SAM110050 - Repayments: issue repayment: class 4 NIC refunds
Where both Class 1 and Class 4 NIC is payable, an SA taxpayer may make a claim to the National Insurance Contributions Office (NICO) for deferment of Class 4 NIC. In all cases where deferment is granted, NICO will send the taxpayer a deferment certificate and the taxpayer should ensure that this deferment is noted on their SA return.
Prior to 2003-2004, if deferment was granted, the taxpayer did not pay any Class 4 NIC through their SA return. But from 2003-2004 if deferment is granted, the taxpayer pays 1 per cent Class 4 NIC on chargeable profits (above the lower profits limit) through their SA return.
Previously if a refund of Class 4 NIC was identified because the taxpayer had failed to note deferment on their return, NICO would calculate and issue the refund. But in some cases this has resulted in a duplicate refund being issued by the processing office following the subsequent amendment of the SA return or the submission of a claim under S33 ‘Error or Mistake’ (replaced by ‘Overpayment relief’ Schedule 1AB TMA 1970 from 1 April 2010).
In order to avoid this risk, where a deferment is omitted from the return and a request to amend the return or an ‘Overpayment relief’ claim is subsequently received by the processing office, any resulting Class 4 NIC refunds will now be made through the taxpayer’s SA record.
Note: A refund of Class 4 NIC cannot be claimed from the processing office until the Class 4 NIC liability for the year has been finalised and paid in full.
For further information on Class 4 NIC refunds see business area ‘Returns’, section ‘View and Amend Return’ and business area ‘Repayments’, section ‘Claims made outside a Return’, subject ‘Claims: Overpayment relief’ (SAM114045).