NIC continues, Tax repayments, and Trust registration service

In our latest tax tips email for accountants we said:

This week we have news about two matters which may be particularly relevant for your lower-earning clients: payment of class 2 NIC and tax refunds, although all self-employed clients will be affected by the national insurance developments. We also have an update concerning access to the trusts registration service.

Below is just an extract from that email. To receive the full email when it is published each Thursday, simply follow the link on the right (or below, if you’re reading this on a mobile device)

Tax repayments

The first tax returns to be submitted in the tax return season are normally those which are likely to generate tax refunds for taxpayers who really need to money. However, the tax may not be repaid in the manner requested, due to HMRC’s policy regarding credit and debit cards.

Where the most recent tax payment was made by a credit card, the tax refund will be made to the same card, even if that card is not held in the taxpayer’s name. This is in line with banking industry standards for making refunds, for example when returning purchased goods to a shop.

The tax refund will be directed to the card only if tax has been paid using that card within the last nine months. Also, the total value of the tax refunds (if more than one) cannot exceed the amount of tax paid with the card.

Where the taxpayer has requested that the tax is refunded into his bank account, that request will be ignored by HMRC if the conditions for a repayment to a credit or debit card are met. This means that where the taxpayer has an outstanding debt on their credit card the tax refund will be set against the amount outstanding, and won’t be available to be spent on other things.

You need to advise your client of HMRC’s tax refund procedure, as the cash may not be available to pay your fees where the repayment goes directly to a credit card.