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HMRC internal manual

National Insurance Manual

NICs: Personal Liability Notices (PLN): introduction

Section 121C, Social Security Administration Act 1992

The PAYE and National Insurance legislation require an employer to pay over to HMRC the PAYE and National Insurance contributions (NICs) due on the earnings of an employee. A company has a statutory obligation to pay the PAYE and Class 1 (NICs) to HMRC within 14 days of the end of the month in which the deductions were made (or 17 days if by electronic method) in respect of employment income paid to its employees. If the correct amount of NICs are not paid then Section 121C of the Social Security Administration Act 1992 provides HMRC with the authority to seek to recover from the ‘officers’ of the company any unpaid contributions plus interest and penalties, provided certain conditions are satisfied.

The above legislation came into effect from 6 April 1999 with the purpose of providing HMRC with a time and cost effective action to tackle abuse of the National Insurance system, and to act as a deterrent to future abuses and losses to the National Insurance Fund.

During the House of Lords debate on the introduction of the legislation, speaking on behalf of the Government Lord Haskel stated that the aims of the legislation were to:

“Recoup monies owing to the National insurance Fund from which contributory benefits must be paid and, by showing that the Government mean business, to deter further thefts from the fund - for that is what they are.”

Lord Haskel further stated:

“The whole thrust of the Government’s approach is to encourage better compliance by employers and the self-employed and to get contributions paid on time.”

The right to recover applies to all the contributions unpaid, by the company, which have arisen after 6 April 1999, and not just the contributions due in respect of the directors.