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Peter Arrowsmith FCA outlines a selection of NIC matters, and offers a timely tip regarding claims for the Winter Fuel Payment.

Paying voluntary Class 2 Whilst Working Abroad

There has been concern for some time about the attitude of HM Revenue and Customs to some cases where persons are working abroad and wish to pay voluntary contributions. Class 2, although normally only for the self-employed, can be paid by some employees in that circumstance - and this is to be preferred to Class 3 as Class 2 is both cheaper and provides coverage for more benefits. In order to be eligible to pay Class 2 it is necessary to have been employed or self-employed 'immediately' before leaving the UK. HMRC now state that having revisited the legislation they have changed the way that such applications are processed. Accordingly, those who have had an application to pay Class 2 rejected are invited to re-apply with a covering note requesting that the earlier decision to be reviewed.
 
Re-application is necessary as HM Revenue and Customs destroy application forms which they reject!

Recent Floods

A special HM Revenue and Customs Helpline is available for those adversely affected by last month's floods in certain parts of the country. The number to call is 0845 3000 157 between 8am and 8pm Monday to Friday and 8am to 4pm Saturday and Sunday. This is the same number as in 2007, though the weekend hours are now slightly shorter.

Where the merits of the case so require HMRC will be able to:

• agree a revised payment schedule when customers are unable to pay due to financial difficulties caused by the flooding,
• agree practical arrangements where individuals and businesses cannot comply with their tax obligations (e.g., their records have been lost or destroyed in the flooding),
• review any  penalties or not impose additional surcharges that may be triggered where deadlines have been missed as a result of the flooding,
• provide help and advice in dealing with other practical, tax related matters arising as a result of the flooding.

Businesses needing to discuss rescheduling payments as a result of the general economic situation rather than issues relating specifically to flooding should continue to contact the Business Payment Support Service on 08453 021435.

No Change in Guidance for SMP

The Tribunal case of North Yorkshire Police and Mrs Deborah Wade v HMRC Commissioners (TC 186) is unusual in that both employer and employee took on HM Revenue and Customs. The matter at issue was the correct start date in respect of Statutory Maternity Pay regarding both of Mrs Wade's two pregnancies. After considering numerous, detailed arguments the Tribunal held that the start date would be fixed on a different basis for each of the two absences and this decision brings into question current HMRC guidance. The matter may not be of immediate significance, however, as HMRC together with the Department for Work and Pensions have decided to appeal against the Tribunal decision. For now, they say that further information will be provided 'when it is available'.

Not (Necessarily) Short Changed

In May 2006 a White Paper was published which was the first firm indication that the number of qualifying years needed for a full state pension would be reduced to 30 (with effect from 6 April 2010).

Ian Osborne and others v HMRC Commissioners (TC 190) considered the position of 13 people who had all made Class 3 contributions around that time - some before the issue of the White Paper, and some after. In one case payment was made notwithstanding an HMRC letter which included reference to the possible change and that any Class 3 properly paid at the time would not be refunded later. Another person made payments both before and after the publication of the White Paper. Claims for repayment had been denied.

The Tribunal Judge (Roger Berner) decided that SSCR 2001 Reg 52 precluded hindsight. Therefore payments made before the White Paper was published were not made in error and are correctly not refundable. Those made subsequent to publication were, however, made in error - even in the case where HMRC had brought the likely change to the attention of the contributor. In that latter situation the error was that payment had been made immediately when it could have been deferred.

Our Records are Better than Yours!

Thomas Joseph Beamish v HMRC Commissioners (TC 217) was another in a long series of cases over the past few years where an individual was unsuccessful in challenging the failure to receive a full rate state pension. What was slightly out of the ordinary was that this case did not involve the married woman's reduced rate election or, indeed, a woman at all.

Mr Beamish had reached pension age in April 2001 and during the intervening 8½ years had challenged his incomplete contribution record (12 blank years) many times, which resulted in some minor revisions, but not the full rate pension he felt was due, claiming he had been working and paying contributions throughout his working life. Sadly, DWP - as the payer of the pension - had directed him down the benefit appeals route, which naturally reached a dead end. The correct route was to appeal an HMRC Notice of Decision as to his contribution record itself.

While Mr Beamish set out details of his work for the 'gap' years, HMRC searches of unmatched contributions, employer records under the names given, and Companies House searches found results inconsistent with the information supplied, both as to names of employer and time periods. In one employment he had been a director and one period of 'work' with a single firm turned out to be self-employment. In an earlier period of self-employment, contributions had been paid very late. The Tribunal Judge felt that the NICO record was to be preferred to the incomplete and inconsistent evidence put forward by Mr Beamish. He also felt that SSCR 2001 Reg 60 (which deals with contributions suffered by an employee, but not paid to HMRC by the employer) should not be invoked in this case.

Tip of the Month - December 2009

At this time of year, I often remind readers to make sure that male clients aged 60-65 receive their (non-taxable and not means-tested) Winter Fuel Payment from the Department for Work and Pensions. Men over 65 and women over 60 will receive the payment automatically, but those slightly younger men need to claim. The amount this year (at that age, higher for some others) is either £125 or £250 and a claim must be made by 30 (not 31) March 2010. Further details are in the DWP leaflet at Guide To Winter Fuel Payments Telephone: 08459 151515.

Next year the position will be different - even assuming that after next year's General Election such payments still exist. That is because the start point - the state pension age for a woman - will have changed. The Table below sets out the current plan to bring the start date for these Payments to age 65 for both men and women in line with women's state pension age increase that starts to take effect next April.

ELIGIBLE AGES FOR ENTITLEMENT TO FIRST WINTER FUEL PAYMENT

The above is taken from 'NIC Newsletter' (01/12/2009), and is reproduced with the kind permission of Peter Arrowsmith FCA, who retains the copyright.