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Trial tribulations

12 August 2014
Issue: 4464 / Categories: Forum & Feedback , Employees , Income Tax

Should class 1A contributions be refunded when benefits are made good?

Following the taxpayer’s victory in the First-tier Tribunal case of Marcia Willett Ltd and HMRC’s decision to withdraw their appeal scheduled for 24 February 2014 several directors of my small and medium-sized enterprise clients decided to retrospectively “make good” benefits in kind provided by their companies over the preceding “in time” four tax years.

Claims for “overpayment relief” have been submitted in accordance with HMRC’s Self-Assessment Claims Manual (SACM12150) and the directors are eagerly awaiting their income tax refunds.

However their companies’ claims for refund of class 1A National Insurance contributions already paid on the “made good” benefits have all been refused by HMRC’s Customer Operations & PAYE Employer Office in Newcastle.

They maintain that the official HMRC position set out in the National Insurance Manual at NIM17130 remains unchanged – ie no relief can be given because no “error” occurred at the time of the...

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