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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: by NIC decision

Most EC cases will be concluded by agreement through Class 6 settlements.

Section 8 of the Social Security Contributions (Transfer of Functions) Act 1999

A formal decision will only be made where agreement to NIC, SSP, SMP and other related matters cannot be reached.

Formal decisions carry with them the right to appeal. The guidance in the Decisions and Appeals for NICs and Statutory Payments Guide (DANSP) should be followed in all cases.

There are three stages to the decisions and appeals process:

Stage 1 - The Informal Stage

You offer an initial opinion on liability to pay NIC. At this stage any dispute can be settled by normal discussion and agreement.

Stage 2 - The Formal Decision

The normal process for discussion is exhausted.

Agreement cannot be reached and a formal decision is made by a HMRC Decision Maker. There are 30 days in which to appeal.


The new Appeals Tribunal wish to consider appeals against tax and NIC liability at the same time as appeals against any related penalty determinations. This avoids the expense of two tribunal hearings when, in essence, the same point is being considered.

Therefore, where there is evidence of a liability to a penalty you should commence formal action to raise penalties, COG914175 - Formal Action, at the same time as issuing determinations.

Stage 3 - The Appeal

Appeals can be settled by

  • the Officer of HMRC and the appellant reaching agreement (either without, or after a review)
  • the appellant withdrawing the appeal or
  • the Tax Appeal Tribunal.

Further details can be found in the Decisions and Appeals for NICs and Statutory Payments Guide.