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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
Updated
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Class 1: treating as paid: nics cannot be treated as paid: removing NICs from the NI account

Where it is established that the failure to pay primary Class 1 NICs arose due to the consent or connivance of the employee (see NIM12115) or because of negligence on the part of the employee (see NIM12116).

This is about removing NIC’s, not recording them, you must check the employee using NPS to check if any NICs that have not been paid are already recorded as paid on the NI account. This could arise, for example, where details of the NICs were recorded on the P14 End of Year Return and therefore posted to NI accounts, but were not subsequently paid to HMRC.

Where investigations (for example, enquires about an insolvent company) confirm this to be the case, the unpaid Class 1 NICs cannot be shown as paid and must be removed from the NI account. However, no action to remove the NICs should be taken until the investigations have been concluded.

Where enquiries confirm that a failure to pay primary Class 1 NICs did not occur with the consent or connivance of the employee, and was not due to any negligence on their part, any unpaid NICs that are shown as paid must still be removed from the NI account. This is because unpaid NICs cannot be recorded to an NI account with a status of “paid”. However, the primary element of those unpaid NICs can then be returned to the account with a status of “treated as paid”.

When removing any NICs from an NI account, you must make sure that you only remove NICs for employments where it has been established that those NICs were not paid.

For example, an employee may have unpaid NICs of £500 with Company A that have been recorded as paid on the NI account. There may also be NICs of £200 that have been correctly paid in full with Company B.

You must only remove the unpaid NICs of £500 for Company A from the NI account. The £200 with Company B has been correctly paid and must remain as paid on the employee’s account