Sleeping partners will now pay N.I.

HMRC has announced that it has changed its view of the law covering the National Insurance contributions liability of sleeping and inactive limited partners.

From 6 April 2013 all partners will be required to pay National Insurance. Full details are in an HMRC statement.

Important information for all sleeping and limited partners and agents

Partners will be required to pay Class 2 and Class 4 NICs on the grounds that they are self-employed earners even if they are inactive.

Sleeping partners and inactive limited partners are those who take no active part in running the business.

The consequences of this are: Sleeping and inactive limited partners who are not already paying Class 2 NICs must advise HMRC of their self-employed status and arrange to pay NICs according to their individual circumstances.

Sleeping and inactive limited partners should account for Class 4 NICs liability, if any, for the 2013/14 tax year of assessment and for subsequent tax years.

Some partners may have paid Class 2 and 4 NICs for past years. HMRC considers that they will not be entitled to a refund of Class 2 NICs or to any overpayment relief in respect of Class 4 NICs.

Partners who have not paid Class 2 or Class 4 NICs for a past period will not be required to pay those contributions.