National Ins in arrears - need to claim MA

[nct73]

I am self employed plus do short term PAYE contracts which I pay tax & NI class 1 at source. Just as I thought I was building up enough freelance work to go above the threshold for class 2 NI, I had a completely disasterous SE year, ending up in loss. I did hold an excemption certificate in the past but am aware that it has run out and never received any renewal forms. It says on their site that I would be billed if I had underpaid so thought I would wait until I knew how much I had earned SE each year and wait for my bill. I have done my tax forms for 2005-06 which was a good year SE but failed to start class 2 payments. I did enough PAYE to cover my class 1 quota. I have informed the Inland Revenue in writing(tried to do it by phone but was told to do it in writing) that I am in arrears for the past year and now for 2006-07 as well. I have heard nothing back.

I am now 6 months pregnant. I have had my forms through for Maternity Allowance. Because I have still not been billed for my arrears I am at present not able to claim. I do not have enough PAYE weeks to claim within my test period as I lost those contracts once I became pregnant as too much heavy lifting involved.

Has anyone else had this problem? How long do IR take to bill you for arrears? I presume I have to wait till I have paid up to date before I can claim. I am really worried that I am going to lose all my MA even though I have always been honest about my earnings. Any advice?

I used to advise on self employed NI for the Inland Revenue, though I haven't done it for a couple of years so forgive me if I'm a bit rusty.

When you hold an small earnings exception (SEE) you don't pay NI because your earnings are expected to be below a certain threshold, but there is a section in the booklet sent out with the application form that says that if you don't pay NI then your entitlement to certain benefits may be affected and one such benefit is maternity allowance. Note - if you do get a SEE then you won't need to pay NI because it credits your account.

You can request a bill from the Self Employed Contact Centre at any time - all they have to do is click a mouse four times and it's done, and it will be an up to date bill up to the end of the current billing period. If you only want to pay for part of the bill then just send an accompanying letter with the cheque saying exactly what period the money is for. If you don't pay a bill when it's issued it will just roll over to the next billing period and so on until it gets to over £100, whereupon the recovery office theoretically should step in.

As far as I am aware you can backdate a claim for a SEE but I'm not sure if it's for 3 months or to the start of the tax year in April or even further back than that. One possible solution could be to enquire about the possibility of backdating your SEE to take you up to the required amount of weeks for MA.

For example, if you've got 8 weeks left to pay NI through your PAYE job then that would leave 18 weeks short on the NI contributions as you didn't pay your class 2 contributions. You could possibly work out the dates to take you up to the full 26 weeks needed and try and claim for a small earnings exeption up to that date. Does that make any sense?

I'm sorry if the information is out of date, I'm just trying to think of a solution. It does look like you'll have to pay your class 2 contributions for this tax year, and you can pay them going back 6 years (P.S. If you ever receive a bill demanding contributions that go back further than 6 years don't bother paying it. Backdated contributions going back more than 6 years don't count towards your state pension and the Inland Revenue cannot legally demand payment, though they can still request it - the Inland Revenue won't tell you this, you have to write and ask for a time barred waiver on old contributions over 6 years)

Hope that helps.

Thanks for that. I am completely willing to pay my class 2 arrears. I just seem to be having trouble actually obtaining a bill. I phoned the Self Employment Contact Centre who said I had to do it in writing and refused to take any of my details. I sent them a letter a few weeks ago with the dates I owe from plus my NI number and tax code. I have so far heard nothing and it sounds from your message that it is a far from complicated process. I thought they would be glad I was trying to give them money rather than the other way around.