Class 2 NI problems to continue beyond summer
The problems with incorrectly charged Class 2 NI have been widely reported. HMRC has just released an update, and it’s bad news for affected individuals. What’s the full story?
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Accounting for VAT if there is no cash payment
Your business has submitted repayment returns for the last two quarters and you are concerned that you might have underpaid output tax on some supplies where no money has changed hands. Are your concerns justified?
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Treatment of distributions under review
The government has launched a consultation on modernising the tax treatment of distributions and repayments of capital by companies. The proposals could affect the distinction between dividends taxed as income and capital payments subject to CGT. What changes are being considered?
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Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
We reported previously that incorrect SA302s that include Class 2 NI were being issued, despite compulsory payments being abolished from April 2024. Note that this only affects taxpayers that have already filed their 2024/25 tax return. HMRC has now issued an update to explain that incorrect letters will continue to be sent until an IT issue is resolved in September. With Making Tax Digital right around the corner, how will HMRC cope if it can’t even stop sending out letters it knows are incorrect for over two months?
In the update HMRC stresses that there won’t be any long-term impact as it will refund, or credit the account of, all affected customers. If you’ve received a letter concerning the “correction” of your 2024/25 tax return regarding Class 2 NI, you will be notified by HMRC when it has updated your account. There is no need to pay the erroneous amount in the meantime.
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