The Social Security (Contributions) Regulations 2001

Regulation 67(2)

SCHEDULE 4U.K. [F1Provisions derived from the Income Tax Acts and the Income Tax (Pay As You Earn) Regulations 2003]

Textual Amendments

PART IU.K. GENERAL

InterpretationU.K.

1.—[F2(1) In this Schedule the “PAYE Regulations” means the Income Tax (Pay As You Earn) Regulations 2003.

(2) In this Schedule, except where the context otherwise requires—

“aggregated” means aggregated and treated as a single payment under paragraph 1(1) of Schedule 1 to the Act;

“allowable pension contributions” means any sum paid by an employee by way of contribution towards a pension fund or scheme which is withheld from the payment of PAYE income and for which a deduction must be allowed from employment income under section 592(7) or 594(1) of the Taxes Act (exempt approved schemes and exempt statutory schemes);

[F3“closed tax year” means any year preceding the current year and cognate expressions shall be construed accordingly;]

“Compensation of Employers Regulations” means the Statutory Maternity Pay (Compensation of Employers) and Miscellaneous Amendments Regulations 1994 and the Statutory Sick Pay Percentage Threshold Order 1995

“deductions working sheet” means any form of record on or in which are to be kept the matters required by this Schedule in connection with an employee’s general earnings and earnings-related contributions or the form issued by the Inland Revenue under paragraph 31 or under regulation 35 of the PAYE Regulations (simplified deduction scheme);

“earnings-related contributions” means contributions payable under the Act by or in respect of an employed earner in respect of employed earner’s employment;

“employed earner” and “employed earner’s employment” have the same meaning as in the Act;

“employee” means any person in receipt of general earnings;

“employer” means the secondary contributor determined—

(a)by section 7 of the Act;

(b)under regulation 5 of, and Schedule 3 to, the Social Security (Categorisation of Earners) Regulations 1978; or

(c)under regulation 122;

“general earnings has the meaning given in section 7(3) of ITEPA 2003;”;

F4...

“Inland Revenue” means any officer of the Board of Inland Revenue;

“mariner” has the same meaning as in regulation 115;

“the Reimbursement Regulations” means the Employer’s Contributions Re-imbursement Regulations 1996;

“tax month” means the period beginning on the 6th day of any calendar month and ending on the 5th day of the following calendar month;

“tax period” means a tax quarter where paragraph 11 has effect, but otherwise means a tax month;

“tax quarter” means the period beginning on 6th April and ending on 5th July, or beginning on 6th July and ending on 5th October, or beginning on 6th October and ending on 5th January, or beginning on 6th January and ending on 5th April;

“voyage period” has the same meaning as in regulation 115;

“year” means tax year;

and other expressions have the same meaning as in the Income Tax Acts.]

(3) For the purposes of paragraphs 7(13), 9, 10, 11 and 22, “primary Class 1 contributions” and “earnings-related contributions” shall, unless the context otherwise requires, include any amount paid on account of earnings-related contributions in accordance with the provisions of regulation 8(6).

Textual Amendments

F4Words in Sch. 4 para. 1(2) omitted (1.4.2009) (with effect in accordance with reg. 1(2)(a) of the amending S.I.) by virtue of The Social Security (Contributions) (Amendment No. 3) Regulations 2009 (S.I. 2009/600), regs. 1(1), 8(2)

Multiple employersU.K.

[F52.—(1) If—

(a)an employer has made an election under regulation 98 of the PAYE Regulations to be treated as a different employer in respect of each group of employees specified in the election, and

(b)no improper purpose notice has been given, or if one has been given it has been withdrawn,

he shall be treated as having made an identical election for the purposes of this Schedule.

(2) In this paragraph an “improper purpose notice” is a notice issued to the employer stating that it appears to the Inland Revenue that the election is made wholly or mainly for an improper purpose within the meaning of regulation 99(2) of the PAYE Regulations.]

Textual Amendments

Intermediate employersU.K.

3.—(1) Where an employee works for a person who is not his immediate employer, that person shall be treated as the employer for the purpose of this Schedule, and the immediate employer shall furnish the principal employer with such particulars of the employee’s [F6general earnings] as may be necessary to enable the principal employer to comply with the provisions of this Schedule.

This is subject to the qualification in sub-paragraph (4).

(2) In this paragraph—

  • “the principal employer” means the person specified as the relevant person in the direction referred to in sub-paragraph (4), and

  • “the immediate employer” means the person specified as the contractor in that direction.

(3) If the [F7employee’s general earnings] are actually paid to him by the immediate employer—

(a)the immediate employer shall be notified by the principal employer of the amount of earnings-related contributions which may be deducted when [F8those earnings] are paid to the employee, and may deduct the amount so notified to him accordingly; and

(b)the principal employer may make a corresponding deduction on making to the immediate employer the payment out of which [F9those earnings] will be paid.

(4) This paragraph only applies if a direction has been given by the Board under [F10section 691 of ITEPA 2003] (PAYE: mobile UK workforce)F11.

(5) Where an employee is paid a sickness payment which by virtue of regulation 23 is not made through the secondary contributor in relation to the employment—

(a)the person making that payment shall furnish the secondary contributor with such particulars of that payment as may be necessary to enable the secondary contributor to comply with this Schedule; and

(b)for the purposes only of this Schedule the secondary contributor shall be deemed to have made the sickness payment.

Textual Amendments

F11Section 203E was inserted by section 126 of the Finance Act 1994 (c. 9).

Employer’s earnings-related contributionsU.K.

4.  If, under this Schedule, a person [F12pays] any earnings-related contributions which, under section 6(4) of the Act F13, another person is liable to pay, his payment of those contributions shall be made as agent for that other person.

Textual Amendments

F12Word in sch. 4 para. 4 substituted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 5

F13This section was substituted by paragraph 2 of Part I of Schedule 9 to the Welfare Reform Act.

[F14IntermediariesU.K.

4A.—(1) Where any payment of [F15general earnings] of an employee is made by an intermediary of the employer, the employer shall be treated, for the purposes of this Schedule other than–

(a)paragraph 7(1),

(b)paragraph 7(3)(a),

(c)the references to a subsequent payment of [F15general earnings] or of monetary earnings in paragraph 7(3) and (8), and

(d)paragraph 7(11),

as making the payment of those [F15general earnings] to the employee.

(2) For the purposes of this paragraph, a payment of [F15general earnings] of an employee is made by an intermediary of the employer if it is made–

(a)either–

(i)by a person acting on behalf of the employer and at the expense of the employer, or

(ii)by a person connected with him, or

(b)by trustees holding property for any persons who include, or class of persons which includes, the employee.

(3) Section 839 of the Taxes Act (connected persons) applies for the purposes of this paragraph.]

Textual Amendments

F14Sch. 4 para. 4A inserted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, reg. 6

[F16Continuation of proceedings etc.U.K.

5.  Any legal proceedings or administrative act authorised by or done for the purposes of this Schedule and begun by one Inland Revenue officer may be continued by another officer, and any officer may act for any division or other area.]

Textual Amendments

PART IIU.K. DEDUCTION OF EARNINGS-RELATED CONTRIBUTIONS

Deduction of earnings-related contributionsU.K.

6.—(1) Every employer, on making during any year to any employee any payment of [F17general earnings] in respect of which earnings-related contributions are payable, or are treated as payable, or on making any payment of statutory maternity pay—

(a)shall, if he has not already done so, prepare, or in the case of an employee to whom [F18regulation 35 of the PAYE Regulations (simplified deduction scheme)] applies, maintain a deductions working sheet for that employee, and

(b)may deduct earnings-related contributions in accordance with this Schedule.

[F19(1A) Where a liability to pay retrospective contributions has arisen in respect of an employee, an employer shall amend the relevant deductions working sheet or where necessary prepare one in respect of that employee.]

(2) Subject to sub-paragraph (3), an employer shall not be entitled to recover any earnings-related contributions paid or to be paid by him on behalf of any employee otherwise than by deduction in accordance with this Schedule.

(3) Sub-paragraph (2) does not apply to secondary Class 1 contributions in respect of which an election has been made jointly by the secondary contributor and the employed earner for the purposes of paragraph 3B(1) of Schedule 1 to the Act (election in respect of transfer of secondary contribution liability on [F20relevant employment income]) F21 if the election provides for the collection of the amount in respect of which liability is transferred.

Textual Amendments

F20Words in Sch. 4 para. 6(3) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 4) Regulations 2004 (S.I. 2004/2096), regs. 1(1), 7(a)

F21Paragraph 3B was inserted by section 77(2) of the Child Support, Pensions and Social Security Act 2000 (c. 19).

Calculation of deductionU.K.

7.—(1) Subject to sub-paragraph (2), on making any payment of [F22general earnings] to the employee, the employer may deduct from those [F22general earnings] the amount of the earnings-related contributions based on those [F22general earnings] F23... which the employee is liable to pay under section 6(4) of the Act [F24(the “section 6(4)(a) amount”)] .

(2) Where two or more payments of [F22general earnings] fall to be aggregated, the employer may deduct the amount of the earnings-related contributions based on those [F22general earnings], which are payable by the employee, either wholly from one such payment or partly from one and partly from the other or any one or more of the others.

[F25(3) If the employer–

(a)on making any payment of [F22general earnings] to an employee does not deduct from those [F22general earnings] the full section 6(4)(a) amount, or

(b)is treated as making a payment of [F22general earnings] by paragraph 4A,

he may recover, in a case falling within paragraph (a) the amount not so deducted or, in a case falling within paragraph (b) the section 6(4)(a) amount, by deduction from any subsequent payment of [F22general earnings] made by the employer to that employee during [F26the same year and, where the case falls within paragraph (b) [F27or sub-paragraph 4(a) or (f)]].

  • This sub-paragraph is subject to sub-paragraphs (4) and (5).]

[F28(3A) Where an amount has been treated as retrospective earnings paid to or for the benefit of an employee, the employer may deduct the retrospective contributions based on those earnings from any payment of general earnings made by him to that employee—

(a)after the relevant retrospective contributions regulations come into force, and

(b)during the same and the following year.

This sub-paragraph is subject to sub-paragraph (5).]

(4) Sub-paragraph (3) applies only where—

(a)the under-deduction occurred by reason of an error made by the employer in good faith;

(b)the [F22general earnings] in respect of which the under-deduction occurred are treated as earnings by virtue of regulations made under section 112 of the Act (certain sums to be earnings)F29;

(c)the under-deduction occurred as a result of the cancellation, variation or surrender of the contracting-out certificate issued in respect of the employment in respect of which the payment of [F22general earnings] is made; or

(d)the [F22general earnings] in respect of which the under-deduction occurred are, by virtue of regulation 23, not paid through the secondary contributor in relation to the employment; F30...

[F31(e) the employer is treated as making a payment of [F22general earnings] by paragraph 4A][F32; or]

[F33(f)the payment in question is made to a person whose place of employment is outside the United Kingdom and on whose general earnings Class 1 contributions are, but income tax is not, payable.]

(5) For the purposes of sub-paragraphs (3), [F34(3A),] (4), (8) and (11)—

(a)the amount which by virtue of those sub-paragraphs may be deducted from any payment, or from any payments which fall to be aggregated, shall be an amount in addition to, but not in excess of, the amount deductible from those payments under the other provisions of this Schedule; and

(b)for the purposes of Part III of this Schedule an additional amount which may be deducted by virtue of those sub-paragraphs [F35in a case falling within paragraph (a) of any of those sub-paragraphs [F36except sub-paragraph (3A)]] shall be treated as an amount deductible under this Schedule only in so far as the amount of the corresponding under-deduction has not been so treated.

[F37This is subject to the following qualification.]

[F38(5A) Where a payment—

(a)falls within sub-paragraph (4)(e) [F39or (f)],

(b)comprises a beneficial interest in [F40securities], or

(c)is treated as earnings within the meaning of Part 7 of the Income Tax (Earnings and Pensions) Act 2003,

sub-paragraph (5B) applies.

(5B) If this sub-paragraph applies—

(a)sub-paragraph (5)(a) shall have effect as if “, but not in excess of,” were omitted; and

(b)sub-paragraph (8) shall have effect as if at the end there were added “or the following year”]

(6) Sub-paragraph (8) applies where an employer makes a payment consisting either soley of non-monetary earnings, or a combination of monetary and non-monetary earnings, to—

(a)an employee;

(b)an ex-employee,

and at the time of the payment of those earnings there are no, or insufficient, monetary earnings from which the employer could deduct the [F41section 6(4)(a) amount].

(7) In sub-paragraph (6)(b) “ex-employee” means a person who—

(a)ceases to be employed by the employer in a particular year (“the cessation year”); and

(b)receives such earnings from the employer after the cessation of employment but in the cessation year.

[F42(8) Where, in the circumstances specified in sub-paragraph (6), the employer–

(a)does not deduct from the earnings referred to in that sub-paragraph the full section 6(4)(a) amount, or

(b)is treated as making a payment of [F22general earnings] by paragraph 4A,

he may recover, in a case falling within paragraph (a) the amount not so deducted or, in a case falling within paragraph (b) the section 6(4)(a) amount, by deduction from any subsequent payment of monetary earnings to that employee, or ex-employee (as the case may be) during the same year.

  • This sub-paragraph is subject to sub-paragraph (5).]

(9) Sub-paragraph (11) applies if—

(a)a person (“the ex-employee”) ceases in a particular tax year (“the cessation year”) to be employed by a particular employer (“the employer”); and

(b)the ex-employee receives from the employer in the cessation year, after the cessation of employment, earnings in the form of—

(i)a beneficial interest in [F43securities],

(ii)a conditional interest in [F43securities] or a beneficial interest in convertible [F43securities] treated as earnings under [F44regulation 22(5), (6) or (7)] ,

(iii)any gain on which the ex-employee is chargeable to tax by virtue of [F45section 4(4)(a) of the Act]; and

(c)at the time of the payment of those earnings there are no monetary earnings, or insufficient monetary earnings, from which the employer could deduct the [F46section 6(4)(a) amount].

F47(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11) Where, in the circumstances specified in sub-paragraph (9), the employer has not deducted, from the earnings referred to in sub-paragraph (9)(b), the full amount of earnings-related contributions which by virtue of this Schedule he is entitled to deduct, he may, without prejudice to sub-paragraph (8) but subject to sub-paragraph (12)(b), recover the amount so under-deducted by deduction from the proceeds of sale of some, or all, of—

(a)the [F49securities] referred to in of sub-paragraph 9(b)(i) and (ii); or

(b)the [F49securities] which form the subject matter of the option referred to in sub-paragraph (9)(b)(iii).

(12) For the purposes of sub-paragraph (11)—

(a)the whole of the amount under-deducted may be recovered from the proceeds of sale of some, or all, of the [F49securities] referred to in that sub-paragraph; and

(b)the employee’s prior written consent to that sale and the recovery of all or part of the under-deduction from the proceeds thereof, shall be required.

(13) Subject to sub-paragraph (14), the employer shall record on the deductions working sheet for that employee the name and national insurance number of the employee, the year to which the working sheet relates, the appropriate category letter in relation to the employee (being the appropriate category letter indicated by the Board) and, in so far as relevant to that category letter, the following particulars regarding every payment of [F22general earnings] which he makes to the employee namely—

(a)the date of payment;

(b)the amount of—

(i)earnings up to and including the current lower earnings limit where earnings equal or exceed that figure,

(ii)earnings which exceed the current lower earnings limit but do not exceed the current primary threshold and the current secondary threshold,

(iii)earnings which exceed the current primary threshold and the current secondary threshold but do not exceed the [F50upper accrual point],

[F51(iiia)earnings which exceed the upper accrual point but do not exceed the current upper earnings limit,]

[F52(iv)the sum of the primary Class 1 contributions and secondary Class 1 contributions payable on all the employee’s earnings, other than contributions recovered under sub-paragraph (3); and

(v)the primary Class 1 contributions payable on the employee’s earnings;]

(vi)any statutory maternity pay;

[F53(vii)any statutory paternity pay; and

(viii)any statutory adoption pay.

The amounts to be recorded under sub-paragraphs (iv) and (v) are the amounts of contributions after deducting the amount of any reduction calculated in accordance with section 41(1) to (1B) or section 42A(1) to (2A) of the Pensions Act (“the reduction”), subject to the following qualification.

If the amount of the reduction exceeds the amount of the contributions in respect of which it falls to be made, the amount to be entered under sub-paragraph (v) is nil.]

F54(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(14) Where 2 or more payments of [F22general earnings] fall to be aggregated, the employer, instead of recording under heads (iv) and (v) of sub-paragraph (13)(b) separate amounts in respect of each such payment, shall under each head record a single amount, being the total of the contributions appropriate to the description specified in that head, in respect of the aggregated payments.

(15) When an employer pays [F22general earnings] he shall record under the name of the employee to whom he pays the [F22general earnings]—

(a)the date of payment;

(b)the amount of the [F22general earnings], excluding any allowable [F55pension] contributions; and

(c)any allowable [F55pension] contributions;

and retain the record for a period of three years after the end of the tax year in which the [F22general earnings] were paid.

Textual Amendments

F23Word in Sch. 4 para. 7(1) omitted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 7(2)

F24Words in Sch. 4 para. 7(1) inserted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 7(2)

F25Sch. 4 para. 7(3) substituted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 7(3)

F29Section 112 was amended by paragraph 51(4) of Schedule 1 to the Employment Rights Act 1996 (c. 18) and paragraph 21 of Schedule 3 to the Transfer Act.

F31Sch. 4 para. 7(4)(e) and word inserted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 7(4)

F35Words in Sch. 4 para. 7(5)(b) inserted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 7(5)

F41Words in Sch. 4 para. 7(6) substituted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 7(6)

F42Sch. 4 para. 7(8) substituted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 7(7)

F46Words in Sch. 4 para. 7(9)(c) substituted (28.11.2002) by The Social Security (Contributions)(Amendment No. 5) Regulations 2002 (S.I. 2002/2929), regs. 1, 7(8)

F52Sch. 4 para. 7(13)(b)(iv)-(v) substituted (with effect in accordance with reg. 1(1) of the amending S.I.) by The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(2)(a)(i)

F53Sch. 4 para. 7(13)(b)(vii)-(viii) and words inserted (with effect in accordance with reg. 1(1) of the amending S.I.) by The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(2)(a)(ii)

F54Sch. 4 para. 7(13)(c) omitted (with effect in accordance with reg. 1(1) of the amending S.I.) by virtue of The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(2)(b)

[F56Records where liability transferred from secondary contributor to employed earner: relevant employment incomeU.K.

8.  Where an election has been made for the purposes of paragraph 3B(1) of Schedule 1 to the Act (elections about transfer of liability for secondary contributions in respect of relevant employment income), the secondary contributor shall maintain records containing—

(a)a copy of any such election;

(b)a copy of the notice of approval issued by the Inland Revenue under paragraph 3B(1)(b) of that Schedule;

(c)the name and address of the secondary contributor who has entered into the election;

(d)the name of the employed earner; and

(e)the national insurance number allocated to the employed earner.]

Textual Amendments

F56Sch. 4 para. 8 heading substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 4) Regulations 2004 (S.I. 2004/2096), regs. 1(1), 7(b)

Certificate of contributions paidU.K.

9.—(1) Where the employer is required to give the employee a certificate in accordance with [F57regulation 67 of the PAYE Regulations (information to employees about payments and tax deducted (Form P 60))], the employer shall enter on the certificate, in respect of the year to which the certificate relates—

(a)the amount of any earnings up to and including the current lower earnings limit where earnings equal or exceed that figure;

(b)the amount of any earnings in respect of which primary Class 1 contributions were, by virtue of section 6A of the ActF58, treated as having been paid, which exceed the current lower earnings limit but do not exceed the current primary threshold, other than earnings from non-contracted-out employment in respect of which primary Class 1 contributions were, by virtue of that section and regulation 127, treated as having been paid at the reduced rate;

(c)the amount of any earnings in respect of which primary Class 1 contributions were payable which exceed the current primary threshold but do not exceed the [F59upper accrual point], other than earnings from non-contracted-out employment in respect of which primary Class 1 contributions were payable at the reduced rate;

[F60(ca)the amount of any earnings in respect of which primary Class 1 contributions were payable which exceed the upper accrual point but do not exceed the current upper earnings limit, other than earnings from non-contracted-out employment in respect of which primary Class 1 contributions were payable at the reduced rate;]

(d)the amount of the earnings, if any, recorded under paragraphs (b) and (c), above the current lower earnings limit, in respect of which primary Class 1 contributions were payable or, where section 6A of the Act and regulation 127 applies, were treated as having been paid, at the reduced rate;

(e)the amount of primary Class 1 contributions paid by the employee;

[F61(f)the amount of statutory maternity pay paid to the employee;

(g)the amount of statutory paternity pay paid to the employee; and

(h)the amount of statutory adoption pay paid to the employee;]

and shall enter the amounts under [F62paragraph (e)] under the appropriate category letter indicated by the [F63Inland Revenue].

(2) Where the employer is not required to give the employee a certificate in accordance with [F64regulation 67 of the PAYE Regulations], because no tax has been deducted from the employee’s [F65general earnings] during the year concernedF66..., [F67but the employee—

(a)has paid, or

(b)is treated, by virtue of section 6A of the Act, as having paid,

primary Class 1 contributions in that year, the employer shall nevertheless give the employee such a certificate showing the information referred to in sub-paragraph (1).]

Textual Amendments

F58Section 6A was inserted by paragraph 3 of Part I of Schedule 9 to the Welfare Reform Act.

F61Sch. 4 para. 9(1)(f)-(h) inserted (with effect in accordance with reg. 1(1) of the amending S.I.) by The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(3)(a)

F62Words in Sch. 4 para. 9(1) substituted (with effect in accordance with reg. 1(1) of the amending S.I.) by The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(3)(b)

PART IIIU.K. PAYMENT AND RECOVERY OR EARNINGS-RELATED CONTRIBUTIONS, CLASS 1A CONTRIBUTIONS AND CLASS 1B CONTRIBUTIONS, ETC.

Payment of earnings-related contributions monthly by employerU.K.

10.—(1) Subject to [F68sub-paragraph (1A) and] paragraph 11 and 15(8), the employer shall pay the amount specified in sub-paragraph (2) to the [F69Inland Revenue] within 14 days [F70or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, within 17 days] of the end of every F71... tax month.

[F72(1A) This paragraph does not apply in respect of amounts of retrospective earnings.]

(2) The amount specified in this sub-paragraph is the total amount of earnings-related contributions due in respect of [F73general earnings] paid by the employer in that F74... tax month, other than amounts deductible under paragraph 7(2) which he did not deduct and amounts which he deducted under the Compensation of Employers Regulations and the Reimbursement Regulations.

(3) For the purposes of sub-paragraph (2), if two or more payments of [F75general earnings] fall to be aggregated, the employer shall be treated as having deducted from the last of those payments the amount of any earnings-related contributions deductible from those payments which he did not deduct from the earlier payments.

Textual Amendments

Payments of earnings-related contributions quarterly by employerU.K.

11.—(1) Subject to [F76sub-paragraph (1A) and] paragraph 15(8), the employer shall pay the amount specified in sub-paragraph (2) to the [F77Inland Revenue] within 14 days of the end of every F78... tax quarter [F79or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, within 17 days of the end of every tax quarter] where—

(a)the employer has reasonable grounds for believing that the condition specified in sub-paragraph (4) applies and chooses to pay the amount specified in sub-paragraph (2) quarterly; or

F80(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F81(1A) This paragraph does not apply in respect of amounts of retrospective earnings.]

(2) The amount specified in this sub-paragraph is the total amount of earnings-related contributions due in respect of [F82general earnings] paid by the employer in that F83... tax quarter, other than amounts deductible under paragraph 7(2) which he did not deduct and amounts which he deducted under the Compensation of Employers Regulations and Reimbursement Regulations.

(3) For the purposes of sub-paragraph (2), where two or more payments [F84of general earnings] fall to be aggregated, the employer shall be deemed to have deducted from the last of those payments the amount of any earnings-related contributions deductible from those payments which he did not deduct from the earlier payments.

[F85(4) The condition specified in this sub-paragraph is that for [F86tax months] falling within the current year, the average monthly amount found by the formula below will be less than £1500.

The formula is—

[F87(N + P + L + S) − (SP + CD)]

  • The expressions used in the formula have the following values.

    • N is the amount which would be payable to the [F88Inland Revenue] under the Social Security Contributions and Benefits Act 1992 and these Regulations but disregarding—

      (a)

      any amount of secondary Class 1 contributions in respect of which liability has been transferred to the employed earner by an election made jointly by the employed earner and the secondary contributor for the purpose of paragraph 3B(1) of Schedule 1 to the Act (transfer of liability to be borne by the earner); and

      (aa)

      [F89any amount payable in respect of retrospective earnings;]

      (c)

      F90...

    • [F91“P” is the amount which would be payable to HMRC under regulation 68 of the PAYE Regulations but disregarding any amount payable in respect of retrospective employment income (within the meaning of regulation 2 of those Regulations);]

    • L is the amount which would be payable to the [F88Inland Revenue] under regulation 39(1) of the Education (Student Loans) (Repayment) Regulations 2000 (payment of repayments deducted to the Inland Revenue) if the reduction referred to in paragraph (3) of that regulation F92...were disregarded.

    • S is the sum of the amounts which the employer would be liable to deduct, under section 559 of the Taxes Act and the Income Tax (Sub-contractors in the Construction Industry) Regulations 1993, from payments made by him.

    • F93...

    • SP is the amount—

      (a)

      recoverable by the employer from [F94the Inland Revenue], or

      (b)

      deductible from amounts for which the employer would otherwise be accountable to [F94the Inland Revenue],

      in respect of payments to his employees by way of statutory sick pay, statutory maternity pay, statutory paternity pay and statutory adoption pay.

    • CD is the amount which would be deducted by others from sums due to the employer, in his position as a sub-contractor, under section 559 of the Taxes Act.]

Textual Amendments

F85Sch. 4 para. 11(4) substituted (with effect in accordance with reg. 1(1) of the amending S.I.) by The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(4)

[F95Payments of earnings-related contributions in respect of retrospective earningsU.K.

11A.—(1) This paragraph applies where there are retrospective earnings in respect of which contributions (whether primary or secondary contributions) are payable.

(2) The employer shall pay the contributions referred to in sub-paragraph (1) to HMRC within 14 days or, if payment is made in respect of the current year by an approved method of electronic communications, 17 days of the end of the tax month immediately following the tax month in which the relevant retrospective contributions regulations came into  force.]

Textual Amendments

Payment of earnings-related contributions by employer (further provisions)U.K.

12.—[F96(1) The Inland Revenue shall give a receipt to the employer for the total amount paid under paragraph [F9710, 11 or 11A] if so requested, but if a receipt is given for the total amount of earnings-related contributions and any tax paid at the same time, a separate receipt need not be given for earnings-related contributions.]

(2) Subject to sub-paragraph (3), if the employer has paid to the [F98Inland Revenue] on account of earnings-related contributions under paragraph [F9710, 11 or 11A] an amount which he was not liable to pay, or which has been refunded in accordance with regulation 2 of the Social Security (Refunds) (Repayment of Contractual Maternity Pay) Regulations 1990 (refunds of contributions)F99, the amounts which he is liable to pay subsequently in respect of other payments of [F100general earnings] made by him during the same year shall be reduced by the amount overpaid, so however that if there was a corresponding over-deduction from any payment of [F100general earnings] to an employee, this paragraph shall apply only in so far as the employer has reimbursed the employee for that over-deduction.

(3) Sub-paragraph (2) applies only if—

(a)the over-deduction occurred by reason of an error by the employer in good faith;

(b)the over-deduction occurred as a result of the employment in respect of which the payment on account of earnings-related contributions is made being or, as the case may be, becoming contracted-out employment; or

(c)a refund has been made under regulation 2 of the Social Security (Refunds) (Repayment of Contractual Maternity Pay) Regulations 1990.

Textual Amendments

Payment of Class 1B contributionsU.K.

13.—(1) A person who is liable to pay a Class 1B contribution (“the employer”), shall pay that Class 1B contribution to the [F101Inland Revenue] not later than 19th October [F102or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, not later than 22nd October] in the year immediately following the end of the year in respect of which that contribution is payable.

(2) If the employer has paid to the [F101Inland Revenue] under this paragraph an amount in respect of Class 1B contributions which he was not liable to pay, he shall be entitled to deduct the amount overpaid from any payment in respect of secondary earnings-related contributions which he is liable to pay subsequently to the [F101Inland Revenue] under paragraph 10 or 11 for any F103... tax period in the same year.

Textual Amendments

Employer failing to pay earnings-related contributionsU.K.

14.—(1) If within [F10417 days] of the end of any F105... tax period the employer has paid no amount of earnings-related contributions to the [F106Inland Revenue] under paragraph 10 or 11 for that F105... tax period and the [F106Inland Revenue] is unaware of the amount, if any, which the employer is liable so to pay, the [F106Inland Revenue] may give notice to the employer requiring him to render, within 14 days, a return in the prescribed form showing the amount of earnings-related contributions which the employer is liable to pay to the [F106Inland Revenue] under that paragraph in respect of the F105... tax period in question.

(2) Where a notice given by the [F106Inland Revenue] under sub-paragraph (1) extends to two or more consequent income tax periods, the provisions of this Schedule shall have effect as if those F105... tax periods were one F105... tax period.

(3) If the [F106Inland Revenue] is not satisfied that an amount of earnings-related contributions paid F107... under paragraph 10 or 11 for any F105... tax period is the full amount which the employer is liable to payF107..., the [F106Inland Revenue] may give a notice under sub-paragraph (1) despite the payment of that amount.

Textual Amendments

Specified amount of earnings-related contributions payable by the employerU.K.

15.—(1) If after [F10817 days] following the end of any F109... tax period the employer has paid no amount of earnings-related contributions to [F110HMRC] under paragraph 10 or 11 for that F109... tax period and there is reason to believe that the employer is liable to pay such contributions, [F110HMRC], upon consideration of the employer’s record of past payments [F111whether of earnings-related contributions or of combined amounts,] may to the best of [F112their judgment] specify the amount of earnings-related contributions [F113or of a combined amount] which [F114they consider] the employer is liable to pay and give notice to him of that amount.

[F115(1A) For the purposes of this paragraph “combined amount” is an amount which includes earnings-related contributions due under these regulations and one or more of the following—

(a)tax due under the PAYE Regulations;

(b)amounts due under the Income Tax (Construction Industry Scheme) Regulations 2005;

(c)payments of repayments of student loans due under the Education (Student Loans) (Repayment) Regulations 2000.]

(2) If, on the expiration of the period of 7 days allowed in the notice, the specified amount F116... or any part thereof is unpaid, the amount so unpaid—

(a)shall be treated for the purposes of this Schedule as an amount of earnings-related contributions [F117or as including an amount of earnings-related contributions] which the employer was liable to pay for that F109... tax period in accordance with paragraph 10 or 11; and

(b)may be certified by [F118HMRC].

(3) The provisions of sub-paragraph (2) shall not apply if, during the period allowed in the notice, the employer pays to [F119HMRC] the full amount of earnings-related contributions which the employer is liable to pay under paragraph 10 or 11 for that F109... tax period, or the employer satisfies [F119HMRC] that no amount of such contributions is due.

(4) The production of a certificate such as is mentioned in sub-paragraph (2) shall, until the contrary is established, be sufficient evidence that the employer is liable to pay to [F120HMRC] the amount shown in it; and any document purporting to be such a certificate as aforesaid shall be deemed to be such a certificate until the contrary is proved.

Paragraph 16 shall apply, with any necessary modifications, to the amount shown in the certificate.

(5) Where the employer has paid no amount of earnings-related contributions under paragraph 10 or 11 for any F109... tax periods, a notice may be given by [F121HMRC] under sub-paragraph (1) which extends to two or more consecutive F109... tax periods, and this Schedule shall have effect as if those F109... tax periods were the latest F109... tax period specified in the notice.

(6) A notice may be given by [F122HMRC] under sub-paragraph (1) notwithstanding that an amount of earnings-related contributions has been paid F123... by the employer under paragraph 10 or 11 for any F109... tax period, if, after seeking the employer’s explanation as to the amount of earnings-related contributions paid, [F122HMRC] is not satisfied that the amount so paid is the full amount which the employer is liable to pay F123... for that period, and this paragraph shall have effect accordingly, save that sub-paragraph (2) shall not apply if, during the period allowed in the notice, the employer satisfies [F122HMRC] that no further amount of earnings-related contributions is due for the relevant F109... tax period.

(7) Where, during the period allowed in a notice given by [F124HMRC] under sub-paragraph (1), the employer claims, but does not satisfy [F124HMRC], that the payment F125... made in respect of any F109... tax period specified in the notice is [F126or includes] the full amount of earnings-related contributions he is liable to pay to [F124HMRC] for that period, the employer may require [F124HMRC] to inspect the employer’s documents and records as if [F124HMRC] had called upon the employer to produce those documents and records in accordance with [F127Schedule 36 to the Finance Act 2008 (information and inspection powers) and the provisions of paragraph 26A] shall apply in relation to that inspection, and the notice given by [F124HMRC] under sub-paragraph (1) shall be disregarded in relation to any subsequent time.

(8) Notwithstanding anything in this paragraph, if the employer pays any amount of earnings-related contributions certified by [F128HMRC] under it [F129whether separately or as part of a combined amount] and that amount exceeds the amount which he would have been liable to pay in respect of that F109... tax period apart from this paragraph, he shall be entitled to set off such excess against any amount which he is liable to pay to [F128HMRC] under paragraph 10 or 11 for any subsequent F109... tax period.

(9) If, after the end of the year, the employer renders the return required by paragraph 22(1) and the total earnings-related contributions he has paid in respect of that year in accordance with this Schedule exceeds the total amount of such contributions due for that year, any excess not otherwise recovered by set-off shall be repaid.

Textual Amendments

F127Words in Sch. 4 para. 15(7) substituted (1.4.2009) (with effect in accordance with reg. 1(2)(a) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 3) Regulations 2009 (S.I. 2009/600), regs. 1(1), 8(3)

Recovery of earnings-related contributions or Class 1B contributionsU.K.

16.—(1) The F130... Tax Acts and any regulations underF131 [F132section 684 of ITEPA 2003 (PAYE regulations)] relating to the recovery of tax shall apply to the recovery of—

(a)any amount of earnings-related contributions which an employer is liable to pay [F133HMRC] for any F130... tax period in accordance with paragraph 10 or 11 or which he is treated as liable to [F133HMRC] [F134whether separately or as part of a combined amount] for any F130... tax period under paragraph 15; or

(b)any amount of Class 1B contributions which an employer is liable to pay to the [F133HMRC] in respect of any year in accordance with paragraph 13(1),

as if each of those amounts had been charged to tax by way of an assessment on the employer [F135as employment income under ITEPA 2003].

(2) Sub-paragraph (1) is subject to the qualification that, in the application to any proceedings taken, by virtue of this paragraph, of any of the relevant provisions limiting the amount which is recoverable in those proceedings, there shall be disregarded any [F136other component of a combined amount] which may, by virtue of sub-paragraphs (3) to (5), be included as part of the cause of action or matter of complaint in those proceedings.

(3) Proceedings may be brought for the recovery of the total amount of—

(a)earnings-related contributions which the employer is liable to pay to [F137HMRC] for any F130... tax period;

(b)Class 1B contributions which the employer is liable to pay to [F137HMRC] in respect of any year;

(c)a combination of those classes of contributions as specified in heads (a) and (b); or

(d)any of the contributions as specified in heads (a), (b), or (c) in addition to any [F138other component of a combined amount] which the employer is liable to pay to [F137HMRC] for any F130... tax period,

without specifying the respective amount of those contributions and of [F139other component of a combined amount], or distinguishing the amounts which the employer is liable to pay in respect of each employee and without specifying the employees in question.

(4) For the purposes of—

(a)proceedings under section 66 of the Taxes Management Act 1970 F140 (including proceedings under that section as applied by the provisions of this paragraph);

(b)summary proceedings (including in Scotland proceedings in the sheriff court or in the sheriff’s small debt court),

the total amount of contributions, in addition to any [F141other component of the combined amount] which the employer is liable to pay to [F142HMRC] for any F130... tax period, referred to in sub-paragraph (3) shall, subject to sub-paragraph (2), be one cause of action or one matter of complaint.

(5) Nothing in sub-paragraph (3) or (4) shall prevent the bringing of separate proceedings for the recovery of each of the several amounts of—

(a)earnings-related contributions which the employer is liable to pay for any F130... tax period in respect of each of his several employees;

(b)Class 1B contributions which the employer is liable to pay in respect of any year in respect of each of his several employees; F143...

(c)tax which the employer is liable to pay for any F130... tax period in respect of each of his several employees.

[F144(d)amounts due under the Income Tax (Construction Industry Scheme) Regulations 2005; or

(e)payments of repayments of student loans due under the Education (Student Loans) (Repayment) Regulations 2000.]

[F145(6) For the purposes of this paragraph “combined amount” has the meaning given in paragraph 15(1A).]

Textual Amendments

F131Section 203 was amended by section 128 of, and paragraph 4 of Schedule 3 to, the Finance Act 1988 (c. 39), section 45(3) of the Finance Act 1989 (c. 26), paragraph 38 of Part II of Schedule 19 and item (23) of Part V of Schedule 26 to, the Finance Act 1994 (c. 9) and section 119 of the Finance Act 1998 (c. 36).

Interest on overdue earnings-related contributions or Class 1B contributionsU.K.

17.—(1) [F146Subject to [F147sub-paragraph (4A) and] paragraph 21], where, in relation to the year ended 5th April 1993 or any subsequent year, an employer has not—

(a)within 14 days [F148or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, 17 days] of the end of the year paid an earnings-related contribution which he is liable to pay in respect of that year; or

(b)paid a Class 1B contribution by 19th October [F149or, if payment is made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, not later than 22nd October] next following the year in respect of which it was due,

any contribution not so paid shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the reckonable date until payment.

(2) Interest payable under this paragraph shall be recoverable as if it were an earnings-related contribution or a Class 1B contribution, as the case may be, in respect of which an employer is liable under paragraph 10, 11, or 13 to pay to [F150HMRC].

(3) For the purposes of this paragraph—

(a)“employer” means, in relation to a Class 1B contribution, the person liable to pay such a contribution in accordance with section 10A of the ActF151;

(b)“the reckonable date” means, in relation to—

(i)an earnings-related contribution, the 14th day [F152or, if payment was made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, the 17th day] after the end of the year in respect of which it was due;

(ii)a Class 1B contribution, the 19th October [F153or, if payment was made by an approved method of electronic communications in respect of earnings paid after 5th April 2004, the 22nd October] next following the year in respect of which it was due.

[F154(iii)a contribution payable in respect of retrospective earnings relating to a tax year which is closed at the time that the relevant retrospective contributions regulations come into force, the 14th day after the end of the tax month immediately following the tax month in which those regulations came into force.]

(4) A contribution to which sub-paragraph (1) applies shall carry interest from the reckonable date even if the date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882F155.

[F156(4A) Where an employer has not paid contributions in respect of retrospective earnings relating to a closed tax year by the date set out in paragraph 11A, any contribution not so paid shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the reckonable date until payment.]

[F157(5) A certificate of [F158HMRC] that, to the best of their knowledge and belief, any amount of interest payable under this paragraph has not been paid by an employer or employee is sufficient evidence that the amount mentioned in the certificate is unpaid and due to be paid, and any document purporting to be such a certificate shall be presumed to be a certificate until the contrary is proved.]

[F159(6) HMRC may prepare a certificate certifying the total amount of interest payable in respect of the whole or any component of a combined amount without specifying what component of the combined amount the interest relates to.

Sub-paragraph (5) shall apply, with any necessary modifications, to the certificate.

(7) For the purposes of this paragraph “combined amount” has the meaning given in paragraph 15(1A).]

Textual Amendments

F151Section 10A was inserted by section 53 of the Social Security Act 1998 (c. 14).

F1551882 c. 61. Section 92 was amended by sections 3(1) and (3) and 4(4) of the Banking and Financial Dealings Act 1971 (c. 80).

[F160Application of paragraphs 16 and 17 in cases of wilful failure to payU.K.

17A.—(1) If regulation 86(1)(a) applies paragraphs 16 and 17 shall apply to the employed earner to the extent of the primary contribution which the secondary contributor wilfully failed to pay.

(2) For the purpose of sub-paragraph (1) any reference in paragraph 16 and 17 to an employer shall be construed as a reference to the employed earner.]

Textual Amendments

Payment of interest on repaid earnings-related contributions or Class 1B contributionsU.K.

18.—(1) Where an earnings-related contribution paid by an employer in respect of the year ended 5th April 1993 or any subsequent year not later than the year ended 5th April 1999 is repaid to him and that repayment is made after the relevant date, any such repaid contribution shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the relevant date until the order for the repayment is issued.

(2) For the purposes of sub-paragraph (1) “the relevant date” is—

(a)in the case of an earnings-related contribution overpaid more than 12 months after the end of the year in respect of which the payment was made, the last day of the year in which it was paid; and

(b)in any other case, the last day of the year after the year in respect of which the contribution in question was paid.

(3) Where an earnings-related contribution or a Class 1B contribution paid by an employer in respect of the year ended 5th April 2000 or any subsequent year is repaid to him and that repayment is made after the relevant date, any such repaid contribution shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Act from the relevant date until the order for the repayment is issued.

(4) For the purpose of sub-paragraph (3) “the relevant date” is—

(a)in the case of—

(i)an earnings-related contribution, the 14th day after the end of the year in respect of which that contribution was paid; or

(ii)a Class 1B contribution, the 19th October next following the year in respect of which that contribution was paid; or

(b)the date on which the earnings-related contribution or Class 1B contribution was paid if that date is later than the date referred to in paragraph (a).

Repayment of interestU.K.

19.  Where a secondary contributor or a person liable to pay a Class 1B contribution has paid interest on an earnings-related contribution or a Class 1B contribution, that interest shall be repaid to him [F161if]—

(a)the interest paid is found not to have been due to be paid, although the contribution in respect of which it was paid was due to be paid;

(b)the earnings-related contribution or Class 1B contribution in respect of which interest was paid is returned or repaid to him in accordance with the provisions of regulation [F16252, 52A or 55].

Textual Amendments

F162Words in Sch. 4 para. 19(b) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Contributions, Categorisation of Earners and Intermediaries) (Amendment) Regulations 2004 (S.I. 2004/770), regs. 1(1), 32(11)

Remission of interest for official errorU.K.

20.—(1) Where interest is payable in accordance with paragraph 17 it shall be remitted for the period commencing on the first relevant date and ending on the second relevant date in the circumstances specified in sub-paragraph (2).

(2) For the purposes of sub-paragraph (1), the circumstances are that the liability, or a greater liability, to pay interest in respect of an earnings-related contribution or a Class 1B contribution arises as the result of an official error being made.

(3) In this paragraph—

(a)“an official error” means a mistake made, or something omitted to be done, by an officer of the Board, where the employer or any person acting on his behalf has not caused, or materially contributed to, that mistake or omission;

(b)“the first relevant date” means the reckonable date as defined in paragraph 17(3) or, if later, the date on which the official error occurs;

(c)“the second relevant date” means the date 14 days after the date on which the official error has been rectified and the employer is advised of its rectification.

Application of paragraphs 10, 12, 16, 17, 18, 19 and 20U.K.

21.—(1) This paragraph applies where—

(a)secondary Class 1 contributions are payable in respect of [F163relevant employment income; and]

(b)an amount or proportion (as the case may be) of the liability of the secondary contributor to those contributions is transferred to the employed earner by an election made jointly by them for the purposes of paragraph 3B(1) of Schedule 1 to the Act F164.

(2) Paragraphs 10, 12, 16, 17, 18, 19 and 20 shall apply to the employed earner to the extent of the liability transferred by the election and, to that extent, those paragraphs shall not apply to the employer.

(3) For the purposes of sub-paragraph (2)—

(a)any reference in paragraphs 10, 12, 16, 17, 18 and 20 to an employer; and

(b)the reference in paragraph 19 to a secondary contributor,

shall be construed as a reference to the employed earner to whom the liability is transferred by the election.

Textual Amendments

F163Words in Sch. 4 para. 21(1)(a) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 4) Regulations 2004 (S.I. 2004/2096), regs. 1(1), 7(c)

F164Paragraph 3B was inserted into Schedule 1 by section 77(2) of the Child Support, Pensions and Social Security Act 2000.

Return by employer at end of yearU.K.

22.—(1) [F165Before 20th May following the end of the year the employer shall render to [F166HMRC] in such form as they may approve or prescribe], a return showing in respect of each employee, in respect of whom he was required at any time during the year to prepare or maintain a deductions working sheet in accordance with this Schedule—

(a)such particulars as [F166HMRC] may require for the identification of the employee,

(b)the year to which the return relates,

(c)in respect of each and under each of the category letters, the total amounts for the year shown under—

(i)each of [F167sub-paragraphs (i) to (v)] severally of paragraph 7(13)(b) (such amounts being rounded down to the next whole pound if not already whole pounds) in the case of paragraphs (i) to [F168(iiia)]),

F169(ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F170(iii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)the total amount of any statutory maternity pay paid during the year; F171...

[F172(da)the total amount of statutory paternity pay paid during the year;

(db)the total amount of statutory adoption pay paid during the year; and]

(e)the total amounts he is entitled to deduct under regulation 5 of the Reimbursement Regulations.

(2) The return required by sub-paragraph (1) shall include a statement and declaration in the form approved or prescribed by [F166HMRC] containing a list of all deductions working sheets on which the employer was obliged to keep records in accordance with this Schedule in respect of that year, and shall also include a certificate showing—

(a)the total amount of earnings-related contributions payable by him in respect of each employee during that year;

(b)the total amount of earnings-related contributions payable in respect of all his employees during that year;

(c)in relation to any contracted-out employment the number notified by [F166HMRC] on the relevant contracting-out certificate as the employer’s number;

(d)in respect of statutory maternity pay paid during that year to all his employees, the total of amounts determined under regulation 3 of the Compensation of Employers Regulations and deducted by virtue of regulation 4 of those Regulations; F173...

[F174(da)in respect of statutory paternity pay paid during that year to all his employees the total of the amounts determined under regulation 5 of the Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations 2002;

(db)in respect of statutory adoption pay paid during that year to all his employees the total of the amounts determined under regulation 5 of the Statutory Paternity Pay and Statutory Adoption Pay (Administration) Regulations 2002; and]

(e)the total amount deducted under regulation 8 of the Reimbursement Regulations in respect of all his qualifying employees in that year.

[F175(2A) Where a liability arises to pay contributions in respect of retrospective earnings relating to a closed tax year, the employer shall render a replacement return, or where necessary prepare one, in respect of the employee for that closed tax year before 20th May following the end of the year in which the relevant retrospective contributions regulations came into force, in accordance with paragraphs (a) to (c) of sub-paragraph (1), setting out the revised earnings and earnings-related contributions.

(2B) The return required by sub-paragraph (2A) shall include a statement and declaration in a form prescribed by HMRC containing a list of all deductions working sheets in accordance with paragraph 6(1A) of this Schedule in respect of that year, and shall also include a certificate showing—

(a)the total amount of earnings-related contributions originally payable (in accordance with sub-paragraph (2)(a)) in respect of each employee to whom sub-paragraph (2A) applies;

(b)the total amount of earnings-related contributions originally payable (in accordance with sub-paragraph (2)(b)) in respect of all employees to whom sub-paragraph (2A) applies;

(c)the total amount of revised earnings-related contributions payable in respect of each of those employees;

(d)the total amount of revised earnings-related contributions payable in respect of all those employees,

(e)the difference between the amount certified in paragraph (b) and paragraph (d) of this sub-paragraph in respect of all of those employees;

(f)in relation to any contracted-out employment the number notified by HMRC on the relevant contracting-out certificate as the employer’s number.]

(3) If paragraph 25 applies, the return required by sub-paragraph (1) and the certificate required by sub-paragraph (2) shall include the information specified in that paragraph.

(4) If the employer is a body corporate, [F176the declarations] and [F177the certificates] referred to in [F178sub-paragraphs (2) and (2B)] shall be signed by the secretary or by a director of the body corporate.

(5) If, within 14 days of the end of any year, an employer has failed to pay to the [F166HMRC] the total amount of earnings-related contributions which he is liable so to pay, the [F166HMRC] may prepare a certificate showing the amount of such contributions remaining unpaid for the year in question, excluding any amount deducted by the employer by virtue of the Compensation of Employers Regulations.

The provisions of paragraph 17 shall apply with any necessary modifications to the amount shown in that certificate.

(6) Notwithstanding sub-paragraphs (2) to (5), [F179the returns referred to in sub-paragraphs (1) and (2A)] may be made in such other form as [F166HMRC] and the employer approve, and in that case—

(a)sub-paragraphs (2) to (5) shall not apply; and

(b)the making of [F180the returns] shall be subject to such conditions as [F166HMRC] may direct as to the method of making it.

(7) [F181Section 98A of the Taxes Management Act 1970 (special penalties in the case of certain returns) and Schedule 24 to the Finance Act 2007 (penalties for errors) as that Schedule applies to income tax returns] as modified by the provisions of paragraph 7 of Schedule 1 to the Act shall apply in relation to the requirement to make a return contained in sub-paragraph (1) [F182and (2A)].

Textual Amendments

F167Words in Sch. 4 para. 22(1)(c)(i) substituted (with effect in accordance with reg. 1(1) of the amending S.I.) by The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(5)(a)(i)

F169Sch. 4 para. 22(1)(c)(ii) omitted (with effect in accordance with reg. 1(1) of the amending S.I.) by virtue of The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(5)(a)(ii)

F170Sch. 4 para. 22(1)(c)(iii) omitted (with effect in accordance with reg. 1(1) of the amending S.I.) by virtue of The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(5)(a)(ii)

F171Word in Sch. 4 para. 22(1)(d) omitted (with effect in accordance with reg. 1(1) of the amending S.I.) by virtue of The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(5)(b)

F172Sch. 4 para. 22(1)(da)-(db) inserted (with effect in accordance with reg. 1(1) of the amending S.I.) by The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(5)(b)

F173Word in Sch. 4 para. 22(2)(d) omitted (with effect in accordance with reg. 1(1) of the amending S.I.) by virtue of The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(5)(c)

F174Sch. 4 para. 22(2)(da)-(db) inserted (with effect in accordance with reg. 1(1) of the amending S.I.) by The Social Security (Contributions) (Amendment) Regulations 2003 (S.I. 2003/193), regs. 1(1), 16(5)(c)

[F183Additional return by employer at end of year where liability transferred to employed earner: elections under paragraph 3B(1) of Schedule 1 to the Act.]U.K.

23.—(1) This paragraph applies where—

(a)secondary Class 1 contributions are payable in respect of [F184relevant employment income; and]

(b)an amount or proportion (as the case may be) of the liability of the secondary contributor for those contributions is transferred to the employed earner by an election made jointly by them for the purposes of paragraph 3B(1) of Schedule 1 to the Act.

(2) [F185Before 7th July after the end of the year the employer shall deliver to the Inland Revenue], in respect of each employed earner to whom any liability is transferred by the election, written particulars of the matters set out in sub-paragraph (3).

(3) The matters set out in this paragraph are—

(a)the amount of the contributions referred to in sub-paragraph (1)(a);

(b)the amount of the transferred liability; and

(c)the date on which payment of the amount of the transferred liability was made to the [F186Inland Revenue].

Textual Amendments

F183Sch. 4 para. 23 heading substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 4) Regulations 2004 (S.I. 2004/2096), regs. 1(1), 7(d)

F184Words in Sch. 4 para. 23(1)(a) substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 4) Regulations 2004 (S.I. 2004/2096), regs. 1(1), 7(e)

Special return by employer at end of voyage periodU.K.

24.—(1) This paragraph applies where earnings-related contributions are assessed in accordance with regulation 120(4) or (5) (earnings periods for mariners and apportionment of earnings).

(2) Not later than 14 days after the end of the voyage period the employer shall render to the [F187Inland Revenue] in such form as the [F187Inland Revenue] may authorise a return in respect of each mariner showing—

(a)his name, discharge book number and national insurance number;

(b)the earnings periods and the amounts of [F188general earnings] apportioned to each such period in the voyage period;

(c)the appropriate category letter for each apportionment of [F188general earnings];

(d)the amounts of all the earnings-related contributions payable on each apportionment of [F188general earnings] otherwise than under paragraph 7(3);

(e)the amounts of primary Class 1 contributions included in the amounts shown under paragraph (d) for each apportionment of [F188general earnings];

(f)where the employment is contracted-out employment for any part of the voyage period—

(i)the amounts of that part of the contributions shown under paragraph (e) which were payable on earnings above the primary threshold, if primary Class 1 contributions were payable at the reduced rate, and

(ii)the number notified by the [F187Inland Revenue] on the relevant contracting-out certificate as the employer’s number;

(g)the total amount of any earnings in respect of which primary Class 1 contributions were payable, other than earnings from non-contracted-out employment in respect of which primary Class 1 contributions were payable at the reduced rate; and

(h)the total amounts he is entitled to deduct under regulation 5 or 6 of the Reimbursement Regulations in relation to each apportionment of [F188general earnings].

Textual Amendments

Return by employer of recovery under the Statutory Sick Pay Percentage Threshold OrderU.K.

25.—(1) This paragraph applies where an employer recovers any amount in respect of statutory sick pay payments made by him in any F189... tax month in accordance with article 2 of the Statutory Sick Pay Percentage Threshold Order 1995 F190 (right of employer to recover statutory sick pay).

(2) The information required pursuant to paragraph 23(3) to be included—

(a)in the return, is, in respect of each employee, the total amount of statutory sick pay the employer paid in each F189... tax month in respect of which he made that recovery; and

(b)in the certificate, is the total amount of statutory sick pay the employer recovered in the F189... tax year.

Textual Amendments

[F191Retention by employer of contribution and election recordsU.K.

26.—(1) An employer must keep and preserve all contribution records which are not required to be sent to HMRC by other provisions in these Regulations for not less than—

(a)three years after the end of the tax year to which they relate; or

(b)for documents or records relating to information about the amounts of Class 1A and Class 1B contributions, three years after the end of the year in which a contribution became payable.

(2) The duty under paragraph (1) may be discharged by preserving the contribution records in any form or by any means.

(3) Where an election has been made jointly by the secondary contributor and the employed earner for the purposes of paragraph 3B(1) of Schedule 1 to the Act, the records which the secondary contributor is obliged by paragraph 8 to maintain shall be retained by the secondary contributor throughout the period for which the election is in force and for six years after the end of that period.

(4) In this paragraph “contribution records” means wages sheets, deductions working sheets (other than deductions working sheets issued under regulation 35 of the PAYE Regulations (simplified deduction schemes: records)) and other documents or records relating to—

(a)the calculation of payment of earnings to the employer's employees or the amount of the earnings-related contributions payable for those earnings;

(b)the amount of any Class 1A contributions or Class 1B contributions payable by the employer; and

(c)any information about the amounts of Class 1A and Class 1B contributions.

(5) For the purposes of this paragraph “employer”—

(a)includes, in relation to a Class 1A contribution, the person liable to pay such a contribution in accordance with section 10ZA of the Act (liability of third party provider of benefits in kind); and

(b)means, in relation to a Class 1B contribution, the person liable to pay such a contribution in accordance with section 10A of the Act.

Textual Amendments

F191Sch. 4 para. 26-26A substituted for Sch. 4 para. 26 (1.4.2009) (with effect in accordance with reg. 1(2)(a) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 3) Regulations 2009 (S.I. 2009/600), regs. 1(1), 8(4)

Certificate of employer's liability to pay contributions after inspection of documentsU.K.

26A.—(1) An officer of Revenue and Customs may, by reference to the information obtained from an inspection of the documents and records produced under Schedule 36 to the Finance Act 2008 (information and inspection powers), and on the occasion of each inspection, prepare a certificate showing—

(a)the amount of earnings-related contributions which it appears that the employer is liable to pay to HMRC, excluding any amount deducted by the employer by virtue of the Compensation of Employers Regulations for the years or tax periods covered by the inspection; or

(b)the amount of any Class 1B contributions which it appears that the employer is liable to pay to HMRC for the years covered by the inspection, or such an amount in addition to an amount referred to in paragraph (a);

together with any amount of earnings-related contributions or Class 1B contributions or a combination of those classes of contributions, which has not been paid to HMRC or, to the best of the officer's knowledge and belief, to any other person to whom it might lawfully be paid.

(2) The production of a certificate mentioned in sub-paragraph (1) shall, unless the contrary is proved, be sufficient evidence that the employer is liable to pay to HMRC in respect of the years or, as the case may be, tax periods mentioned in the certificate, the amount shown in the certificate as unpaid; and any document purporting to be such a certificate shall be treated as such a certificate until the contrary is proved.

(3) The provisions of paragraph 16 shall apply with any necessary modifications to the amount shown in such a certificate.

(4) For the purposes of this paragraph “employer” has the meaning given by paragraph 26(5).]

Textual Amendments

F191Sch. 4 para. 26-26A substituted for Sch. 4 para. 26 (1.4.2009) (with effect in accordance with reg. 1(2)(a) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 3) Regulations 2009 (S.I. 2009/600), regs. 1(1), 8(4)

Death of an employerU.K.

27.  If an employer dies, anything which he would have been liable to do under this Schedule shall be done by his personal representatives, or, in the case of an employer who paid [F192general earnings] on behalf of another person, by the person succeeding him or, if no person succeeds him, the person on whose behalf he paid [F192general earnings].

Textual Amendments

Succession to a business, etcU.K.

28.—(1) This paragraph applies where there has been a change in the employer from whom an employee receives [F192general earnings] in respect of his employment in any trade, business, concern or undertaking, or in connection with any property, or from whom an employee receives any annuity other than a pension.

(2) Where this paragraph applies, in relation to any matter arising after the change, the employer after the change shall be liable to do anything which the employer before the change would have been liable to do under this Schedule if the change had not taken place.

(3) Sub-paragraph (2) is subject to the qualification that the employer after the change shall not be liable for the payment of any earnings-related contributions which were deductible from emoluments paid to the employee before, unless they are also deductible from emoluments paid to [F193the employee after], the change took place, or of any corresponding employer’s earnings-related contributions.

Textual Amendments

Payments by chequeU.K.

29.—(1) Sub-paragraph (2) applies for the purposes of paragraphs 10, 11, 13, 15, 17 and 18.

(2) If any payment to the [F194Inland Revenue] is made by cheque, and the cheque is paid on its first presentation to the banker on whom it is drawn, the payment shall be treated as made on the day on which the cheque was received by the [F194Inland Revenue], and “pay”, “paid”, “unpaid” and “overpaid” shall be construed accordingly.

Textual Amendments

[F195PART 3AU.K.DEBTS OF MANAGED SERVICE COMPANIES

Textual Amendments

Interpretation of this PartU.K.

29A.—(1) In this Part of this Schedule—

“HM Revenue and Customs” means Her Majesty’s Revenue and Customs;

“lower amount” means the amount mentioned in paragraph 29C(5);

“managed service company” has the meaning given by section 61B of ITEPA;

“paragraph (b) associate” means a person who—

(a)

is within section 688A(2)(d), and

(b)

is within that provision by virtue of a connection with a person who is within section 688A(2)(b);

“paragraph (c) associate” means a person who—

(a)

is within section 688A(2)(d), and

(b)

is within that provision by virtue of a connection with a person who is within section 688A(2)(c);

“qualifying period” means a tax period beginning on or after 6th August 2007;

“relevant contributions debt” means a debt specified in paragraph 29B;

“specified amount” means the amount mentioned in paragraph 29C(1)(b);

“transfer notice” means the notice mentioned in paragraph 29C(4);

“transferee” means the person mentioned in paragraph 29C(4).

(2) In this Part of this Schedule references to section 688A, however expressed, are references to section 688A of ITEPA.

Relevant contributions debts of managed service companiesU.K.

29B.—(1) A managed service company has a relevant contributions debt if—

(a)a managed service company must pay an amount of contributions for a qualifying period, and

(b)one of conditions A to E is met.

(2) Condition A is met if—

(a)a decision has been made in accordance with section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 that an amount of Class 1 National Insurance contributions is due in respect of a qualifying period, and

(b)any part of the amount has not been paid within 14 days from the date on which the decision became final and conclusive.

(3) Condition B is met if—

(a)an employer delivers a return under paragraph 22(1) (return by employer at end of year) for the tax year 2007-08, or any later tax year, showing an amount of total contributions deducted by the employer for that tax year,

(b)HM Revenue and Customs prepare a certificate under paragraph 22(5) (certificate that contributions specified in return under paragraph 22(1) remain unpaid) showing how much of that amount remains unpaid, and

(c)any part of that amount remains unpaid at the end of a period of 14 days beginning with the date on which the certificate is prepared.

(4) Condition C is met if—

(a)HM Revenue and Customs prepare a certificate under paragraph 14(1) (employer failing to pay earnings-related contributions) showing an amount of contributions which the employer is liable to pay for a qualifying period, and

(b)any part of that amount remains unpaid at the end of a period of 14 days beginning with the date on which the certificate is prepared.

(5) Condition D is met if—

(a)HM Revenue and Customs serve notice on an employer under paragraph 15(1) (specified amount of earnings-related contributions payable by the employer) requiring payment of the amount of Class 1 contributions which they consider the employer is liable to pay, and

(b)any part of that amount remains unpaid at the end of a period of 14 days beginning with the date on which the notice is prepared.

(6) Condition E is met if—

(a)HM Revenue and Customs prepare a certificate under [F196paragraph 26A (certificate of employer's liability to pay contributions after inspection of documents)] showing an amount of contributions which it appears that the employer is liable to pay for a qualifying period,

(b)HM Revenue and Customs make a written demand for payment of that amount of contributions, and

(c)any part of that amount remains unpaid at the end of a period of 14 days beginning with the date on which the written demand for payment is made.

Textual Amendments

F196Words in Sch. 4 para. 29B(6)(a) substituted (1.4.2009) (with effect in accordance with reg. 1(2)(a) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 3) Regulations 2009 (S.I. 2009/600), regs. 1(1), 8(5)

Transfer of debt of managed service companyU.K.

29C.—(1) This paragraph applies if—

(a)a managed service company has a relevant contributions debt, and

(b)an officer of Revenue and Customs is of the opinion that the relevant contributions debt or a part of the relevant contributions debt (the “specified amount”) is irrecoverable from the managed service company within a reasonable period.

(2) HM Revenue and Customs may make a direction authorising the recovery of the specified amount from the persons specified in section 688A(2) (managed service companies: recovery from other persons).

(3) Upon the making of a direction under sub-paragraph (2), the persons specified in section 688A(2) become jointly and severally liable for the relevant contributions debt, but subject to what follows.

(4) HM Revenue and Customs may not recover the specified amount from any person in accordance with a direction made under sub-paragraph (2) until they have served a notice (a “transfer notice”) on the person in question (the “transferee”).

(5) If an officer of Revenue and Customs is of the opinion that it is appropriate to do so, HM Revenue and Customs may accept an amount less than the specified amount (the “lower amount”) from a transferee; but this acceptance shall not prejudice the recovery of the specified amount from any other transferee.

(6) HM Revenue and Customs may not serve a transfer notice on a person mentioned in section 688A(2)(c), or on a paragraph (c) associate, if the relevant contributions debt is incurred before 6th January 2008.

(7) HM Revenue and Customs may not serve a transfer notice on a person mentioned in section 688A(2)(c), or on a paragraph (c) associate, unless an officer of Revenue and Customs certifies that, in his opinion, it is impracticable to recover the specified amount from persons mentioned in paragraphs (a) and (b) of section 688A(2) and from paragraph (b) associates.

(8) In determining, for the purposes of sub-paragraph (7), whether it is impracticable to recover the specified amount from the persons mentioned in paragraphs (a) and (b) of section 688A(2) and from paragraph (b) associates the officer of Revenue and Customs may have regard to all managed service companies in relation to which a person is a person mentioned in paragraph (a) or (b) of section 688A(2) or a paragraph (b) associate.

(9) In determining which of the persons mentioned in section 688A(2)(c) and which of the paragraph (c) associates are to be served with transfer notices and the amount of those notices, HM Revenue and Customs must have regard to the degree and extent to which those persons are persons who (directly or indirectly) have encouraged or been actively involved in the provision by the managed service company of the services of the individual mentioned in that provision.

Time limits for issue of transfer noticesU.K.

29D.—(1) A transfer notice must be served before the end of the period specified in this paragraph.

(2) Sub-paragraphs (3) to (7) apply if the transfer notice is served on a person mentioned in paragraph (a) or (b) of section 688A(2) or on a paragraph (b) associate.

(3) In a case in which condition A in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which the decision became final and conclusive.

(4) In a case in which condition B in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which HM Revenue and Customs received the return delivered under paragraph 22.

(5) In a case in which condition C in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which HM Revenue and Customs prepare the certificate under paragraph 14(1).

(6) In a case in which condition D in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which HM Revenue and Customs serve notice to the employer under paragraph 15(1).

(7) In a case in which condition E in paragraph 29B is met, the transfer notice must be served before the end of a period of 12 months beginning with the date on which HM Revenue and Customs carry out the inspection of the employer’s contribution records under [F197Schedule 36 to the Finance Act 2008].

(8) If the transfer notice is served on a person mentioned in paragraph (c) of section 688A(2), or on a paragraph (c) associate, the transfer notice must be served before the end of a period of three months beginning with the date on which the officer of Revenue and Customs certifies the matters specified in paragraph 29C(7).

Textual Amendments

F197Words in Sch. 4 para. 29D(7) substituted (1.4.2009) (with effect in accordance with reg. 1(2)(a) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 3) Regulations 2009 (S.I. 2009/600), regs. 1(1), 8(6)

Contents of transfer noticeU.K.

29E.—(1) A transfer notice must contain the following information—

(a)the name of the managed service company to which the relevant contributions debt relates;

(b)the address of the managed service company to which the relevant contributions debt relates;

(c)the amount of the relevant contributions debt;

(d)the tax periods to which the relevant contributions debt relates;

(e)if the tax periods to which the relevant contributions debt relates are comprised in more than one tax year, the apportionment of the relevant contributions debt among those tax years;

(f)which of the conditions A to E specified in paragraph 29B is met;

(g)the transferee’s name;

(h)the transferee’s address;

(j)whether the transferee is a person mentioned in paragraph (a), (b) or (c) of section 688A, a paragraph (b) associate or a paragraph (c) associate;

(k)if the transferee is a person mentioned in paragraph (c) of section 688A or a paragraph (c) associate—

(i)the date on which the officer of Revenue and Customs certified the matters specified in paragraph 29C(7), and

(ii)the names of the persons from whom it has been impracticable to recover the specified amount;

(l)the specified amount;

(m)the tax periods to which the specified amount relates;

(n)if the tax periods to which the specified amount relates are comprised in more than one tax year, the apportionment of the specified amount among those tax years;

(o)the address to which payment must be sent;

(p)the address to which an appeal must be sent.

(2) The transfer notice may specify the lower amount if HM Revenue and Customs are prepared to accept the lower amount from the transferee.

(3) The transfer notice must also contain a statement, made by the officer of Revenue and Customs serving the notice, that in his opinion the specified amount is irrecoverable from the managed service company within a reasonable period.

Payment of the specified amountU.K.

29F.—(1) If a transfer notice is served, the transferee must pay the specified amount to HM Revenue and Customs at the address specified in the transfer notice.

(2) The transferee must pay the specified amount within 30 days beginning with the date on which the transfer notice is served (the “specified period”).

(3) If a transfer notice is served on a person mentioned in paragraph (a) or (b) of section 688A(2), or on a paragraph (b) associate, the specified amount carries interest from the reckonable date until the date on which payment is made.

(4) If a transfer notice is served on a person mentioned in paragraph (c) of section 688A(2), or on a paragraph (c) associate, the specified amount carries interest from the day following the expiry of the specified period until the date on which payment is made.

[F198(5) For the purposes of sub-paragraph (3) “the reckonable date” has the meaning given by paragraph 17(3)(b)(i).]

Textual Amendments

F198Sch. 4 para. 29F(5) inserted (1.4.2009) (with effect in accordance with reg. 1(2)(a) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 3) Regulations 2009 (S.I. 2009/600), regs. 1(1), 8(7)

AppealsU.K.

29G.—(1) A transferee may appeal against the transfer notice.

(2) A notice of appeal must—

(a)be given to HM Revenue and Customs at the address specified in the transfer notice within 30 days beginning with the date on which the transfer notice was served, and

(b)specify the grounds of the appeal.

(3) The grounds of appeal are any of the following—

(a)that the relevant contributions debt (or part of the relevant contributions debt) is not due from the managed service company to HM Revenue and Customs;

(b)that the specified amount does not relate to a company which is a managed service company;

(c)that the specified amount is not irrecoverable from the managed service company within a reasonable period;

(d)that the transferee is not a person mentioned in section 688A(2);

(e)that the transferee was not a person mentioned in section 688A(2) during the tax periods to which the specified amount relates;

(f)that the transferee was not a person mentioned in section 688A(2) during some part of the tax periods to which the specified amount relates;

(g)that the transfer notice was not served before the end of the period specified in paragraph 29D;

(h)that the transfer notice does not satisfy the requirements specified in paragraph 29E;

(j)in the case of a transferee mentioned in section 688A(2)(c) or of a paragraph (c) associate, that it is not impracticable to recover the specified amount from persons mentioned in paragraphs (a) and (b) of section 688A(2) or from paragraph (b) associates;

(k)in the case of a transferee mentioned in section 688A(2)(c) or of a paragraph (c) associate, that the amount specified in the transfer notice does not have regard to the degree and extent to which the transferee is a person who (directly or indirectly) has encouraged or been actively involved in the provision by the managed service company of the services of the individual mentioned in that provision.

(4) Sub-paragraph (3)(a) is subject to paragraph 29H(4).

F199(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Procedure on appealsU.K.

29H.—(1) On an appeal [F200that is notified to the tribunal, the tribunal] shall uphold or quash the transfer notice.

(2) The general rule in sub-paragraph (1) is subject to the following qualifications.

(3) In the case of the ground of appeal specified in paragraph 29G(3)(a), the [F201tribunal] shall investigate the matter and shall—

(a)uphold the amount of the relevant contributions debt specified in the transfer notice, or

(b)reduce or increase the amount of the relevant contributions debt specified in the transfer notice to such amount as in [F202the tribunal’s] opinion is just and reasonable.

(4) If the [F203tribunal determines] the amount of the relevant contributions debt of a managed service company under sub-paragraph (3), that amount is conclusive as to the amount of that relevant contributions debt in any later appeal relating to that debt.

(5) In the case of the ground of appeal specified in paragraph 29G(3)(f), the [F204tribunal] may reduce the amount specified in the transfer notice to an amount determined in accordance with the equation—

(6) In paragraph (5)—

RA means the reduced amount;

P means the number of days in the tax periods specified in the transfer notice during which the transferee was a person mentioned in section 688A(2);

TP means the number of days in the tax periods specified in the transfer notice;

AS means the amount specified in the transfer notice.

(7) In the case of the ground of appeal specified in paragraph 29G(3)(k), the [F205tribunal] may reduce the amount specified in the transfer notice to such amount as in [F206the tribunal’s] opinion is just and reasonable.

Textual Amendments

Withdrawal of transfer noticesU.K.

29J.—(1) A transfer notice shall be withdrawn if the [F207tribunal quashes] it.

(2) A transfer notice may be withdrawn if, in the opinion of an officer of Revenue and Customs, it is appropriate to do so.

(3) If a transfer notice is withdrawn, HM Revenue and Customs must give written notice of that fact to the transferee.

Textual Amendments

Application of Part 6 of the Taxes Management Act 1970U.K.

29K.—(1) For the purposes of this Chapter, Part 6 of the Taxes Management Act 1970 (collection and recovery) applies as if—

(a)the transfer notice were an assessment of tax on employment income, and

(b)the amount of earnings-related contributions specified in the transfer notice, and any interest payable on that amount under sub-paragraph (3) or (4) of paragraph 29F were income tax charged on the transferee;

and that Part of that Act applies with the modification specified in sub-paragraph (2) and any other necessary modifications.

(2) Summary proceedings for the recovery of the specified amount may be brought in England and Wales or Northern Ireland at any time before the end of a period of 12 months beginning immediately after the expiry of the period mentioned in paragraph 29F(2).

(3) The specified amount is one cause of action or one matter of complaint for the purposes of proceedings under sections 65, 66 and 67 of the Taxes Management Act 1970 (magistrates’ courts, county courts and inferior courts in Scotland).

(4) But sub-paragraph (3) does not prevent the bringing of separate proceedings for the recovery of each of the amounts which the transferee is liable to pay for any tax period.

Repayment of surplus amountsU.K.

29L.—(1) This paragraph applies if the amounts paid to HM Revenue and Customs in respect of a relevant contributions debt exceed the specified amount.

(2) HM Revenue and Customs shall repay the difference on a just and equitable basis and without unreasonable delay.

(3) Interest on any sum repaid shall be paid in accordance with paragraph 18 (payment of interest on repaid earnings-related contributions).]

PART IVU.K. ASSESSMENT AND DIRECT COLLECTION

Provisions for direct paymentU.K.

30.  In cases of employed earner’s employment, where the employer does not fulfil the conditions prescribed in regulation 145(1)(b) as to residence or presence in Great Britain or Northern Ireland or is a person who, by reason of any international treaty to which the United Kingdom is a party or of any international convention binding on the United Kingdom, is exempt from the provisions of the Act or is a person against whom, for a similar reason, the provisions of the Act are not enforceable, the provisions of paragraph 31 shall apply to the employee, unless the employer, being a person entitled to pay the primary contributions due in respect of the earnings from the said employment, is willing to pay those contributions.

Direct collection involving deductions working sheetsU.K.

31.—(1) In any case falling within paragraph 30, [F208HMRC] may issue a deductions working sheet to the employee (and, if no such working sheet has been issued, the employee shall obtain one from [F208HMRC]), and sub-paragraphs (2) to (8) shall apply.

(2) The employee to whom a deductions working sheet has been issued under sub-paragraph (1) shall record on that working sheet his name, national insurance number and category letter indicated by [F208HMRC], and whenever, in respect of an employment such as is specified in paragraph 30, the employee receives any [F209general earnings] during the year for which the deductions working sheet was issued, he shall also record on that working sheet the amount of the [F209earnings], the date on which he received them, and the earnings-related contributions payable by him in respect of those [F209earnings ].

(3) Not later than the time for the payment of income tax, if any, the employee shall pay to [F208HMRC] the amount of the earnings-related contributions payable by the employee in respect of the [F210general earnings] which have been received by him and for which the income tax is or would have been payable.

(4) If, by the time specified in sub-paragraph (3), the employee has paid no amount of earnings-related contributions to [F208HMRC] in respect of the [F211general earnings] mentioned in that sub-paragraph, and [F208HMRC] is unaware of the amount, if any, which the employee is liable so to pay, or if an amount has been paid but [F208HMRC] is not satisfied that it is the full amount which the employee is liable to pay to him in respect of those [F211earnings], sub-paragraph (5) applies.

(5) If this sub-paragraph applies, [F208HMRC] may give notice to the employee requiring him to render, within the time limited in the notice, a return in the prescribed form containing particulars of all [F212general earnings] received by him during the period specified in the notice and such other particulars affecting the calculations of the earnings-related contributions payable in respect of the [F212earnings] in question as may be specified in the notice, and in such a case the provisions of—

(a)paragraph 14 regarding the ascertaining and certifying by [F208HMRC] of earnings-related contributions payable by an employer, and

(b)paragraph 16 regarding the recovery of those contributions.

shall apply with the necessary modifications for the purposes of ascertaining, certifying and recovering the earnings-related contributions payable by the employee.

(6) If the employee ceases to receive [F213general earnings] falling within sub-paragraph (2), he shall immediately render to [F214[F208HMRC], in such form as they may prescribe] , a return showing such particulars as they may require for the identification of the employee, the year to which the return relates, the appropriate category letter, the last date on which he received any such [F213earnings], the total of those [F213earnings] and the earnings-related contributions payable from the beginning of the year to that date.

(7) [F215Before 20th May following] the end of the year, the employee shall (unless sub-paragraph (6) has applied) render to [F216[F208HMRC], in such form as they may prescribe], a return showing such particulars as they may require for the identification of the employee, the year to which the return relates, the total of the [F217general earnings] and earnings-related contributions payable during the year, together with the appropriate category letter, and the provisions of paragraph 22(5) regarding the certification and recovery of earnings-related contributions remaining unpaid by an employer for any year shall apply in the case of any earnings-related contributions remaining unpaid by the employee.

[F218(7A) Where a liability arises to pay contributions in respect of retrospective earnings relating to a closed tax year, the employer shall render a replacement return for the closed tax year before 20th May following the end of the year in which the relevant retrospective contributions regulations came into force in accordance with sub-paragraph (7), setting out the revised earnings and earnings-related contributions.

(7B) Where sub-paragraph (7A) applies, the employer shall amend the relevant deductions working sheet or where necessary prepare one in accordance with sub-paragraph (2)]

(8) The employee shall retain deductions working sheets issued under sub-paragraph (1) for not less than three years after the end of the year to which they relate.

(9) [F219Section 98A of the Taxes Management Act 1970 (special penalties in the case of certain returns) and Schedule 24 to the Finance Act 2007 (penalties for errors) as that Schedule applies to income tax returns] as modified by the provisions of paragraph 7 to Schedule 1 to the Act, shall apply in relation to the requirement to make a return contained in sub-paragraphs [F220(6), (7) and (7A)].

Textual Amendments