Why is HMRC removing the £100 fixed penalty for Class 2 National Insurance contributions?
Currently there is a fixed £100 penalty if someone notifies that they commenced self-employment more than three months late. During the consultation, people stated that this penalty is counter-productive and can, at a crucial stage, damage relations between HMRC and customers. Although the fixed penalty reinforces the obligation for early notification it does not encourage people to come forward and can often mean the first response to a new business that has approached HMRC is to impose a penalty. The new system is more proportionate because a penalty will be related to the amount of both Income Tax and National Insurance contributions unpaid because of late notification.
