The firm said that they had been informed that due to an error between HM Revenue & Customs (HMRC) and the National Insurance Office (NI Office) some people who are self-employed may end up not paying Class 2 NICs when they should be.
As of April 2016, Class 2 NIC had to be collected via self-assessment on the tax return for self-employed workers instead of via direct debit, as had previously been the case.
However, according to Thorne Widgery the two departments responsible for implementing the changes and recording Class 2 NICs, HMRC and the NI Office, have failed to share this information – resulting in some people, who have completed their self-assessment tax returns correctly, having the Class 2 NIC removed from their tax calculations for 2015/16 when contributions are owed or have already been paid voluntary.
Megan Smith, Tax Manager at Thorne Widgery, said: “It would seem that HMRC & the NI Office have failed to communicate properly to one and other – even though they are supposed to be more ‘joined up’ – about those who are due to pay Class 2 NICs since the changes made last year.
“We have already advised clients where HMRC have been taking the Class 2 NIC off their tax calculations even though it states on the tax returns that they are obviously self-employed. Worryingly, we having spoken to, and heard from, other peers within our profession both locally and nationally and we are not alone on this issue.”
She went on to say that HMRC and the NI Office failed to communicate properly with each other, adding: “The most amazing thing is that the NI Office has cheerfully been collecting NI contributions in previous years which would indicate that clients are self-employed.”
The tax team at Thorne Widgery is encouraging those who are self-employed and subject to Class 2 NICs, to check their tax bill to ensure they are paying contributions.
“HMRC seems to be washing their hands of this problem and they have already told us that they expect us to ring them regarding each client to get it corrected, even though it is their error,” said Megan.
“We predict there will be many more people out there affected by this who may not be aware of the issue and could be unwittingly not paying when they should be.”