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HMRC internal manual

National Insurance Manual

Class NICs: Securities: Retrospective liability - Introduction

Section 4B of the Social Security Contributions and Benefits Act 1992

The National Insurance Act 2006 introduced section 4B into SSCBA 1992 and this provides a power for the making of regulations with retrospective effect to reflect any backdated tax changes that take effect on or after 2 December 2004. The power to make regulations can only be used where a retrospective provision is introduced to the Income Tax Acts which relates to income tax chargeable under the employment parts of the Income Tax (Earnings and Pensions) Act 2003.

Subsequent NI regulations ensure that such payments made, on or after 2 December, will be subject to a NICs liability.

There are also provisions which prevent the use of NIC agreements and elections (see NIM06812) in respect of any schemes which have been targeted by backdated NIC regulations so that employers cannot pass retrospective secondary NICs liability onto their employees.

Relevant backdated tax changes were announced in the Finance Act (No.2) Act 2005 and Finance Act 2006 and, under the powers contained in section 4B SSCBA, regulations were introduced to mirror these changes for NICs - see NIM06842 and NIM06843.