Coronavirus still causing HMRC issues
It transpires that HMRC’s system has not accepted some voluntary Class 2 NI payments for 2020/21, meaning entitlement to the state pension might be affected. Do you need to take action to resolve this?
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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?
Voluntary Class 2 NI is generally paid by people who are self-employed but do not exceed the small profits threshold. For just £3.15 per week, you can preserve your entitlement to state benefits and the state pension if you fall into this category - far more efficient than paying Class 3 NI at £15.85. However, there has been an issue with some 2020/21 tax returns rejecting the voluntary NI entry. At the time the returns were filed, HMRC extended the filing deadline to the end of February 2022 due to the pandemic. Only the tax returns filed after the usual deadline of 31 January 2022 are affected and an error message is displayed explaining that it is too late to pay voluntary NI. This could mean that the voluntary NI was either not paid, or it was paid and your self-assessment account is simply sitting with an unallocated credit for the amount.
HMRC will be writing to everyone in December to explain how this can be resolved. If this affects you but you do not receive a letter from HMRC you can call the National Insurance Helpline on 0300 200 3500. It's worth checking whether you already have enough qualifying years for the state pension before making a further payment to HMRC. You can check your NI record in your personal tax account.
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