ACC to refund Kiwi businesses $100 million for overpayments

Minister for ACC Iain Lees-Galloway. Photo / File

ACC will refund more than 300,000 business customers $100 million plus accrued interest after overcharging them for 15 years.

Between 2002 and March 2017, when the error was discovered, the state-owned workplace insurer overcharged about 106,000 people in the first year of being self-employed by a total of $34 million. Over the same period, some 200,000 businesses were overcharged $64m on provisional invoices.

The refunds for self-employed people will average about $340 excluding GST and $415 for firms' provisional payments.

ACC uncovered the issue when preparing to introduce a new levy system and has started tracking down customers so it can repay them.

Phil Riley, head of business customer service delivery, said ACC regrets and apologises for the mistake and urged people to update their contact details with the insurer to help the process.

"We expect it may take until April next year to complete the refund process," he said. "We will begin refunding customers this month."

ACC has taken a provision for the refunds in its 2018 annual accounts which are due to be tabled in Parliament next week.

Riley said the refund has been factored into its latest levy consultation and accounts for a 1 cent increase in the work account, where a reduction is proposed, and less than 1 cent for the earners account, where a 2.5 per cent increase is proposed. That spreads the funding impact over 10 years.

Riley said ACC will pay the 90-day bank bill rate at the year the invoice was due with monthly compounding interest, but wouldn't speculate on how large that bill might be.

The rate was 4.88 per cent at the start of 2002, rising as high as 8.11 per cent in 2008 and has since dropped to 2.84 per cent.

The number of affected customers was relatively consistent in each of the years, Riley said.

ACC didn't inform the minister until December last year and Riley said the previous administration wasn't informed.

The Crown entity will seek feedback on whether to adopt payments in arrears from the self-employed, matching the way they pay income tax.