ESA and National Ins. Shortfall

concerned43

Hi there, sorry this is a long story.
I am posting on behalf of BIL. He has been self-employed all his working life and was paying Class 2 + class 4 NI contributions. However he had to stop work due to a heart condition and subsequently has had to undergo heart surgery and won't be back at work for 6 months.
He made a claim for contribution based ESA which was declined due to him not having continuious contributions - turns out his accountant was paying the IR and the IR only took class 4 for the last financial year.
Therefore creating a shortfall of £350!
He was due a tax rebate and asked the IR if this could be put the money towards his NI shortfall (which they agreed) and asked the DWP if they would pay him ESA if his contributions would be brought up to date (they agreed).
He went ahead and payed the shortfall but the DWP say they cannot pay him his ESA because the IR have put a 6 week 'fine' on his file (for late NI payment) and therefore will not be paying him any ESA for another six weeks - nor are they backdating the claim.
The IR deny having put anything on his file!
Has anyone come across this before? I certainly have never heard of it and can't find anything on the government web site.
Would be grateful if anyone could shed some light on this.

Robbie64

When was the shortfall paid?

healy

concerned43 wrote: »

Hi there, sorry this is a long story.
I am posting on behalf of BIL. He has been self-employed all his working life and was paying Class 2 + class 4 NI contributions. However he had to stop work due to a heart condition and subsequently has had to undergo heart surgery and won't be back at work for 6 months.
He made a claim for contribution based ESA which was declined due to him not having continuious contributions - turns out his accountant was paying the IR and the IR only took class 4 for the last financial year.
Therefore creating a shortfall of £350!
He was due a tax rebate and asked the IR if this could be put the money towards his NI shortfall (which they agreed) and asked the DWP if they would pay him ESA if his contributions would be brought up to date (they agreed).
He went ahead and payed the shortfall but the DWP say they cannot pay him his ESA because the IR have put a 6 week 'fine' on his file (for late NI payment) and therefore will not be paying him any ESA for another six weeks - nor are they backdating the claim.
The IR deny having put anything on his file!
Has anyone come across this before? I certainly have never heard of it and can't find anything on the government web site.
Would be grateful if anyone could shed some light on this.

This has been mentioned on the forum a few times and is standard penalty/waiting time when someone pays class 2 NI late.

concerned43

the shortfall was paid last week, he did not know there was a shortfall, there was no letter from the IR informing him of the matter, he pays his tax/NI yearly (April - April). Will search forum again for past posts.

Robbie64

Ah, that's why there is a 6 week "fine" in place now. When you pay any NIC shortfall you can't be paid any benefit that relies on those NICs for a period of 6 weeks.

stazi

HMRC decide if the Class 2 conts are late or not. Late paid conts are automatically treated as 'late' if paid after the start of the benefit year JCP would 'use' the conts.
The OP's BIL needs to contact HMRC ASAP and ask them (nicely), to treat the conts as 'paid on time' -ie without the conts being treated as 'late'.
If HMRC agree, they'll update the NI records so that JCP can use the conts now to look again at the ESA(C) claim- however this can take upto a month. To speed things up, you could ask HMRC to fax JCP the updated conts record.

concerned43

Thanks Stazi but the HMRC have denied putting a 'fine' on BIL file. This appears to be JCP making it up!

NASA_2

concerned43 wrote: »

Thanks Stazi but the HMRC have denied putting a 'fine' on BIL file. This appears to be JCP making it up!

The JCP are not making it up.

HMRC have a system called eNIRS2, the JCP have access to this system to enable them to make decisions on contributory benefit, when the Class 2 NIC's were paid late HMRC update eNIRS2 with the Class 2 NIC's and what date they were paid on.

If they are paid late then this shows up on eNIRS2 with a date they were paid and a Late 'Radio button' selected.

While this may mean little to HMRC - the JCP use the information to impose the six week penalty - HMRC have decided they were paid late (And they were paid late) so it is up to them to review that decision.

concerned43

Thanks NASA but the HMRC have said they have not put a 'late' on BIL's record

ceecee1

But they were paid late. The National Insurance system will have noted them as paid on the date of payment and they would have automatically have been flagged as a late payment.

There is (and has always been as long back as I can remember) a 6 week penalty on the payment of benefit when that payment depends on late paid national insurance contributions.

I would say that the only person that you have a complaint about is the accountant

NASA_2

concerned43 wrote: »

Thanks NASA but the HMRC have said they have not put a 'late' on BIL's record

I find that hard to believe. The NIC's were late and it wasnt the HMRC's fault.