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HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

Examples of situations which do not need a varied decision

DANSP44100 explains when varied decisions should be issued. Shown below are two examples of situations where varied decisions should not be issued.

Example one

Worker engaged by company A, employment status disputed. The worker also worked for company B which was associated with company A. The worker made a claim for industrial injuries benefits when he had an accident carrying out some work for company A. The Department for Work and pensions asked HMRC to investigate the worker’s engagement with company A. HMRC decided that the worker was self-employed. The worker was issued with a decision under section 8(1)(b) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (see DANSP15400) which showed that he was not an employed earner with company A.

At some later date HMRC were required to conduct an investigation into the worker’s employment status with company B. HMRC concluded that the worker was also self-employed with company B.

Although the worker has had an employment status decision in respect of his work for company A, if needed, a separate similar decision should be given for his employment with company B. The first decision should not be varied, there is nothing to suggest it was incorrect. The decision in respect of his employment with company B should be restricted to his work with company B.

Example two

Company A provided one of its directors with certain benefits which were all subject to Class 1A NICs. No Class 1A NICs had been paid. Company A argued that NICs were not due. HMRC issued a decision setting out the NICs due and the NICs paid.

A few months after issuing the decision about Class 1A NIC liability HMRC discover that company A paid earnings to the same director which were not included in gross pay when calculating Class 1 NICs. Company A argue that NICs were not due. HMRC issue a decision setting out the Class 1 NICs due and the Class 1 NICs paid.

In this example, those affected by each decision are the same, i.e. company A and the director. The first decision was not incorrect so it does not need to be varied. Ideally, if HMRC had discovered both the Class 1A and Class 1 NIC liability around the same time, all the decisions could have been included on one notice of decision.