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HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

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HM Revenue & Customs
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Decision types: Penalties decisions: Failure to make a return or incorrect return penalties

Section 8(1)(k) and 8(1)(l) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999; Article 7(1)(k) and 7(1)(l) of the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (SR 1999 No 671); Paragraph 7A(2) and 7B2(h) of Schedule 1 to the Social Security Contributions and Benefits Act 1992; Paragraph 7A(2) and 7B2(h) of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992;

DANSP15100 explains that appealable decisions can be made about penalties under the above legislation. This includes penalties that HMRC imposes on a person who either makes an incorrect contributions return, or fails to make a return. A contributions return includes returns for Class 1, 1A, 1B and 2 National Insurance contributions (NIC).

Example

Class 1A NIC are due for benefits provided in the 2006/07 tax year. The person liable to pay Class 1A NIC submitted a return at the right time. HMRC conducted a review of the employer’s records and established that the employer had completed the return incorrectly. Penalties can be imposed under regulation 81 of the Social Security (Contributions) Regulations 2001.

Where you have issued a NIC liability decision because some NIC are unpaid consider making penalty determinations, (see COG914175), at the same time. Penalty determination notices provide the formal decision about the penalty and the right of appeal against the penalty. Do not use form DAA1 for this purpose.