NIM13190 – Class 1A NICs: Liability for Class 1A NICs: Identifying whether a payment of earnings has been made or a benefit has been provided: Establishing the contractual arrangements: Cases of doubt

In cases where doubt exists about whether an employee has received earnings or been provided with a benefit it is important to establish all relevant facts.

The payment by an employer of an employee’s personal bill is not sufficient to render the payment a benefit for NIC purposes. Many directors, particularly of small companies, arrange for their personal bills to be paid by their employers. Often they will arrange for the supplier to send a bill direct to their employer’s address. Although the bill may have on it the employer’s address and the provider may anticipate payment from the employer, this does not necessarily mean that the contract to supply the goods or service is with the employer.

In some cases it will be necessary to check who it is that has actually made the contract with the supplier. This will be especially important where a dispute arises and it is likely that a section 8 NICs liability decision will be needed.