Interest: Interest Review Unit (IRU): PAYE and National Insurance Contributions: Class 1 NIC
When an underpayment of Class 1 NIC is identified, the National Insurance Contributions Office (NICO) or the appropriate NIC office will ask for payment of the NIC and interest due to date. An objection may be received to the interest following this. Normally the objection is based on HMRC delay in asking for the payment.
Before the merger of the Contributions Agency (CA) with the Inland Revenue on 1 April 1999, NICO and local NIC offices were able to consider giving up interest locally. From 30 July 99 the rules changed. The new rules instruct NICO and NIC offices, in cases of delay, to follow the guidelines in the HMRC factsheet‘Complaints and putting things right’. The NIC legislation allows NICO and the local NIC offices to still consider giving up interest in the first instance. It is only ‘repeat’ objections that should be sent to IRU for considerations. That is, cases where the objector does not accept the initial decision made by NICO or the local NIC office.
When considering an objection to interest on a Class 1 NIC liability the guidelines at ‘PAYE & NIC Avoidance’DMBM405940 may be suitable depending on the year of the underpayment.
When considering a case take into account interest already given up by NICO or the local NIC office. Where the amount given up is in line with guidelines, uphold the remaining interest.
Where it is evident that periods of unreasonable delay have not already been considered, give NICO or the NIC office authorisation to give up interest for the period(s) of delay. Uphold the interest where it is confirmed that HMRC have not caused any unreasonable delay.