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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: computations: estimating earnings for NICs purposes - identifying employees affected

You do not need to conduct extensive investigations to identify such individuals. If the employer clearly states that no one is so affected and that is supported by the information in the records reviewed, no further investigation is necessary on your part.

When looking at this criteria an important factor to consider is whether a pay record has been completed for all employees earning above the LEL.

From 6 April 2013, details of all employees must be included on a Full Payment Submission, including those below the LEL (see COG904220).

At this point you should be able to decide whether estimation is appropriate, see COG908091.

Where estimation is appropriate you must

  • explain your reasons for estimating earnings to the employer, and
  • the method you intend to use, and
  • try to secure their agreement before you go any further.

If there is no agreement you can still estimate.

You should

  • obtain sufficient information on which to base a Section 8 decision, see COG915155 
  • consider the basis of estimates below

Note: You may have to explain the basis at the First-tier Tribunal.

Irrespective of whether you get agreement to estimate earnings instruct the employer to review any Statutory Payments to the individuals involved during the period in question and get the employer to make any additional Statutory Payments to the individuals concerned based on the increased total earnings.

Extensive investigations are not required into whether Statutory Payments have been made or the employer has followed the instruction to recalculate payments.