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HMRC internal manual

National Insurance Manual

HM Revenue & Customs
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NICs avoidance: retrospective legislation: introduction

The National Insurance Contributions Act 2006

This NICA 2006 took effect from 30 March 2006 and took forward the Paymaster General’s Pre-Budget Report 2004 announcing that the Government would be prepared to act retrospectively against tax and NICs avoidance involving employee remuneration.

Section 4B of the Social Security Contributions and Benefits Act 1992

Social Security Contributions and Benefits (Northern Ireland) Act 1992

NICA 2006 provides a power to make regulations in respect of NICs that reflect retrospective tax changes that take effect on or after 2 December 2004. The regulations ensure that payments made under a tax and/ or NICs avoidance scheme or arrangement used at any time since 2 December 2004, can be treated as earnings for NICs purposes.

The resulting NICs liability is calculated as if a liability had existed at the time the payments were made.

Use of retrospective legislation

For guidance about when this power was used, see NIM50350.

When the power can be used

The power may only be used where

  • a provision of the Income Tax Acts, which relates to income tax chargeable under the employment income Parts of ITEPA 2003, is passed which has retrospective effect, and
  • the Treasury consider it appropriate to make NICs regulations under any of those existing powers for the purpose of reflecting the whole or part of the retrospective tax provision, and
  • the Treasury believe it is expedient for the NICs regulations to have retrospective effect in consequence of the retrospective tax provision.