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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Class 1: Treating as paid: Considering negligence

NIM12119 advises that unpaid primary Class 1 NICs cannot be recorded on an NI account when it is established that the failure to pay those NICs was due to negligence on the part of the employee. It also explains how unpaid NICs could already be recorded and advises that you must remove any such NICs from the account.

Before any NICs are removed from an NI account however, full enquiries must be made to confirm that the failure to pay was due to the employee’s negligence.

The answers to the questions below will help you to form an opinion on whether there has been negligence, though you should not consider the list to be exhaustive. Remember that in order to establish negligence you must establish that the employee failed to exercise reasonable care (see NIM12116).

  • What was the period of directorship, role as wages clerk, company secretary etc?
  • What did they perceive their role to be?
  • Did they know that money was not being paid over to HMRC, or being paid late?
  • Why was money not being paid over to HMRC?
  • Did they have access to the relevant records and, or accounts?
  • Did they sign cheques on behalf of the company?

Where the information needed to form an opinion on negligence is not held, you must contact the employee concerned to obtain that information. This can be done by post. When writing you should invite the employee to provide any information they have that will show they were not negligent.