Fleet News

Hundreds of companies ask HMRC for alleged NI overpayment money back

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HM Revenue and Customs (HMRC) says it is working its way through a number of claims against Class 1 National Insurance (NI)  contributions.

Employers are hoping to secure a refund against tax paid on lump sum payments made to employees who use their own cars on business trips.

The claims were lodged after Total People – subsequently known as Cheshire Employer and Skills Development – successfully argued for a refund in the Court of Appeal.

Total People’s seven-year legal battle related to an NI refund claim based on the difference between the HMRC 40p per mile allowable rate (now 45p) and the 12p per mile paid by the employer plus an additional lump sum paid to the employees for using their private cars on business.

The value of the amount claimed was approximately £146,000, which it is understood has now been paid by HMRC, or around £1,000 per employee involved.

It has resulted in claims being lodged by an estimated 250 companies. Tax and pension specialists Innovation Professional Services is confident that HMRC will pay up.

However, an HMRC spokesman told Fleet News: “We are not making refunds automatically as a result of the decision made by the Court of Appeal.” 

Refund payments can go back six years from the date lodged with HMRC and John Messore, director of Innovation Professional Services, has urged employers yet to make  a protective claim to do so before the end of the 2014/15 financial year.

He said: “We know that about 250 companies have so far lodged protective claims. What is very surprising is the significantly larger number of companies which have not lodged claims, when actually there is nothing to lose.”

Innovation Professional Services had been putting together a class action – also known as a Group Litigation Order – on behalf of 20 companies who believe they are due a refund.

However, it has now put formal claims into HMRC  on behalf of those 20 organisations, explaining each company’s case. Messore said he hoped the letters were strong enough for HMRC to make refunds.

Messore said: “HMRC is dragging its heels on this issue. Its stalling tactics are resulting in a lot of companies running scared and getting cold feet on submitting a claim because they think HMRC will never pay up. Whereas there is no harm to be done in requesting a refund if a legitimate claim is submitted.”

Last year, Fleet News revealed that HMRC had sent a letter and an in-depth questionnaire to companies that had lodged a refund claim asking for detailed information. The programme of writing to employers continues.

HMRC has not set a time limit for companies to respond to the request for information but has said that, if collating details is going to take longer than three months,  companies should agree a timeframe for submission with the tax office.

However, before HMRC makes any payments in those cases it plans to test all the relevant arguments before a First Tier Tribunal to “provide clarity for all parties”.

HMRC said that, while it recognised the Court of Appeal’s view, it does not provide a binding precedent for the repayment of NI.

As a result, HMRC said it was taking steps to identify a “suitable lead case or cases to bring before a tribunal where all arguments can be fully presented to provide clarity for all parties”.

The HMRC spokesman said it had yet to establish a timetable for going to a tribunal and declined to provide further details, saying that HMRC did not comment on individual taxpayers.

He continued: “Where we identify there is no NI contributions liability, a refund will be made ahead of any lead case being heard by a tribunal.

“Where we do not consider a refund is due, it is HMRC’s intention to issue a formal decision. The company will be able to appeal should it choose to do so or withdraw their refund application.”


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