New rules permit recovery of unpaid Class 2 NIC

HMRC has published details of new rules which now enable the tax authority to collect unpaid Class 2 National Insurance Contributions (NICs) through an individual’s PAYE tax code as of from April 2014, reports chartered accountants Harris & Co.

This follows the publication of new draft regulations by the Department for Work & Pensions (DWP) which now makes this collection possible.

HMRC have been sending payment requests since April 2013 to those who owe Class 2 NICs.

The payment requests said that if not paid, HMRC may collect the debt through their PAYE code from April 2014 or pass it to a private debt collection agency for recovery on HMRC’s behalf.

Taxpayers are advised to act on the payment requests either by making the requisite payment or, if their payment request is wrong, they should contact HMRC to explain why (eg, if they have stopped being self-employed), failing which they are likely to receive an Annual Coding Notice (P2) between January and March 2014.

This will show the Class 2 NICs debt to be collected from April 2014 through their PAYE code.

To prevent the outstanding debt to be included in their tax code, the full amount will have to be paid.