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HMRC internal manual

Debt Management and Banking Manual

Pre-enforcement: coding out: class 2 NIC debts: impacts on Higher Rate Provision (HRP)

If payment of class 2 NIC is made late, after the end of the tax year following the one in which the NIC is due (for example, NIC is due in the 2011-12 tax year may be due at a higher rate if paid after 5 April 2013) details of higher rate provisions are shown on class 2 NIC payment requests.

NPS(NI) scans taxpayer records and applies HRP in June each year. Debts selected for coding out and IDMS action will be selected between July and August each year. Any higher rate provision will therefore have been applied to the debts before selection.

Legislation is now in place which results in HRP not being applied to a debt once accepted for coding out. HRP already applied prior to selection will not be affected if HRP is calculated on debts already with IDMS an amendment will be sent to IDMS to increase.