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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: settlement: posting (allocating) contributions to an employee’s NI account - contributions ‘deemed as paid’

NIC&EO will ‘deem’ the contributions as having been paid and post the contributions to the individuals’ NI account in the following situations:

Where you are satisfied that

  • NICs have been deducted from the employee,
  • have been paid to HMRC, but
  • you have not been able to trace the relevant return to confirm that NICs has been allocated to the NI account.

If you can establish that the NICs were paid to HMRC, it follows that those NICs should be accepted as paid in full and should carry all the rights of a fully paid contribution. The status of deemed NICs is covered in NIM12105.

The reason you must record the NICs to the NI account as deemed, rather than just as paid, is to prevent a refund being triggered if the ‘real contributions’ reach the NI account at a later date.

When you deem Class 1 NICs, you are accepting that those NICs have been paid and are somewhere within the HMRC systems. There is therefore the possibility that at some point in the future they will be matched up and recorded to the individual’s NI account. If this happens, the account will then appear to show a duplicate payment and it would seem that a refund should be given. Recording the NICs as deemed serves as a means of identifying the fact that they have not really been paid twice, and of preventing such a refund being made.