HMRC request for backdated Class 2 NICs

profscooter

I had a letter this week from HMRC saying I owed £250 in class 2 NICs from 2008-10, so about 14-15 years ago. It’s a bona fide letter and I phoned them to enquire further, eventually they answered and the chap said they can go back 20 years. I thought it was 6 years at least in terms of records you are supposed to keep. Apparently it should have been calculated at a higher rate. Anyone else had this happen, and any idea why? 

Bookworm105

how keen are you to want to argue it? Do either of the following situations apply? If not then they are out of time.
Have you checked your state pension forecast, although your wording implies you have paid something towards those years so may have a full credit already anyway? If you need to catch up then they are offering you a golden opportunity to fill years which are now well out of date for backfilling for pension purposes, so worth doing anyway


EM3220 - Discovery: legislation and time limits: HMRC’s interpretation of the legislation - HMRC internal manual - GOV.UK (www.gov.uk)
"The time limit is extended to 20 years if the assessment involves a loss of tax

• brought about deliberately by the taxpayer or a person acting on their behalf, with a deliberate intention to mislead, or
• attributable to a failure by the taxpayer to notify chargeability,"

As it says, the above is HMRC interpretation, you could of course take them to court for a judicial "clarification" if you want to fight it on other grounds

[Deleted User]

profscooter said:

I had a letter this week from HMRC saying I owed £250 in class 2 NICs from 2008-10, so about 14-15 years ago. It’s a bona fide letter and I phoned them to enquire further, eventually they answered and the chap said they can go back 20 years. I thought it was 6 years at least in terms of records you are supposed to keep. Apparently it should have been calculated at a higher rate. Anyone else had this happen, and any idea why? 

Used to be fairly common. I think that you have mis-interpreted what they said. There is no ‘higher rate’ for Class 2. 

Class 2 in 2010 was £2.40. The penalty that they impose for late payment is to charge at the current rate which is £3.45 pw. 

If you have gaps in your NI record it is almost certainly worth paying!

Dazed_and_C0nfused

profscooter said:

I had a letter this week from HMRC saying I owed £250 in class 2 NICs from 2008-10, so about 14-15 years ago. It’s a bona fide letter and I phoned them to enquire further, eventually they answered and the chap said they can go back 20 years. I thought it was 6 years at least in terms of records you are supposed to keep. Apparently it should have been calculated at a higher rate. Anyone else had this happen, and any idea why? 

As you fall under transitional rules for the new State Pension it's worth checking your State Pension forecast on gov.uk to see how this might impact your foundation/starting amount and overall impact on your entitlement.

It could be a blessing in disguise.

profscooter

I can’t imagine there being any intention to mislead. It would all have been done by my (then) accountants who I pay to get this stuff right. Probably an honest mistake by an accountant employee I imagine. I just assumed that once the tax returns are done and accepted that was that, and certainly wouldn’t expect HMRC to be trawling back 15 years to look for underpayments and send bills for immediate payment out of the blue. 

Dazed_and_C0nfused

profscooter said:

I can’t imagine there being any intention to mislead. It would all have been done by my (then) accountants who I pay to get this stuff right. Probably an honest mistake by an accountant employee I imagine. I just assumed that once the tax returns are done and accepted that was that, and certainly wouldn’t expect HMRC to be trawling back 15 years to look for underpayments and send bills for immediate payment out of the blue. 

Class 2 NI was independent of tax returns in those years, it's only since 2015-16 (or maybe 2016-17) that is part of a return.

[Deleted User]

Apart from possibly initially setting one up for payment of Class 2, there is no way that the accountant is responsible for checking that you still pay them, particularly if paid from a personal account. 

Nevertheless I always checked if payments were made from a client’s business account and would have asked the question if not the case. Not everyone does though!