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Posted Tue, 11 Jan 2022 15:11:29 GMT by Gary Coombs
Hi, While talking with a friend about her NI record and state pension forecast we discovered that despite submitting Self Assessment returns for many years in relation to her self-employment, something caused HMRC to ignore her self-employed status from 2016 onwards and to adjust the amounts shown on her self-assessment return such that no Class 2 was actually collected. She did not notice this small reduction in the amounts payable and as a result her NI record shows empty years for 2016/17 onwards. She understands none of this and her tax accountant is being summarily unhelpful. Having read various posts on this forum and done a lot of internet research I tracked the issue down to the changes in 2015 when HMRC started collecting Class 2 NIC via the tax return and suggested she call HMRC's NI team to correct the issue as something clearly went wrong at that time. She did that and the team have corrected your systems. For 2020/21 the Class 2 is now showing as due by 31 January 2022 and she was told she would have to pay the missing NI for 2016/17 to 2019/20 at the current rate. She is happy with that, though personally, I think there is an argument that it should be the rate for the year in question but let's leave that to one side. What is not clear is how she actually pays the £635 or so. It is a couple of months since she called HMRC and she has received neither a letter, nor any payable amounts (other than the 2020/21 mentioned above) added to her SA account. Will HMRC write to her at some point providing a payment reference or other instructions on how to pay, or must she do something proactively still to create the payable amounts? As I said, she understands none of this, her adviser is "not interested" in contacting HMRC about it and if she calls HMRC again she will likely not fully understand what they tell her (she is particularly "overloaded" at the moment having recently lost her husband meaning she is dealing with a myriad of complex issues as a result), so other than sending a 64-8 adding me as her "agent" (something I do not want her to do) we are not sure how to enable her to pay the amounts accepts she has to pay and which are needed to secure her state pension next year. Thanks. Gary
Posted Tue, 18 Jan 2022 15:19:30 GMT by HMRC Admin 19

Since 2015-16, most Class 2 NICs are collected by Self Assessment (SA). In order for this to happen the National Insurance record must be noted that the person is liable to pay Class 2 NICs through SA, and this information must transfer through to the SA record. If this does not happen, no Class 2 NI will be charged by the SA system, even if income from self employment is included in the tax return.  

Without being able to examine the actual record, we are unable to confirm why Class 2 NICs have not been requested by SA before now. 

We are assuming the income from self employment is at or above the small profit threshold? This changes each year and is £6475 for 2020-21.  If income is below this level, a request must be made on the tax return to pay the Class 2 NICs on a voluntary basis.

You are correct, there would be a case for paying the arrears at the original rate if it is found that the lack of charge is due to an error on our part, this can be investigated when the arrears are confirmed.

It is now too late to pay the arrears through SA, during the conversation with our helpline, payment instructions should have been given for the arrears and the onus would then be on the customer to make the payment.  

No letter would be issued unless one was specifically requested. If a letter was requested, the details would have been passed to a clerical section. Unfortunately, the area who would issue such a letter are currently dealing with work received on 26 July 2021 and so it may be some time before the letter is issued (if one was requested).

We appreciate that you do not wish to complete form 64-8 and become your friend’s agent. For your further reference, we are only able to hold details of one authorised agent on our records, so if this was done, the previous agent details would be removed.

Going forward, we suggest your friend calls the NI helpline again and asks for the payment details to be given to her over the phone, during this call, she could also establish if (and when) a request has been sent to the clerical section for a letter to be issued confirming the payment details. You may wish to be present during this call, and after confirming her identity, your friend can give our advisor permission to speak to you about her tax and NI, however this authorisation would be for that particular call only.

Thank you.
Posted Tue, 18 Jan 2022 16:31:18 GMT by Gary Coombs
Many thanks for your reply - most helpful. The income is indeed from s/e and above the threshold. The tax returns for all years 2016/17 onwards included the relevant Cl. 2 entries as they were properly completed by her agent. I don't know why your colleague suggested she pay at the 2021/22 rate for the 4 years concerned (2106/17 to 2019/20 - 2020/21 return has been amended) but as she needs to call your colleagues again she can ask that question. At the end of the day the difference is only about £20, so she may decide it is not worth arguing... I will speak with my friend again as I am 99% certain that she was not given payment instructions and she did not mention a letter - it was me who suggested to her that it may take a while for HMRC to contact her regarding those earlier years given that she had not received payment instructions. Anyway, she may simply have mis-heard or misunderstood next steps as she was struggling enough to ask the relevant questions in any event! I will ensure she calls again to obtain payment instructions and to clarify/finalise the amount due for those 4 years but unfortunately, being with her during the call is not possible as we live 300 miles apart and I am not sure she can ask you guys to "phone her friend". Thanks again. Gary

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