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Version Superseded: 06/04/2015
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87B.—(1) A penalty is payable by P where—
(a)P becomes liable to pay a Class 2 contribution;
(b)P fails to comply with the requirement to notify in accordance with regulation 87A(1); and
(c)notification has not been made by 31st January following the end of the year in which P became liable to pay a Class 2 contribution.
(2) A failure by P to comply with the requirement to notify is—
(a)“deliberate and concealed” if the failure is deliberate and P makes arrangements to conceal the situation giving rise to the requirement, and
(b)“deliberate but not concealed” if the failure is deliberate but P does not make arrangements to conceal the situation giving rise to the requirement.
(3) The penalty payable under paragraph (1) is—
(a)for a deliberate and concealed failure to comply with the requirement to notify, 100% of the lost contributions,
(b)for a deliberate but not concealed failure to comply with the requirement, 70% of the lost contributions, and
(c)for any other case, 30% of the lost contributions.
(4) “The lost contributions” are the amount of Class 2 contributions which P is liable to pay—
(a)beginning on the date on which P becomes liable to pay a Class 2 contribution, and
(b)ending on the 31st January preceding the day on which HMRC received notification of, or otherwise became fully aware of P's liability to pay Class 2 contributions.
(5) When calculating the amount of “the lost contributions” no account is to be taken of any Class 2 contribution—
(a)that is unpaid after the end of the sixth year following the year in which liability for that contribution arose, or
(b)in respect of which P's earnings meet the conditions set out in regulation 45(1) for the purposes of section 11(4) of the Act (exception from liability for Class 2 contributions on account of small earnings).
(6) Liability to a penalty under paragraph (1) does not arise in relation to a failure to comply with the requirement to notify which is not deliberate if P satisfies HMRC or (on appeal) the tribunal that there is a reasonable excuse for the failure.
(7) For the purposes of paragraph (6)—
(a)an insufficiency of funds is not a reasonable excuse unless attributable to events outside P's control,
(b)where P relies on any other person to notify HMRC, that is not a reasonable excuse unless P took reasonable care to avoid the failure,
(c)where P had a reasonable excuse but the excuse has ceased, P is to be treated as having continued to have that excuse if P notifies without unreasonable delay after the excuse ceased.
(8) For the purposes of this regulation, the reference to a failure by P includes a failure by a person who acts on P's behalf; but P is not liable to a penalty in respect of a failure by P's agent where P satisfies HMRC or (on appeal) the tribunal that P took reasonable care to avoid the failure.]
Textual Amendments
F1Regs. 87A-87G inserted (with effect in accordance with reg. 1(2)(b) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 3) Regulations 2009 (S.I. 2009/600), regs. 1(1), 6
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