ECH22003 - Settlement: Voluntary Restitution

There will be occasions where arrears are identified as part of a review but are not legally enforceable. This is most likely to be the case with arrears of NICs that have become time barred due to the constraints of the Limitations Act.

In these circumstances the ECO cannot include the arrears in a contract settlement or take formal recovery action. However, if the employer is willing to pay any of the arrears (with or without the interest thereon) voluntarily, they may be included in a Class 6 settlement.

Where the ECO identifies arrears that are not legally enforceable they should

• explain to the employer that although the Department cannot take legal action to recover the arrears due and interest thereon they would invite the employer to make voluntary restitution.

If the employer agrees the ECO should

• obtain completion of a voluntary restitution letter
• issue a confirmation of receipt letter
• include the arrears and interest in a Class 6 settlement

Where a settlement combines voluntary restitution with a contract settlement the paperwork must not be combined. The voluntary restitution letter may be issued with the appropriate letter of offer and the confirmation letter may be issued with the letter of acceptance, but they must remain separate pieces of correspondence.

The confirmation of receipt letter must be signed at C2 level or above.