DMBM525940 - Class 4 NICs: Effects of limitation on Class 4 NICs

Effect of limitation on due dates of Class 4 liability

Prior to Self Assessment

Before Self Assessment the statutory due date of Class 4 liability was the same as any associated tax in the assessment and depended on whether the assessment was made on time or late. Assessments made on time were due on 1 January and 1 July in the year of assessment. Late assessments were due 30 days after issue.

Example: If tax for 1993/94 was not assessed until 15 October 1997, both the tax and the Class 4 were due on 14 November 1997, and so the six year limit for limitation purposes cannot begin to run until then.

Self Assessment

In Self Assessment, the statutory due date for both tax and Class 4 NICs is the 31st January following the end of the relevant tax year.

So the due and payable date under Self Assessment is fixed in relation to the tax year where the Self Assessment return is submitted, including cases where an SA determination is displaced by a self assessment.

Amendments to the SA return

In circumstances where the Self Assessment return is amended or corrected and the taxpayer does not dispute the matter within 30 days, the amended liability is due and payable on the later of:

• 30 days after the issue of the notice of amendment or
• the statutory due date of the return.

The date of amendment will be recorded on the SA statement.

Appeals and postponement

If the assessment (or SA amendment) is appealed and payment postponed, any amount payable on determination of the appeal is due 30 days after issue of the notice under S55(9) of the Taxes Management Act 1970.

A non-postponed amount is due as if there is no appeal, 30 days from the issue of the amendment under S55(2) Taxes Management Act 1970.

Determinations under S28C Taxes Management Act 1970

Revenue determinations under Self Assessment are determinations of income tax. Class 4 NICs are not identified separately. Therefore, an enforcement action for a determination is not susceptible to a defence of limitation.

Determinations superseded by a self assessment

HMRC has 5 years from the filing date in which to issue a determination. The taxpayer has 12 months from the date of issue of the determination in which to file a return. A self assessment will not be accepted later than six years after the filing date (S28C (5) TMA 1970).

If a self assessment displaces a determination then the due date for any Class 4 is the original statutory due date (S59B(4) TMA 1970).

If proceedings have been commenced for the determination and have not been concluded, then they can continue for the revised amount (as if they had originally been taken for the self assessment) (S28C (4) TMA 1970). A defence of limitation cannot therefore apply.

If an earlier determination has been paid, and the taxpayer then submits a return showing further debt, take proceedings for the debt on the return within six years from the date of the last payment.

You should respond to a defence of limitation that payment of the determination was a payment on account of the debt, and the limitation date is advanced accordingly under Section 29(5) Limitation Act 1980.

SA payments on account

SA payments on account are payments on account of income tax. Class 4 NICs are not identified separately until the SA return is filed.

If payments on account are not made, or are less than the self assessment the statutory due date for the Class 4 remains the 31st January following the end of the tax year (S59B(4) Taxes Management Act 1970).

Discovery assessments in SA

Where a “discovery” assessment is made under SA, the due date for both tax and Class 4 NICs is 30 days from the issue of the notice where there is no application to postpone payment (S59B(6) Taxes Management Act 1970) or for any non-postponed amount (S55(2) Taxes Management Act 1970).

Any further tax or Class 4 payable following determination of the appeal is due 30 days from the determination (S55(9) Taxes Management Act 1970).