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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Alternative rights of recovery (PAYE directions): primary class 1 NICs: background: when payments cannot be treated as paid

Where you discover a failure to pay primary Class 1 NICs and that failure arose due to the consent or connivance of the employee or because of negligence on the part of the employee, the unpaid NICs must not be recorded on the employee’s NI account.

By invoking the provisions of Regulation 86 SSCR 2001 and by making a decision in that respect under Section 8(1)(c) of the Social Security Contributions (Transfer of Functions) Act 1999 you will have established that the failure to pay unpaid primary Class 1 NICs was due to negligence on the part of the employee.

Minus Postings

It is possible that some NICs that have not been paid are posted as paid on the employee’s NI account. This could arise, for example where details of the primary NICs were recorded on the P14 End of Year Return or final Full Payment Submission and therefore posted to the subsequent NI account, but were not actually paid over.  

If this did arise those primary NICs will need to be removed from the NI account. This is not a removal from the NI account in the ‘physical’ sense but where the primary NICs are recorded as being paid a ‘minus posting’ for the same amount is placed on the NI account which has the same effect as the NICs posting being removed.

Access to the NIRS2 (Contributions) folder will be required to establish what primary Class 1 NICs have been paid or recorded as paid on the NI account.

If you do establish primary Class 1 NICs were posted but were never paid you will need to advise NIC&EO so that they can arrange for this to be corrected by making a ‘minus posting’.  In practical terms, this will be achieved by completing a Section 8 Report form (see COG932670).