HMRC Recovery of NIC Arrears

Ian Whyteside · Posted: Fri Jun 27, 2008 1:10 pm Post subject: HMRC Recovery of NIC Arrears

Hi everyone,

Will someone remind me, when did HMRC get the power to do a 6 year assessment claim on an employer for NIC failures?

We all know that for Income Tax a compliance review will assume that any errors detected will have been going on for at least 6 years and they will assess and penalise accordingly.

I am aware that they did not originally have the power to do the same with NIC but were given the power to do so recently, and not retrospectively.

So, if a client wanted to make a voluntary disclosure about an NIC error found in an internal review how far back do you go with the calculation?

Any clarification will be most appreciated because I cannot remember!

Ian Whyteside

Ian Congreave · Posted: Tue Jul 01, 2008 11:55 am Post subject: HMRC Recovery of NIC Arrears

Ian, I'm not sure that this is the answer, but Schedule 24 of the Finance Act 2007 includes the new penalty regime for the main taxes, and the penalties in respect of lost revenue include NICs. http://www.opsi.gov.uk/acts/acts2007/ukpga_20070011_en_38#sch24
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Ian Whyteside · Posted: Wed Jul 02, 2008 11:59 am Post subject: HMRC Recovery of NIC Arrears

Ian,

I had an idea the compliance regimes were only aligned recently so I am assuming the calculation of NIC arrears should only go back to 6 April 2007 and not the full 6 year assessment normally encountered with income tax.

I have another issue with this case.

What I have discovered is that in order to get the accounting right my clients have separate payroll reference numbers for different contracts. Whilst this gives finance the right results (which is a statutory requirement anyway) it means the NIC is wrong in that the ET and UEL are being allowed on each of the separate payments.

Since this is because the payroll system does not have the capability of aggregating the different reference numbers for NIC purposes (and this is true up to this month) I am considering arguing that the client should not have to pay the NIC for previous years.

The new system will aggregate properly and all we have to consider is giving suitable notice to the affected employees so they know in advance that their total pay will reduce.

My stance is based on the fact that the guidance seems to suggest that if systems are not capable of combining without considerable effort and cost HMRC are prepared, in certain circumstances, to allow the error.

What I do not know is how successful such a stance can be, and perhaps has been for viewers in the past. I certainly have not used this in the past, but then I have never met the situation up till now.

Ian Whyteside