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HMRC internal manual

National Insurance Manual

Class 1: treating as paid: negligence not established

Regulation 60, Social Security (Contributions) Regulations 2001

NIM12116 explains what constitutes negligence and NIM12117 advises what you should consider in forming an opinion on whether an employee has been negligent.

If you conclude that the failure to pay primary Class 1 NICs was not due to negligence on the part of the employee, the unpaid contributions can be treated as paid and recorded as such on the NI account. NIM12111 provides a definition of treating as paid.

You should write to the employee and advise that

  • you have reviewed all the information about the unpaid NICs;
  • you have concluded that they were not negligently responsible for the failure to pay the primary Class 1 NICs;
  • the unpaid primary Class 1 NICs will be treated as paid and recorded on their NI account.

The letter should also include details of the relevant year(s) and amount(s) of NICs that will be treated as paid.

In some cases, the relevant Class 1 NICs may already be shown as paid on the NI account. If this is the case, the NICs that are erroneously shown as paid must be removed from the NI account and replaced with primary only NICs with the correct status of “treated as paid”. NIM12119 provides further information on removing NICs from the NI account.