The Social Security (Categorisation of Earners) Regulations 1978

Citation, commencement and interpretation

1.—(1) These regulations may be cited as the Social Security (Categorisation of Earners) Regulations 1978, and shall come into operation on 27th December 1978.

(2) In these regulations, unless the context otherwise requires—

“the Act” means the Social Security Act 1975;

[F1 “an agency” in paragraph 2 of Schedule 1 and paragraphs 2 and 9 of Schedule 3 to these regulations means either a UK agency or a foreign agency;]

[F2 “category A, B, C or D waters” has the meaning given in the Merchant Shipping (Categorisation of Waters) Regulations 1992;]

[F3 “end client” in paragraph 2 of Schedule 1 and paragraphs 2 and 9 of Schedule 3 to these regulations means a person (including any connected person within the meaning given by section 993 of the Income Tax Act 2007) who has a place of business, residence or presence in Great Britain and to whom the worker personally provides services;]

[F3 “foreign agency” in paragraph 2 of Schedule 1 and paragraphs 2 and 9 of Schedule 3 to these regulations means a person (including a body of persons unincorporate of which the employed person is a member) who does not have a place of business, residence or presence in Great Britain;]

F4 ...

F5 ...

[F6 “foreign employer” in paragraph 9 of Schedule 3 to these regulations means a person–

(a)

who does not fulfil the conditions as to residence or presence in Great Britain prescribed under section 1(6)(a) of the Social Security Contributions and Benefits Act 1992; and

(b)

who, if he did fulfil those conditions as to residence or presence in Great Britain referred to in (a) above, would be the secondary contributor in relation to any payment of earnings to or for the benefit of the person employed;

“host employer” in paragraph 9 of Schedule 3 to these regulations means a person having a place of business[F7 , residence or presence] in Great Britain;]

[F2 “mariner” has the meaning given in regulation 115 of the Social Security (Contributions) Regulations 2001;]

[F8 “remuneration”—

(a)

in paragraph 2 of Schedule 1 and paragraphs 2 and 9 of Schedule 3 to these regulations means—

(i)

every form of payment, profit, gratuity or benefit, but

(ii)

does not include anything that would not have constituted employed earner’s earnings if it had been receivable in connection with an employment but for those paragraphs; and

(b)

in paragraph 8 of Schedule 3 to these regulations includes any payment in respect of stipend or salary and excludes—

(i)

any payment disregarded or, as the case may be, deducted from the amount of a person’s earnings by virtue of regulations made under section 3(3) of the Act; or

(ii)

any specific and distinct payment made towards the maintenance or education of a dependent of the person receiving the payment;]

[F9 “UK agency” in paragraph 2 of Schedule 1 and paragraphs 2 and 9 of Schedule 3 to these regulations means a person (including a body of persons unincorporate of which the employed person is a member) who has a place of business, residence or presence in Great Britain;]

[F9 “worker” in paragraph 2 of Schedule 1 and paragraphs 2 and 9 of Schedule 3 to these regulations means the person providing services under or in consequence of the contract;]

and other expressions have the same meaning as in the Act.

(3) Any reference in these regulations to any provision made by or contained in any enactment or instrument shall, except in so far as the context otherwise requires, be construed as including a reference to that provision as amended or extended by any enactment or instrument, and as including a reference to any provision which it re-enacts or replaces with or without modification.

(4) The rules for the construction of Acts of Parliament contained in the Interpretation Act 1889 shall apply for the purposes of the interpretation of these regulations as they apply for the purposes of the interpretation of an Act of Parliament.

Textual Amendments

F1 Words in reg. 1(2) inserted (6.4.2014) by The Social Security (Categorisation of Earners) (Amendment) Regulations 2014 (S.I. 2014/635), regs. 1, 2(2)(a)

F2 Words in reg. 1(2) inserted (13.10.2003) by The Social Security (Categorisation of Earners) (Amendment No. 2) Regulations 2003 (S.I. 2003/2420), regs. 1, 3

F3 Words in reg. 1(2) inserted (6.4.2014) by The Social Security (Categorisation of Earners) (Amendment) Regulations 2014 (S.I. 2014/635), regs. 1, 2(2)(c)

F4 Words in reg. 1(2) omitted (6.4.2012) by virtue of The Social Security (Categorisation of Earners) (Amendment) Regulations 2012 (S.I. 2012/816), regs. 1, 3

F5 Words in reg. 1(2) omitted (6.4.2014) by virtue of The Social Security (Categorisation of Earners) (Amendment) Regulations 2014 (S.I. 2014/635), regs. 1, 2(2)(b)

F6 Words in reg. 1(2) inserted (6.4.1994) by The Social Security (Categorisation of Earners) Amendment Regulations 1994 (S.I. 1994/726), reg. 1(1), 2

F7 Words in reg. 1(2) inserted (6.4.2014) by The Social Security (Categorisation of Earners) (Amendment) Regulations 2014 (S.I. 2014/635), regs. 1, 2(2)(d)

F8 Words in reg. 1(2) substituted (6.4.2014) by The Social Security (Categorisation of Earners) (Amendment) Regulations 2014 (S.I. 2014/635), regs. 1, 2(2)(e)

F9 Words in reg. 1(2) inserted (6.4.2014) by The Social Security (Categorisation of Earners) (Amendment) Regulations 2014 (S.I. 2014/635), regs. 1, 2(2)(f)

Treatment of earners in one category of earners as falling within another category and disregard of employments

2.—(1) For the purposes of the Act an earner in one category of earners shall be treated as falling within another category in accordance with the following provisions of this regulation.

(2) Subject to the provisions of paragraph (4) of this regulation, every earner shall, in respect of any employment described in any paragraph in column (A) of Part I of Schedule 1 to these regulations, be treated as falling within the category of an employed earner in so far as he is gainfully employed in such employment and is not a person specified in the corresponding paragraph in column (B) of that Part, notwithstanding that the employment is not under a contract of service, or in an office (including elective office) with F10 [F11 ... earnings].

(3) Subject to the provisions of paragraph (4) of this regulation, every earner shall, in respect of any employment described in any paragraph in column (A) of Part II of the said Schedule 1, be treated as falling within the category of a self-employed earner in so far as he is gainfully employed in such employment and is not a person specified in the corresponding paragraph in column (B) of that Part, notwithstanding that the employment is under a contract of service, or in an office (including elective office) with F10 [F11 ... earnings].

(4) Every employment described in any paragraph in column (A) of Part III of the said Schedule 1 shall, in relation to liability for contributions otherwise arising from employment of that description, be disregarded, except in so far as it is employment of a person specified in the corresponding paragraph in column (B) of that Part.

Textual Amendments

F10 Word in reg. 2 omitted (6.4.2015) by virtue of The Social Security (Miscellaneous Amendments No. 2) Regulations 2015 (S.I. 2015/478), regs. 1(4), 25(2)

F11 Words in reg. 2 substituted (6.4.2004) by The Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) Regulations 2004 (S.I. 2004/770), regs. 1(1), 34(2)

Employments treated as continuing

3.  For the purposes of the Act with respect to the computation, collection and recovery of, and otherwise with respect to, contributions (other than Class 4 contributions which under section 9 of the Act are to be recovered by the Inland Revenue), the employment of a person shall be treated as continuing in the circumstances specified in Schedule 2 to these regulations.

Special provisions with respect to persons declared by the High Court to be persons falling within a particular category of earners

4.—(1) Where, under the provisions of the Act relating to references and appeals to the High Court(1), the High Court decides any question whether in respect of any employment a person is an earner and, if so, as to the category of earners in which he is to be included, and that decision is inconsistent with some previous determination of a question by the Secretary of State(2), then, if the Secretary of State is satisfied that contributions appropriate to another category of earners have been paid by or in respect of any person by reason of that determination or in the reasonable belief that that determination was applicable, the Secretary of State may, if it appears to him that it would be in the interests of the person by or in respect of whom such contributions have been paid, or of any claimant or beneficiary by virtue of that person's contributions, so to do, direct that that person shall be treated as though he had been included in the category of earners corresponding to the contributions paid during the period for which contributions appropriate to that other category were so paid before the date on which the decision of the High Court was given, and, if such a direction is given, that person shall be deemed to have been included in that category accordingly for such period.

(2) Where the Secretary of State, on review under section 96(1) of the Act, has revised a determination of a question previously given by him, the provisions of this regulation shall apply with the necessary modifications in the same manner as they apply where the High Court has given a decision inconsistent with a determination previously given by the Secretary of State.

(3) In the application of this regulation to Scotland, for any reference to the High Court, there shall be substituted a reference to the Court of Session(3).

Persons to be treated as secondary contributors

5.— [F12 (1)] For the purposes of section 4 of the Act (Class 1 contributions), in relation to any payment of earnings to or for the benefit of an employed earner in any employment described in any paragraph in column (A) of Schedule 3 to these regulations, the person specified in the corresponding paragraph in column (B) of that Schedule shall be treated as the secondary Class 1 contributor in relation to that employed earner.

[F13 (2) Paragraph 9 of Schedule 3 applies to mariners notwithstanding anything in regulations 122 and 124(1) of the Social Security (Contributions) Regulations 2001.]

Textual Amendments

F12 Reg. 5(1): reg. 5 renumbered as reg. 5(1) (13.10.2003) by The Social Security (Categorisation of Earners) (Amendment No. 2) Regulations 2003 (S.I. 2003/2420), regs. 1, 4(1)

F13 Reg. 5(2) added (13.10.2003) by The Social Security (Categorisation of Earners) (Amendment No. 2) Regulations 2003 (S.I. 2003/2420), regs. 1, 4(2)

[F14 Anti-avoidance

5A— (1) Paragraph (2) applies if—

(a) an earner has an employment in which the earner personally provides services to a person who is resident or present or has a place of business in Great Britain,

(b) a third person enters into relevant avoidance arrangements, and

(c) but for paragraph (2), the earner would not be, and would not be treated as falling within the category of, an employed earner in relation to the employment.

(2) The earner is to be treated as falling within the category of an employed earner in relation to the employment.

(3) In paragraph (1)(b) “relevant avoidance arrangements” means arrangements the main purpose, or one of the main purposes, of which is to secure—

(a) that the earner is not treated under paragraph 2 of Schedule 1 as falling within the category of employed earner in relation to the employment, or

(b) that a person is not treated under paragraph 2 or 9(b) or (d) of Schedule 3 as the secondary Class 1 contributor in respect of payments of earnings to or for the benefit of the earner in respect of the employment.

(4) Paragraph (5) applies if—

(a) a person (“P”) enters into arrangements the main purpose, or one of the main purposes, of which is to secure that P is not treated under a relevant provision as the secondary Class 1 contributor in respect of payments of earnings to or for the benefit of an employed earner in respect of an employment, and

(b) but for paragraph (5), no person who is resident or present or has a place of business in Great Britain would—

(i) be the secondary Class 1 contributor in respect of such payments, or

(ii) be treated, under a provision other than paragraph 2(a) or (b) or 9(g) or (h) in column (B) of Schedule 3, as the secondary Class 1 contributor in respect of such payments.

(5) If P is resident or present or has a place of business in Great Britain, P is to be treated as the secondary Class 1 contributor in respect of such payments.

(6) In paragraph (4)(a) a “relevant provision” means any provision of—

(a) paragraph 2 of Schedule 3, other than sub-paragraphs (a) and (b) of that paragraph in column (B), or

(b) paragraph 9(a) to (d) of that Schedule.

(7) In this regulation “arrangements” include any scheme, transaction or series of transactions, agreement or understanding, whether or not legally enforceable, and any associated operations.]

Textual Amendments

F14 Reg. 5A inserted (6.4.2014 retrospective for specified purposes, 12.2.2015 in so far as not already in force) by National Insurance Contributions Act 2015 (c. 5), s. 6(1)(7) (with s. 6(8)(9)(11))

Revocation and general savings

6.—(1) The regulations specified in column (1) of Schedule 4 to these regulations are hereby revoked to the extent mentioned in column (3) of that Schedule.

(2) Anything whatsoever done under or by virtue of any regulation revoked by these regulations shall be deemed to have been done under or by virtue of the corresponding provision of these regulations and anything whatsoever begun under any such regulation may be continued under these regulations as if begun thereunder.

David Ennals

Secretary of State for Social Services