Replies to Queries - 3

It has always been my understanding that when arriving at the profit for Class 4 National Insurance in cases where a subpostmaster's salary has been included in business profits and taxed under Schedule D that an amount equivalent to the earnings on which Class 1 contributions have been paid is deducted. There is a box for deducting this amount on the Inland Revenue NICO form for calculating Class 4 contributions and there was support for this approach in Tolley's National Insurance. This approach seems reasonable as not to do this means that the same income is subject to both Class 1 and Class 4 contributions.

I now have a case where the Class 4 contributions have been calculated without this deduction from profit and it has been referred to a 'Technical Officer' from NICO. He informs me that it has taken legal advice on this...