DMBM527150 - NICs: Limitation: National Insurance debts and appeals

Section 8 of the Social Security Contributions (Transfer of Functions etc.) Act 1999 (ToFA) allows an officer of HM Revenue & Customs to make a decision that an employer or individual is liable to pay a National Insurance liability. This is usually a nominated officer in Compliance who has responsibility for issuing the decision.

The decision confers a right of appeal to the Tax Appeal Commissioners, and the debtor has 30 days to submit an appeal

No appeal

If no appeal is received in the 30 days following the Section 8 ToFA decision, then Section 117A(2)(b) of the Social Security Administration Act 1992 provides that the decision is conclusive for the purposes of court proceedings. The NICs debt is due and payable and will be passed to the responsible debt management office to enforce.

Protective claims

The ‘protective claim’ procedure was originally used by the Contributions Agency (CA).

Protective claims work is now dealt with by DMU Tyneside (DMU(T)), and claims have been issued in many compliance and Class 1 NICs avoidance cases ( DMBM525180). Compliance offices will approach DMU(T) direct and request that they issue a protective claim. Any NICs due are in addition to the amounts shown on BROCS.

A county court claim is issued within six years of the original due date of the NICs, because NICs (and any interest) are subject to limitation even if they are under appeal. The claim is issued for the NICs and any interest.

The court is then requested to adjourn the proceedings until the appeal is determined.

Protective claims may also be issued for any Class 1 and Class 1A debt where the employer is disputing the liability, and the matter will not be settled before the earliest NICs debt becomes six years old.

As long as a claim is issued within six years, a debtor cannot submit a defence against a claim for NICs and interest on the grounds that it was out of time.

Appeal determined

If an appeal is determined in the department’s favour, S117A(5) of the Social Security Administration Act 1992 confirms that the decision is conclusive for the purposes of the court proceedings.

If the debt is not paid, DMU(T) will restore the department’s claim and enforce as necessary. After judgment the debt will be referred to the DMO.