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HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

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Decision types: Regional employer National Insurance contributions holiday

Background

Part 2 of the National Insurance Contributions Act 2011 makes provision for a Regional employer National Insurance contributions holiday (NIC holiday). Under this scheme, for a limited period and subject to meeting certain conditions, new businesses may qualify for a deduction of up to £5,000 from the secondary Class 1 NICs that would normally be due - for each of the first ten employees they take on.

Entitlement decisions

Section 8(7)(a) of the National Insurance Contributions Act 2011 (the Act) provides for HMRC officers to decide whether a person, or a number of persons in partnership (‘P’) is or was entitled to make a deduction under section 8 of the Act and, if so, the amount that P is or was entitled to deduct.

Such decisions may be required where

  • P considers that they are entitled to the NICs holiday but their application has been unsuccessful;
  • HMRC discover that the NICs holiday has been incorrectly applied.

This could be for a number of reasons, for example, because HMRC considers that

  • the business is not a new business;
  • the employee in question is not a qualifying employee;
  • the employer’s principle place of business is in an excluded area.

Refund decisions

Section 8(1) of the Act provides that P can make NIC holiday deductions from any one or more of the payments he makes to HMRC for Class 1 NICs in respect of earnings paid in a tax year. If the amount that P is entitled to deduct exceeds the amount of the Class 1 NICs payments from which it can be deducted, HMRC must refund the excess to P if P requests HMRC to do so. Section 8(7)(b) of the Act provides for HMRC officers to decide whether P is entitled to a refund under section 8 of the Act and, if so, the amount of the refund.

As there is a time limit within which applications for a refund must be made, HMRC will deny applications made outside of that time limit. Where P will not accept that they cannot have a refund a refund decision may be required.

Wording of decisions

For wording of such decisions see DANSP40800.