NIM25042 - Class 3 NICs: Deficiency Notices: Annual exercise for 2002-03 - 2004-05

Following the six year Deficiency Notice exercise covering 1996-97 to 2001-02 the annual exercise recommenced in October 2004. It covered the 2002-03 tax year.

• For the background to Deficiency Notices see NIM25041.
• For the special provisions for time limits and higher rates for 1996-97 to 2001-02 see NIM25043.

Before the start of the annual exercise, NIRS 2 performs a scan 18 months after the end of the tax year. This identifies contributors who have not paid, or been credited with, enough contributions or credited earnings to make that year count towards their basic State Pension. The purpose of the exercise is to give contributors the opportunity

• to pay Class 3 NICs on a voluntary basis to make up the gap
• to tell us if they think the amount of the gap is wrong

The contributor is sent a letter which gives details of the gap and the amount to pay to make the year qualify for basic State Pension. There are two versions of the letter CA8334

• a National Insurance Contributions Office (NICO) version issued to individuals living in the United Kingdom
• a Centre for Non-Residents (CNR) version issued to individuals living abroad

The contributor is also sent:

• instructions on how to pay
• a DWP flyer, changes to State Pension
• a reply form CA93A

If someone lives or works abroad he or she may be able to pay National Insurance contributions at the lower voluntary Class 2 rate, see NIM33603 and CNRN50200.

Any National Insurance contributions paid as a result of the annual exercise are subject to the normal time limits and higher rate provisions.