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HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

Notices of decision: covering letter: to the DAA1(A) recipient

When a covering letter is needed

DANSP05500 explains that there are three stages to the decision and appeal process for National Insurance contributions (NIC) and statutory payments. In stage 1, before the formal decision stage, you should explain your opinion and support it with references to legislation and HMRC guidance, where appropriate.

If the only way you can progress matters is to issue an appealable decision, in most cases, you will need to send a covering letter of explanation.

Even where you have already explained your opinion in detail before the decision is issued, the restricted wording of the notice of decision means that it is normally necessary to enclose a covering letter explaining the reason for the decision. If necessary refer to previous correspondence rather than duplicating information provided earlier.

There will be occasions when it will not be appropriate to issue a covering letter. This may be the case where there is nothing to add to previous correspondence.


Where interest is accruing, remind the liable person. Do not mention interest in the notice of decision covering NICs.

No interest is charged on statutory payments.

More than one person affected by the decision

Where the decision will affect more than one person, if it’s not already been explained, explain who is affected by the decision - see DANSP41000.

Unable to name all affected employees in NICs liability decision

Where all of the affected employees cannot be identified, a decision should be issued as explained in DANSP41200. You’ll need to issue a covering letter to advise that you’re unable to individually identify the affected employees and to provide the details of how you’ve calculated the NICs liability.

It may be necessary to issue a decision naming both the employer and the identifiable employee(s) and a separate “employer only” decision for the employees whose identities are unknown. The covering letter must make apparent these are separate decisions and clearly explain the relevant circumstances and calculations for each type of decision - see DANSP41200.

NICs due

Where NICs are unpaid and the decision does not include all the NIC that are due see DANSP43300.

Data security and confidentiality

You must pay regard to data security and confidentiality issues when drafting covering letters for issue to those named in the decisions.

When sending covering letters to those named in the decision, be careful not to divulge information about the other party that is not in the public domain. HMRC’s Information Disclosure Guide makes you aware of how important it is to keep personal customer information confidential, and provides advice on issues in this area.