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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: specialist employer compliance processes: process overview


Cases are submitted to Specialist Employer Compliance (SEC) from a number of sources, which are referred to at COG931110.  

Initial Review

SEC will also consider recovery of unpaid Primary Class 1 NICs when a direction seems appropriate under

  • Regulation 72(5) condition B
  • Regulation 81(4) condition A or B.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

In doing so you will need to gather and present appropriate evidence of the failure to pay Class 1 NICs so that HMRC will be able to authorise the issue of any subsequent decision – see below.

Where you are considering a direction to recover unpaid Regulation 80 tax (COG931630 refers) you should also consider the unpaid Class 1 NIC that may have been included in a decision on the employer. Confirm that any appeal received against a Regulation 80 charge made on an employer has been determined.

Because the existing legislation for PAYE and NICs is different, you will have to give particular consideration to

  • the Limitations Act 1980, which may affect recovery of NI debts that are more than six years old (COG932590 provides further information)
  • any NIC deductions that have been paid by the employer or from any other employment (COG932600 provides further details)
  • the correct calculation of the primary Class 1 NICs under-deducted and interest (see COG932610 for further guidance).


As the conditions for a decision and a direction are the same, SEC will only consider a decision where a direction is appropriate. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

COG932400 onwards also provides guidance on

  • what payments should be considered earnings for primary Class 1 NI purposes
  • definitions of a director
  • employed earners legislation
  • earnings periods

all of which may need to be considered when answering representations.


If the circumstances in a case fit the provisions within Regulation 86, Social Security (Contributions) Regulations 2001 as outlined at COG932490 then the decision will be one made under Section 8(1)(c) of the Social Security Contributions (Transfer of Functions) Act 1999.


Once a decision is made you should

  • issue a Decision Notice (COG932620 refers)
  • send a Section 8 Report form to NIC&EO for the purpose of updating the NIRS2 record for the employee (guidance on completing this report is provided at COG932670 onwards
  • ask the local SAFE nominee to raise the appropriate charges on SAFE. 


Like directions, there is provision for appeal against a decision, see COG932710 onwards.