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Peter Arrowsmith FCA highlights a selection of NIC matters, and provides a reminder on the timely payment of Class 1A National Insurance contributions, in the light of the banks' 'faster payment' system.

Women's pensions

I may have mentioned previously the possibility of some female pensioners being able to claim extra state pension by paying Class 3 without penalty rate for 1996/97 to 2001/02 inclusive.

The DWP Minister announced on BBC Radio 4's "Moneybox" last month that the Pension Service has now identified all 73,000 affected ladies and will shortly be contacting them about this. They are women who have gaps in their contribution record in those six years stated and reached pension age between 1998 and 2004.

In addition, it is believed that there is a good number of women who have not been awarded all the Home Responsibilities Protection that they are due. DWP is currently trying to identify these on the NIRS2 computer and hopes to be in touch with them in due course.

There are two new leaflets of use to women who feel that they may be affected and these are available at:
www.thepensionservice.gov.uk/resourcecentre/factsheets/home.asp

National Insurance number procedures

The government has announced that during the course of 2008 it is reintroducing procedures to count foreign nationals in and out of the UK (Yes staggering, isn't it, that they don't do so already?). As part of the changes DWP will, where a person has no right to be in the UK, no longer issue a NINO to their partner.

Regulations will be made to effect this change in the near future.

Ill advised

Norman Clements was born in the UK in 1938 and paid National Insurance until he moved to Australia at the age of 21. There he remained until the age of 65. In 2002 he claimed a UK state pension and paid contributions for the six years from 1996/97 to 2001/02 inclusive. He did then, however, go on to apply to pay for 1959 to 1996. HMRC refused contributions as it said that the failure to pay for those years was due to a failure to exercise due care and diligence (Social Security Contributions Regs 2001, Reg 50).

Mr Clements claimed rights under EU law and said that Reg 48(3)(b) breached the European Convention on Human Rights. He said that others should have told him about his previous eligibility to pay UK voluntary contributions.

The Special Commissioner said that as Mr Clements had not worked in any of the EU States in the years in question EU law was of no relevance.
 
Further, there were no obligations on any other persons - including any employer or the Inland Revenue - to tell him about the reasons why the payment of Class 3 contributions might be desirable. Having left the UK over 40 years previously,  he could not reasonably expect to receive a full British pension.

For all these reasons, the appeal was dismissed.
(Norman Tansley Clements v Commissioners for HMRC - SpC 677)

Tip of the Month - June 2008

I have already found the banks' so-called 'Faster Payments' system to be something of a disappointment. It is clearly not going to be the boon that many of us (me included) expected. Even when the transitional period is over (and in the case of my own bank there is no immediate likelihood of it even starting, despite it being one of the thirteen committed founder members) it will only apply to payments of up to £10,000, and not to BACS. So an employer will only be able to benefit if the payment falls below £10,000 AND it is initiated as a separate one-off payment by phone or internet (even if those facilities are available at all on the account), rather than merely being added to a general BACS run.

The present transitional period also means that the working limit is a lot lower than £10,000 for many banks. And the recipient bank needs to be capable of receiving 'Faster Payments' too. There is a sort code checker at: www.canipayfaster.co.uk and - surprise, surprise - those for HMRC cannot receive Faster Payments (as of 2 June 2008) even if all the other stipulations just mentioned are met. In addition, just because a particular bank is running the system for personal customers, it does not automatically follow that business customers are running to the same implementation timetable.

In the light of all this, and despite having promised not to, I am returning to an old chestnut having expected that last year was the last time I would ever mention it. That is the timely payment of Class 1A contributions.

Cheques for the 2007/08 liability must be received on or before 19 July 2008 (a Saturday this year). Electronic payments must be received for value by 22 July 2008 - which means having initiated the payment by your bank's own cut-off time on Friday, 18th July 2008.

All in all, businesses making electronic payments to HM Revenue and Customs might be well advised to pretend that 'Faster Payments' just doesn't exist - certainly for some time and unless they have done their homework as far as their own bank is concerned.

Of course, these comments apply equally to the making of all other payments to HM Revenue and Customs by electronic means - and indeed other payments to suppliers.

The above is taken from 'NIC Newsletter' (01/06/2008), and is reproduced with the kind permission of Peter Arrowsmith FCA, who retains the copyright.