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HMRC internal manual

Compliance Operational Guidance

Alternative rights of recovery (PAYE directions): primary class 1 NICs: background: regulation 86 provisions - when employees become responsible for paying their own primary NICs

Regulation 86, Social Security (Contributions) Regulations 2001

Under the provisions of paragraph 3(1) of Schedule 1 to the Social Security Contributions and Benefits Act 1992, the employer is liable to pay both primary and secondary Class 1 NICs to HMRC. There are certain circumstances, however, where these provisions do not apply.

Regulation 86(1) - As respects any employed earner’s employment 

a. where there has been a failure to pay any primary Class 1 NICs which a secondary contributor is liable to pay on behalf of the earner and the failure was due to an act or default of the earner and

(i) not to any negligence on the part of the secondary contributor, or

(ii) it is shown to the satisfaction of the authorised officer that the earner knows that the secondary contributor has wilfully failed to pay the primary contribution which the secondary contributor was liable to pay on behalf of the earner and has not recovered that primary contribution from the earner

then the provisions of paragraph 3(1) to the Act do not apply.

In simple terms, this legislation allows the transfer of unpaid primary NICs liability from the employer to the employee to take place. COG932500 provides guidance on how such a transfer is made.

As referred to in COG932430, Regulation 86 was amended on 6 April 2004 to include (a)(ii), which will only affect the tax years 2004-05 onwards.