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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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Class 1: Treating as paid: Negligence established: Formal decisions

Regulation 155A, Social Security (Contributions) Regulations 2001

NIM12126 and NIM12131 advise that a formal decision should be issued if the employee persists in maintaining that the failure to pay primary Class 1 NICs was not due to negligence on their part.

Formal decisions are allowed by the above regulation, which was introduced by the Social Security (Contributions) (Amendment No 3) Regulations 2002 (Statutory Instrument 2002/2366).

This regulation introduced new decisions that can be taken by front line managers and above of HMRC. It includes, at 155A(2)(h), a decision on whether a failure to pay primary Class 1 NICs was with the consent or connivance of the employee or attributable to any negligence on the employee’s part.

If there is an appeal against the decision, they are prepared by HMRC NIC&EO’s Directors Complaints, and Appeals Team (DCAT). Appeals are dealt with through HMRC on behalf of DWP (Great Britain) or Department for Social Development (Northern Ireland).

Such appeals are heard by the Tribunals Service’s Social Entitlement Chamber (Great Britain) or the Appeals Service in Northern Ireland Appeals.

Regardless of the outcome of issuing the formal Notice of Decision, and of any subsequent appeal, Class 1 NICs that have not been paid must not be recorded on the NI account with a status of “paid”. Any such NICs that are already recorded on the account must be removed when an outcome is reached. If the outcome is a conclusion that the failure to pay the primary Class 1 NICs was not due to negligence on the part of the employee, the primary Class 1 NICs should be returned to the NI account with a status of “treated as paid”.