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HMRC internal manual

National Insurance Manual

Class 2 National Insurance contributions: time limits for paying: late notification penalties

Position before 6 April 2009 - Regulation 87 of the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004)

Anyone starting self-employment on or after 30 April 2001 but before 6 April 2009 must register with HMRC within 3 months from the end of the calendar month in which they start self-employment. Failure to register within the time limits will result in the individual being liable to a penalty of £100 unless:

  • they satisfy the conditions for Small Earnings Exception throughout the period from the commencement of self-employment to the date they register their self-employment, or
  • they are able to provide a reasonable excuse for the delay in registering, or
  • HMRC allows extra time to register

When a penalty is imposed, Self-Employment Services in the National Insurance Contributions & Employer Office will issue a penalty bill. If the individual disputes the imposition of the penalty, and the dispute cannot be resolved, a formal decision will be issued. The formal decision will carry a right of appeal to the tribunal. The instructions for making a formal decision are in the Decision and Appeals for National Insurance and Statutory Payments (DANSP) guidance.

Position from 6 April 2009 - Regulations 87A to 87G of the Social Security (Contributions) Regulations 2001 (SI 2001 No 1004)

For individuals who became self-employed on or after 6 April 2009 there are new provisions about charging penalties. The penalty is geared to the amount of Class 2 NICs due and there are provisions to reduce the amount of the penalty for disclosing a failure to comply with the requirement to notify. For more information about penalties, see the Compliance Handbook.