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HMRC internal manual

National Insurance Manual

Appendix 1: Draft Letter 8

Letter telling an employee of the intention to issue a direction under regulation 31 of the Social Security (Contributions) Regulations 2001

Dear

[A] At a recent visit to your employer [D]………………. an officer of this Department found that the pay practice your employer uses to pay you is one which results in liability for National Insurance contributions (NICs) being reduced or avoided by means of irregular or unequal payments.

[B] Your employer [D]…………. recently asked this Department to consider whether the pay practice he uses to pay you is one which results in liability for National Insurance contributions (NICs) being reduced or avoided by means of irregular or unequal payments.

[C] You recently asked this Department to consider whether the pay practice he uses to pay you is one which results in liability for National Insurance contributions (NICs) being reduced or avoided by means of irregular or unequal payments.

Although NICs are being assessed in accordance with Social Security legislation, where such a pay practice exists this Department may, under regulation 31 of the Social Security (Contributions) Regulations 2001, direct what earnings period should be used for the purposes of calculating the amount of NICs due.

The purpose of this letter is to explain that, in order to ensure that the amount of NICs due is proportionate to the total earnings paid to you, it is our intention to issue a decision which gives your employer notice to change your earnings period. This means that with effect from [E] …………………. your employer will calculate NICs using a [F]…………… earnings period for you.

You will receive this decision in 30 days. In the meantime, if you think there are any reasons why your earnings period should not be changed, please let me know as soon as possible.

A similar letter has been sent to your employer.

Notes Explanation

[A] Use this paragraph if the case originated internally

[B] Use this paragraph if the employer has requested a regulation 31 decision

[C] Use this paragraph if the employee has requested a regulation 31 decision

[D] Insert the name of the employer

[E] Insert operative date

[F] Insert earnings period to be applied, eg monthly, quarterly