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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: computations: estimating earnings for NICs purposes - the basis of estimates

You must

  • always try to obtain the employer’s agreement to the basis of estimation
  • use the same estimated earnings figure to calculate both the tax and the NICs arrears where appropriate
  • use the correct NICs rates and not an ‘average’
  • review the evidence in the available records by looking in detail at a representative period to

    • identify the extent of the inaccuracy, for example how many employees have received payments, how many payments have been made and how much has been paid
    • identify cases where earnings attract secondary NICs only or reduced rates.
  • question the employer. This is particularly important where the records are deficient in some way or non-existent
  • be able to fill the gaps created by the lack of clarity of the records
  • make reasoned judgements and
  • record fully what you have done and why on Caseflow.


The following are examples of ways in which you could estimate earnings but consider any other way which is suitable to the particular circumstances.

  • Work out the earnings and the NICs accurately for a representative sample of employees. Expand the result to cover the whole population affected and for the full period of the inaccuracy.
  • Work out the earnings and the NICs accurately for one month for all employees involved. Expand the result by the number of months in the period of the arrears.