ACC admits $100m in ‘errors’

ACC will refund $100 million plus interest to more than 300,000 businesses, including the self-employed, after discovering it had been overcharging some businesses since 2002.

The two ‘‘disappointing’’ errors that led to the overcharging were discovered ‘‘early last year’’, ACC business customer head Phil Riley said.

But ACC had waited until now to ’fess up because it needed to fix the underlying issues and put in place a system to pay refunds, he said.

A total of $36m plus interest will be paid to about 106,000 people who became self-employed after 2002 and who worked more than 30 hours a week.

They were incorrectly charged ACC levies in their first year of business when regulations meant they shouldn’t have been, Riley said.

Another $64m plus interest would be refunded to 200,000 businesses that paid provisional ACC invoices and were wrongly not given automatic refunds after their circumstances changed.

Riley said the refunds would average $340 for the ‘‘first year selfemployed’’ and $415 for businesses that were wrongly charged provisional levies, excluding GST, plus interest at the 90-day bank bill rate.

The biggest single refund would be more than $154,000, to a business that was among three ‘‘outliers’’. A third of the refunds would be less than $100.

Refunds would start this month and Riley hoped all would be paid by April.

‘‘We very much regret the overpayments and apologise to anyone who made a payment that was not required,’’ he said.

‘‘Our focus is now on making this right as soon as we can, and we have already begun contacting affected customers.’’

Riley would not be drawn on how much interest ACC would have to pay, saying that had not been calculated.

But the timing and amounts involved appear to suggest it will run into the tens of millions.

The interest was expected to be less than $100m, he said.

ACC discovered the overcharging when implementing changes associated with its $669m transformation project, which is still under way.

It told the Government of the issues in December, but the previous government had not been advised, he said.

ACC had already moved to plug the financial gap caused by the refunds, factoring it into new levy rates that it put out for consultation late last month. Its policies required it to spread its effort to recoup the lost revenue over 10 years, Riley said.

In August, ACC separately admitted that it had overcharged hundreds of part-time self-employed workers by classifying them as full time.

Riley said he expected most people would be understanding about the latest errors. ‘‘I think people will be disappointed. I don’t think it will undermine the purpose of ACC – people get that. I think they will trust us to do the right thing from here.’’

Riley said the refunds represented less than 0.4 per cent of the money ACC had raised from employers and workers since the overcharging began.