Question, Question, Question, Question

squirrelpie

"It does beg the question as to what you are paying your accountant for, they should normally be helping you with this."

Exactly! If the OP feels they can't ask their accountant a question, it's time to find another accountant, IMHO!

Go to your accountant's boss (or his boss ...) and tell them you're thinking of changing firms unless they get their act together.

QrizB

DhwERbf689 said:

why HMRC don't think you've paid enough to qualify for State Pension for the past decade.

It shows on the HMRC website that for the past 4 years, where I've been losing money and not earned anything, I've not made any contributions. Isn't that normal?

I don't have an accountant, but if I did I'd expect them to know enough about their job that, on every tax return, they'd ask me (even if I've made a loss) "do you want to pay voluntary Class 2 NI so you get state pension entitlement?".
So why hasn't yours?

zedonk

It shows on the HMRC website that for the past 4 years, where I've been losing money and not earned anything, I've not made any contributions. Isn't that normal?

On the years prior to that where I was earning it shows I've contributed and paid the full amount neccessary to qualify.

That sounds entirely normal to me. You've been paying class 2 contributions as you should, but when your business started making a loss, you didn't have to pay them and so you didn't. There will have been a box on your tax return you could tick to pay these voluntarily (and thus have those years qualify for the state pension), but it sounds as though your accountant didn't tick it and didn't discuss it with you.

I think it's really unlikely that you aren't registered as self-employed. Based on what you've said about your profits and your NI record, there's a much simpler explanation! 

QrizB

DhwERbf689 said:

That sounds entirely normal to me. You've been paying class 2 contributions as you should, but when your business started making a loss, you didn't have to pay them and so you didn't. There will have been a box on your tax return you could tick to pay these voluntarily (and thus have those years qualify for the state pension), but it sounds as though your accountant didn't tick it and didn't discuss it with you. I think it's really unlikely that you aren't registered as self-employed. Based on what you've said about your profits and your NI record, there's a much simpler explanation! 

So basically I should been paying these class 2 contributions voluntarily but my accountant never thought to mention it to me?

In essence yes. That's what I'd expect my accountant to do for me, if I had one.

DhwERbf689 said:

I'm not sure I'm trusting my accountant to give me the right answers currently. 

I do think you need to start with your accountant. At the very least, you can make sure that your Class 2s for this year are covered, and you/he might be able to amend your previous tax returns and pay some previous years too.

Dazed_and_C0nfused

DhwERbf689 said:

So an update on this if anyone cares...

Finally got some sort of answer from my accountant today on this though I'm no clearer on what any of it means and even he doesn't seem to know the answer for sure...

He said "you can pay Class 2 even if you're making a loss but I don't know if paying class 2 on loss making years qualifies towards state pension as HMRC guidelines on this is unclear"  

Why is it so many people here seem to understand these contributions and what they mean (at least that's the impression I get) but my accountant isn't clear and thinks HMRC guidelines are unclear?

Very confused now.

Maybe your accountant needs some refresher training.

Or a course in using Google.

https://www.icaew.com/insights/tax-news/2022/april-2022/nic-for-the-self-employed-a-clarification-and-reminder-following-the-spring-statement

Dazed_and_C0nfused

DhwERbf689 said:

Thanks for the link, I just got confused even more when I read it but I'll certainly pass it onto him.

You (or your accountant) would need to verity this but it is from a normally reputable website/organisation.

What part of this is confusing you?

HMRC has confirmed that individuals with adjusted trading profits up to the class 2 small profits threshold (SPT), which for 2022/23 is £6,725 (£6,515 in 2021/22), will continue to be able to make voluntary class 2 national insurance contributions (NIC) in 2022/23 of £3.15pw as is presently the case (£3.05pw in 2021/22). This will include traders who make losses, because a trading loss is equivalent to a profit of £nil for class 2 NIC purposes

pinnks

Without looking at the guidance or legislation my initial thought was that of course you can pay Class 2 voluntarily if you incur a loss, so long as you are genuinely still self-employed and holding yourself out for business.  

And NI paid voluntarily is simply NI paid voluntarily - if the year is full and qualifying, of course it will qualify for pension purposes.

Any accountant worth their salt should either know the above as a matter of course or be able to consult a colleague who does, especially in a firm of any size.

Anyway, I thought I would go on a guidance hunt and it took 2 minutes to find the answer.  Perhaps you could point your accountant at NIM70001 - Class 2 National Insurance contributions: general information: introduction - HMRC internal manual - GOV.UK and the Spring Statement 2022 and 2023 texts in particular (they are identical):

"If a person’s profits are less than the SPT, or they made a loss, they can choose to pay Class 2 NICs voluntarily to protect entitlement to State Pension and certain benefits. This has not changed."

This derives from Section 11(6) of the Social Security Contributions and Benefits Act (SSCBA) 1992, which says, "If the earner does not have relevant profits of, or exceeding, the small profits threshold, the earner may pay a Class 2 contribution of £3.45 in respect of any week in the relevant tax year that the earner is in the employment." 

If you are "in the employment" and incur a loss, then by definition, you do not have "relevant profits of, or exceeding", anything...

Edit - having read the whole of the above link now, I see S11(6) is referenced directly:

"For those self-employed earners with relevant profits below the SPT or who have no relevant profits, such earners will be eligible to pay voluntary Class 2 NICs (section 11(6) SSCBA 1992)"