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There is a fixed penalty of £100 for late notification of commencing self
employment, meaning more than 3 months after starting. It was recognised
earlier this year that two-thirds of these penalties are cancelled for a
variety of reasons and the penalty is high as compared to the Class 2 NIC
charge.
It is now proposed to replace the fixed penalty with a behaviour-based
penalty, aligned with tax that would recognise voluntary disclosure,
reasonable excuse, etc., but the obligation to notify within 3 months
remains. HMRC is also looking at methods to simplify the processes for the
self employed to understand and meet their NICs liabilities and is seeking
views up to 6 June 2008.
Our view
The Government is right to look at a simplification of the processes for
the self employed both in terms of clearer communication of the benefits
of early notification to HMRC and securing entitlement to contributory
benefits by payment of NIC. |
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