bruce said this may result in accountants getting more queries from those affected, especially if they haven’t paid attention to the letters from HMRC and then see a change in their pay.

“I would say that the queries will be to whoever is responsible for the payroll. But the individual will need to contact HMRC directly if they have an issue,” she said.

The CIPP recently issued a statement on HMRC’s ‘coding out’ consultation, which included a suggestion from members that HMRC look to improve the explanations in letters it issues to individuals.

“Whilst in broad agreement with the proposal to introduce graduated limits for the amount of debt which can be collected through PAYE, respondents had concern for those on low incomes,” the CIPP said.

“There was also disquiet over the likely increase in the number of enquiries employers will receive as a result of these proposals, and respondents suggested that HMRC look to improve the explanations in letters it issues to individuals.”

Replies (4)

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Jennifer Adams
By Jennifer Adams
01st Nov 2013 14:55

Practically how many will this effect?

I would be surprised if this brings in much dosh. One thing self employed people invariably make sure they pay is their small amount of Class 2. It will only effect those who have been self employed, ceased for whatever reason and then were lucky enough to go and get themselves a PAYE job.

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By silverghost
01st Nov 2013 16:25

hypocrites

Beware the NI [***]-up. Several times I have closed down a self-employment, only for the NI numpties to keep demanding class 2 - "we have to be told separately". So you ring them up and tell them, "no, we need it in writing" - you heard me, so write it down. But when they want something, they're quite happy to communicate with the PAYE & SA people. This week, a client paid a class 2 demand, and he has NEVER been self-employed. This is not a good move.

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By djames
04th Nov 2013 12:44

one rule for them . . .

Agree with Silverghost on this one.   Every year we get cases of incorrect NI demands for Class 2 NICs where an individual has ceased in business.   Because the NI lackeys in Longbenton take about 6 months to reply to any written correspondence, we always advise our clients to cancel their direct debits first and worry about the paperwork later - eventually HMRC will write to say 'why have you stopped paying NI' and the response 'I ceased in business on . . . .' is then normally properly recorded by their 'system'.   If you try and do things the other way round - ie try and advise them that your client has ceased in business, could you please stop sending demands - this seems to be filed in their 'not sure what to do with this' pile and subsequently ends up being binned.

This will just mean that many of these incorrect NI demands will now be incorrectly collected via a PAYE code, which, I imagine, will create more work in trying to get it back.

In the face of the CIS debacle, I can't help but think that HMRC are deliberately trying to create a 'them' and 'us' situation with agents.  Speaking for myself, its working.

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By ireallyshouldknowthisbut
05th Nov 2013 09:51

.

Why not collect it (or indeed rebate it) via the tax return in the first place?

The whole system of class 2 and 4 is a plain daft job creation scheme for micro amounts of tax.

So many people pay 2 when they ought not to, or don't pay it when they should. There seems to be almost zero checking between SA returns and contributions. 

 

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