2015/2016 SA Return filed a few weeks ago for a sole trader with a CIS repayment due.
However I received a tax calculation from HMRC whereby Class 2 NIC had not been charged.
I contacted HMRC and was transferred to the NIC section who said that my client had not paid Class 2 NIC for some years.
This was not picked up when his accounts were prepared as a dedicated Business Account is used and Class 2 NIC should be paid from his private account
I was advised that they will backdate the Class 2 NIC for earlier years and send him a bill and the option to pay other years Class 2 NIC to increase his pension.
Transferred back to HMRC and advised them Class 2 NIC was due and asked them to amend their records. I did not need to do a correction as the Return was correct.
However I was advised the repayment had already been made, and that they will send a statement in due course with the Class 2 NIC being payable January 2017.
I only raise this as I suspect this will not be an isolated case, and forewarned is forearmed.......or something like that .
Normally, when you do so, there is a prompt if client owes any NI.
If SA was completed by third party they would have received the same prompt as you process SA and you are given the option to have this added to outstanding payment due on return or alternatively like in your clients case, if they are due a refund, to have NI deducted there and then.
Yes, it is. I do not use Taxcalc, but go straight onto HMRC filing, when you start inputting the info for return there is a prompt along the way, then when you `view your calculations`, again if you have selected to pay or have refund deducted by Class 2 owing, the amount shows up.
You can access clients account if you are their agent and have a look at what HMRC have listed with regards to previous years, any outstanding returns etc.,. I make a point of having a look at record and letting them know if anything shows up which they need to sort out. Sometimes it can be a shocker and you wonder what you have taken on !!
I think I have the answer having spoken to my client.
He has not paid Class 2 for many years when he first made a small income exemption claim.
He admitted he did get a letter some years ago but chose to ignore it.
So I guess no NIC 2 charges made - so no arrears, and this is why HMRC did not make a charge on the 2015/2016 Return.
It also explains why there was no error when I filed the Return, no outstanding liability on record.
I have explained to my client that I would not spend his repayment yet as a demand for the outstanding Class 2 for many years was no doubt now in the post.
I have explained to my client that I would not spend his repayment yet as a demand for the outstanding Class 2 for many years was no doubt now in the post.
Jay
Bet he is loving you for that
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Just had that with one of my acquisitions Jay. They suddenly realised that there were advantages to paying class 2 when they found that the pregnant business owner would not get anything due to lack of contributions.
They quickly sorted out the backdated class 2's only to then find that the benefits associated with them are not applicable until the year following the one where the contributions are brought back up to date.
The baby's due soon but I've told her that she needs to keep her legs crossed until next April.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
