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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 30t h April 2001 but before 6 April 2009 must register with HMRC within three 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 (NIM21000) 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, see DANSP21800. 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.