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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Debt and return pursuit: NIC: class 1 NICs: protective claims

Protective claims

The ‘protective claim’ procedure was originally used by the Contributions Agency (CA) to protect their right to recover any NICs debt the Commissioners determined to be due (see DMBM527150).

Whilst the procedure can apply to any NIC class it is more commonly used for Class 1 and Class 1A debts.

On settlement of the appeal the DMB Protective Claims Team (PCT) in Longbenton will restore the Department’s claim and seek judgment if the debt is not paid.

Employer files a defence

If the employer files a defence to a protective claim, PCT will provide a full response to the defence, and request that the court adjourn the proceedings until the appeal has been determined. Usually, the employer will agree that the court proceedings be adjourned.

PCT will be responsible for making any further applications to adjourn the proceedings.

Determination of the appeal

If the appeal is determined in the Department’s favour, and the employer agrees a settlement, the compliance office dealing with the case will include the liability, interest and costs due.

Protective claim issued and not paid

If the employer refuses to settle, and a protective claim has been issued PCT will:

  • issue a final demand letter requesting payment
  • resume the court action.

If payment is not made and the amount has not changed they will:

  • apply to lift the adjournment
  • proceed towards judgment.

If payment is not made and the amount has changed they will seek leave of the court to file amended particulars as in DMBM665460.

Employer files defence

If the employer files a defence after the proceedings have been resumed, and the court lists the matter for hearing, PCT will refer the case to the Field Force (FF) to attend court and obtain judgment.

For any case sent to FF, PCT should:

  • prepare a certificate of debt to confirm the outstanding amount
  • ensure the court forms confirm interest to the date of the original or any amended particulars
  • confirm the daily rate to enable FF to calculate interest precisely at the date of the hearing
  • ensure that any concession given in respect of interest for any period is clearly noted in the papers.