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HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

Notices of decision: who to name in decisions: not possible to individually identify all employees

Regulation 3 of the Social Security Contributions (Decisions and Appeals) Regulations 1999 (SI 1999 No 1027)

Regulation 3 of the Social Security Contributions (Decisions and Appeals) Regulations 1999 requires that a decision must state the name of every person in respect of whom it is made.

In some situations it may not be possible to name all affected persons in a decision as you cannot individually identify the employees. In these circumstances, you should send a decision naming only the employer.

NICs liability: employees cannot be individually identified

If you identify an employer has engaged employees (such as un-named casual labour) and paid them earnings which incurred NICs liabilities, you should use your Information and Inspection powers (under schedule 36, FA 2008) to identify the employees.

If you successfully identify some or all of the employees, continue action as in DANSP30700 for those identified.

However, if some or all of the employees remain unidentified, because the employer kept inadequate or no records, or the records are no longer available for inspection, for example due to theft - then provided you have sufficient information to do so, make the best use of all the evidence you have to reasonably calculate the outstanding NICs liabilities (including primary and secondary Class 1 NICs) and notify the employer. Specific guidance on estimating earnings for NICs is at COG908091.  

If the employer disputes your calculations but still fails to provide you with the identities of any employees or satisfactory evidence to enable a calculation of their actual NICs liabilities, you may serve the employer with a section 8 decision that names only the employer in that decision and shows the outstanding NICs liabilities (including any primary and secondary Class 1 NICs outstanding). The notice of decision should not refer to a class or category of un-named employees. As the employer will be the only party named in the decision, that employer will have the sole right of appeal against that decision. 

See DANSP31610 for wording to be used in decision.

An explanatory letter must accompany the decision. You should fully explain to the employer exactly how you have estimated earnings for NICs purposes in the absence of them providing satisfactory records to identify individual employees. You should also explain how you have calculated the NIC liabilities on those earnings.

Note - it’s not necessary to issue a section 8 decision before taking action to protect the NICs debt, so where you have NIC liabilities that are close to going out of time for recovery under the provisions of the Limitation Act 1980, you should consider taking protective action.

Appeals against decisions when employees cannot be individually identified

If you receive an appeal against a section 8 decision that was sent only to the employer because the employees could not be individually identified, contact the IPD Technical Team for advice as soon as the appeal is received. This is to ensure that HMRC applies a consistent approach to litigating these appeals.

Restrictions on issuing decisions when employees cannot be individually identified

A decision naming only the employer must not be issued in cases where some or all of the employees’ identities are known. Whenever individuals can be identified both the employer and relevant individual employees must be named in the decision. 

Where a NICs liability exists for a group of individuals but the identity of only some of the individuals in that group can be established, you’ll need to issue 2 different types of decisions:

  • one type naming both the employer and the identifiable employee(s) and separately
  • a decision naming only the employer, to cover the NICs liabilities of the remaining employees whose identities are unknown

The covering letter must make clear these are separate decisions and clearly explain the relevant circumstances and calculations for each type of decision.

It’s also important to note, the guidance at DANSP41500 concerning the issue of section 8 decisions containing a representative sample of workers continues to apply.