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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Enforcement action: country court proceedings: the defendant’s response to the claim: NIC liability disputed

You should be able to deal with the vast majority of defences to court actions where the NIC liability is disputed, for example where the defendant claims he has paid the debt.

However in proceedings involving any class of National Insurance Contributions (NICs) where you receive a defence which questions the liability to pay NICs, you may need to invite the court to order an officer of the Board to make a decision under Section 8 of the Social Security (Transfer of Functions, etc.) Act 1999; for example:

  • whether a person for whom you are claiming contributions is an ‘employed person’
  • what contributions, if any, are payable
  • claims for small earnings exemption (SEE).

If a defence is received the higher debt manager should examine it as in DMBM665770.

Determining the liability for NICs

The court cannot make decisions on liability to NICs.

Section 117A of the Social Security Administration Act 1992 provides that that the question of liability must be determined by an officer of the Board making a decision under Section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999.

The debtor has a right of appeal against such decisions to the Commissioners for Her Majesty’s Revenue and Customs who can confirm or vary the decision.

Action by debt technical office

In order to deal with a defence of this type, you should invite the court to order an officer of the Board to make decision under Section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999.

Prepare three copies of the order on plain paper, different ones where the question affects either:

* only one employee (Class1/1A contributions), see [DMBM665862](https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking/dmbm665862) 
* more than one employee (Class1/1A contributions), see [DMBM665864](https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking/dmbm665864) 
* Class 2 contributions, see [DMBM665866](https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking/dmbm665866).

As well as obtaining the order, you should also ask that the court adjourn the proceedings, with liberty to restore the case once the decision has become final and conclusive (DMBM665940).

Do this in good time before the hearing.

However if the NICs form only part of the claim it is probably better to ask the court, at the listed hearing, for an order for an officer of the Board to make a decision under Section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999.

Attending the defence hearing

If attendance at the court hearing is necessary you should:

  • ask that an order for an officer of the Board to make a decision under Section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 is made
  • keep one copy of the draft order in the debt technical office papers
  • produce the other two copies for signature by the district judge or judge
  • ask the court to return one copy to you
  • note the date the order was signed on your copy of the order
  • ask the court to adjourn the proceedings generally to allow time for the decision process to be carried out.

NICs form only part of claim

  • request an order for interim payment of the undisputed part of the debt where the NICs form only part of the debt.

Debt technical office action after defence hearing

For Class1/1A NIC:

  • send the returned signed copy order to NICO, Debt Management Unit, Room BP3202, Benton Park View, Longbenton, Newcastle upon Tyne, NE98 1ZZ without delay, together with

    • a covering memo explaining the position
    • a copy of the defence

and for Class 2 NIC:

  • complete form NICO/100C stating “Please make a decision under Section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 and advise me of the outcome with a fresh certificate of debt’’
  • attach an immediate flag to the NICO/100C with the court order
  • enclose the NICO file if there is one
  • send all the documents to NICO, Self Employment Services (SES), Room BP3002, Warkworth House, Benton Park View, Newcastle NE98 1ZZ.

NICO will advise you of any adjustments to the contributions payable when the Section 8 decision is final. They will provide a fresh certificate of debt and, on receipt, you should

  • tell the employer or contributor that you intend, in the absence of payment, to continue the proceedings (for the amended amount, if applicable plus court fees)
  • send a copy of the letter to court
  • re-list the case for hearing.

Arranging a further hearing

If you do not receive payment, ask the court to arrange a hearing and notify the defendant.

At the hearing:

  • submit to the court that under Section 117A(2) of the Social Security Administration Act 1992 the decision of an officer of the Board is conclusive
  • produce your certificate of debt and
  • ask for judgment for (the balance of) your debt plus interest (where appropriate) and the fees.

If a defendant unexpectedly raises a question for determination at a hearing ask the court to:

  • make an order for interim payment of any part of your claim that is not affected by the dispute
  • adjourn the proceedings in respect of the claim for Class1/1A/2 contributions
  • make an order for an officer of the Board to make a decision under Section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 with liberty to restore the case once the decision has become final.