NIC 2 - Bullied by debt collectors

ladli

I have been self-employed for a few years now, earning very little and making a loss in the last 2-3 years. Although I used to get a bill for NIC 2, I assumed that I was under the threshold (£5,500) and did not HAVE to pay the NIC 2. However, 6 months ago, a debt collection agency, on behalf of HMRC, started to telephone me and demand that I pay up. When I explained that I should be exempt they said that I would have to apply for the exemption. They telephoned me every week and have been harrasing me and making threats.
I have written to HMRC and asked for the exemption twice now but have had no reply.
I am really frustrated as nobody is listening to me. HMRC do not reply to my letters. I feel like going to my MP and making a complaint.
My questions:
(1) Should I have applied for an exemption all those years ago? I was not aware that you had to do this and its new to my accountant. Can HMRC back-exempt those previous years.
(2) What can the debt collectors do? Can they turn at my doorstep and bully/possess my property etc? Dont they have to go to court first?
(3) Is there an appeals procedure? Will the tax commissioners (if they still exist) listen to my appeal?

xylophone

http://www.hmrc.gov.uk/working/intro/class2.htm#5

I have written to HMRC and asked for the exemption twice now but have had no reply.
I am really frustrated as nobody is listening to me. HMRC do not reply to my letters. I feel like going to my MP and making a complaint.

http://www.hmrc.gov.uk/complaints-appeals/how-to-complain/make-complaint.htm

Does your MP run a weekly "surgery"? You could go along?

PlutoinCapricorn

Normally you get a bill for anything owed to date (usually just a few weeks) and a Direct Debit form for future Class 2 payments when you register as a sole trader. You also get the exemption form which you may chose to use if your earnings are expected to come below a certain limit. Note that exemption is not automatic because people can elect to pay anyway so as to be eligible for certain benefits. That is why you must claim on the relevant form.

Ignoring anything from HMRC is not a good idea. It sounds as though your accountant is not very knowledgeable - and people with low earnings usually complete their own returns.

I hope that others with experience of this situation will be able to offer more help.

Pennywise

ladli wrote: »

I have written to HMRC and asked for the exemption twice now

Have you actually completed and submitted the exemption application form?

http://www.hmrc.gov.uk/forms/cf10.pdf

As said above, you should have received at least one or two demands each year from HMRC showing the NIC liability - these are usually accompanied by explanatory forms outlining the exemption rules and how to apply. Did you move and forget to tell HMRC's NIC department at Longbenton? Ignoring HMRC and not following their procedures is not the way to deal with them.

ChiefGrasscutter

Many (if not most) people below the small earning limit choose to keep paying as a full year NIC's will count towards their pension entitlement.
If they stop they will have 'missed years' - which may affect their future entitlement....depending on how many complete years they have already accumulated and may accumulate in the future.

Hence you have to make a positive declaration that you do not wish to pay and have understood the possible consequences.

Edit - yes and the accountant is incompetant

System

ladli wrote: »

(1) Should I have applied for an exemption all those years ago? I was not aware that you had to do this and its new to my accountant.

This is the form you should have completed - http://www.hmrc.gov.uk/forms/cf10.pdf

Get a new accountant if they don't even know about class 2 exceptions.