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HMRC internal manual

National Insurance Manual

Class 1: Treating as paid: Negligence established: Payment received

Regulations 4 and 6, The Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations 2001

If the employee pays any amount of primary Class 1 NICs after the issue of an opinion on negligence (see NIM12126), those NICs must be recorded on the employee’s NI account with a status of “paid”.

However, when recording the NICs, you must take into consideration regulation 4 of the above named Regulations. This refers to late paid contributions and states that, for the purpose of entitlement to contributory benefit, contributions paid after the due date shall

  • If paid after the end of the second year following the year in which liability for the contribution arises, be treated as not paid.
  • If paid before the end of the said second year, be treated as paid on the date on which payment of the contribution is made.

If paid after the due date, Class 1 NICs must therefore be recorded as either

  • L - late paid, paid before the end of the second year, still count for benefit purposes; or
  • LX - extra late, paid after the end of the second year, do not count for benefit purposes.

It may be possible however, for late paid contributions to be treated as paid on an earlier date under the terms of regulation 6 of the above named Regulations. This allows for a contribution paid after the due date to be treated as paid on such earlier date as HMRC may consider appropriate where

  • it is shown to the satisfaction of HMRC that the failure to pay the contribution before the due date is attributable to ignorance or error on the part of the contributor; and
  • that ignorance or error was not due to any failure on the part of the contributor to exercise due care and diligence.