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A

BILL

TO

Make provision in relation to national insurance contributions; and for
connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

Employment allowance

1 Employment allowance for national insurance contributions

(1) A person qualifies for an employment allowance for a tax year if, in the tax
year—

(a) 5the person is the secondary contributor in relation to payments of
earnings to, or for the benefit of, one or more employed earners, and

(b) in consequence, the person incurs liabilities to pay secondary Class 1
contributions,

under SSCBA 1992 or SSCB(NI)A 1992 (or both).

(2) 10The person’s employment allowance for the tax year is—

(a) £2,000, or

(b) if less, an amount equal to the total amount of the liabilities mentioned
in subsection (1)(b) which are not excluded liabilities.

(3) Subsection (1) is subject to sections 2 and 3 (and Schedule 1).

(4) 15Sections 2 and 3 (and Schedule 1) set out cases in which a person cannot qualify
for an employment allowance for a tax year.

(5) Section 2 also sets out the cases in which liabilities to pay secondary Class 1
contributions are “excluded liabilities”.

(6) Section 4 provides for a person who qualifies for an employment allowance for
20a tax year to receive it by way of deductions or a repayment under that section.

(7) In this Act references to “the employment allowance provisions” are to this
section, sections 2 to 4 and Schedule 1.

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(8) In the employment allowance provisions and section 5 terms used which are
also used in Part 1 of SSCBA 1992 or SSCB(NI)A 1992 have the same meaning
as they have in that Part.

2 Exceptions

5Public authorities

(1) A person cannot qualify for an employment allowance for a tax year if, at any
time in the tax year, the person is a public authority which is not a charity.

(2) In subsection (1)

Personal, family or household affairs

(3) 15Liabilities to pay secondary Class 1 contributions incurred by a person (“P”) are
“excluded liabilities” if they are incurred in respect of an employed earner who
is employed (wholly or partly) for purposes connected with P’s personal,
family or household affairs.

Workers supplied by service companies etc

(4) 20Liabilities to pay secondary Class 1 contributions are “excluded liabilities” if
they are incurred by virtue of regulations made under section 4A of SSCBA
1992 or SSCB(NI)A 1992 (earnings of workers supplied by service companies
etc).

Transfers of businesses

(5) 25Subsection (6) applies if a business, or a part of a business, is transferred to a
person (“P”) in a tax year.

(6) Liabilities to pay secondary Class 1 contributions incurred by P in the tax year
are “excluded liabilities” if they are incurred in respect of an employed earner
who is employed (wholly or partly) for purposes connected with the
30transferred business or part.

(7) For the purposes of subsection (5) a business, or a part of a business, is
transferred to P in a tax year if, in the tax year—

(a) another person (“Q”) is carrying on the business or part, and

(b) in consequence of arrangements involving P and Q, P begins to carry
35on the business or part on or following Q ceasing to do so.

(8) In subsection (7)(b) “arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not legally
enforceable).

(9) In subsections (5) to (7) “business” includes—

(a) 40anything which is a trade, profession or vocation for the purposes of the
Income Tax Acts or the Corporation Tax Acts;

(b) a property business (as defined in section 263(6) of the Income Tax
(Trading and Other Income) Act 2005);

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(c) any charitable or not-for-profit undertaking or any similar
undertaking;

(d) functions of a public nature.

Anti-avoidance

(10) 5A person cannot qualify for an employment allowance for a tax year if, apart
from this subsection, the person would qualify in consequence of avoidance
arrangements.

(11) In a case not covered by subsection (10), liabilities to pay secondary Class 1
contributions incurred by a person (“P”) in a tax year are “excluded liabilities”
10if they are incurred by P, or are incurred by P in that tax year (as opposed to
another tax year), in consequence of avoidance arrangements.

(12) In subsections (10) and (11) “avoidance arrangements” means arrangements
the main purpose, or one of the main purposes, of which is to secure that a
person benefits, or benefits further, from the application of the employment
15allowance provisions.

(13) In subsection (12) “arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not legally
enforceable).

3 Connected persons

(1) 20This section applies if—

(a) at the beginning of a tax year, two or more companies which are not
charities are connected with one another, and

(b) apart from this section, two or more of those companies would qualify
for an employment allowance for the tax year.

(2) 25This section also applies if—

(a) at the beginning of a tax year, two or more charities are connected with
one another, and

(b) apart from this section, two or more of those charities would qualify for
an employment allowance for the tax year.

(3) 30Only one of the companies or charities mentioned in subsection (1)(b) or (2)(b)
(as the case may be) can qualify for an employment allowance for the tax year.

(4) It is up to the companies or charities so mentioned to decide which of them that
will be.

(5) Part 1 of Schedule 1 sets out the rules for determining if two or more companies
35are “connected” with one another for the purposes of subsection (1).

(6) Part 2 of Schedule 1 sets out the rules for determining if two or more charities
are “connected” with one another for the purposes of subsection (2).

(7) In this section and Schedule 1—

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4 How does a person who qualifies for an employment allowance receive it?

(1) Her Majesty’s Revenue and Customs (“HMRC”) must (from time to time)
make such arrangements as HMRC consider appropriate for persons who
qualify for an employment allowance for a tax year to receive it by making
5deductions from qualifying payments which they are required to make under
regulations made under paragraph 6 of Schedule 1 to SSCBA 1992 or
SSCB(NI)A 1992 (regulations combining collection of contributions with tax).

(2) In this section “qualifying payment”, in relation to a person who qualifies for
an employment allowance for a tax year, means a payment in respect of any of
10the person’s liabilities mentioned in section 1(1)(b) which are not excluded
liabilities (see section 2).

(3) If under HMRC’s arrangements a person is permitted to make a deduction
from a qualifying payment, the person must make the deduction and must
make it before any other deductions which the person is permitted to make
15from the payment under any other legislation.

(4) HMRC’s arrangements may (in particular)—

(a) require deductions to be made at the earliest opportunity in a tax year;

(b) provide that deductions may not be made in specified cases;

(c) place limits on the amounts of deductions;

(d) 20provide that a person is not permitted to make deductions unless the
person has first given notice to HMRC in such form and manner, and
containing such information, as HMRC may require.

(5) Subsections (6) to (8) apply in relation to a person who qualifies for an
employment allowance for a tax year if the person has not deducted under this
25section the full amount of the employment allowance by the end of the month
of April in which the tax year ends.

(6) The person may apply to HMRC for a repayment, up to the outstanding
amount of the employment allowance, of qualifying payments made by the
person; and HMRC must make the repayment.

(7) 30The person’s application must be made in such form and manner, and contain
such information, as HMRC may require.

(8) The person’s application must be made before the end of the 4th tax year after
the tax year mentioned in subsection (5).

(9) In the application of section 102 of the Finance Act 2009 (repayment interest on
35sums to be paid by HMRC) in relation to a repayment under this section, the
repayment interest start date is the date on which HMRC receive the person’s
application.

(10) A repayment under this section, and any interest in respect of it under section
102 of the Finance Act 2009, are to be paid out of the National Insurance Fund
40or the Northern Ireland National Insurance Fund.

(11) A person who qualifies for an employment allowance for a tax year may not
receive it otherwise than by way of deductions or a repayment under this
section.

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5 Power to amend the employment allowance provisions

(1) The Treasury may by regulations amend the employment allowance
provisions—

(a) so as to increase or decrease a person’s employment allowance for a tax
5year, or

(b) so as to add to, reduce or modify the cases in which a person cannot
qualify for an employment allowance for a tax year or in which
liabilities to pay secondary Class 1 contributions are “excluded
liabilities”.

(2) 10Section 175(3) to (5) of SSCBA 1992 (various supplementary powers) applies to
the power to make regulations conferred by this section.

(3) The power conferred by section 175(4) of SSCBA 1992, as applied by subsection
(2), includes (in particular) power to make the provision mentioned in section
175(4) by way of amendments to the employment allowance provisions.

(4) 15Regulations under this section must be made by statutory instrument.

(5) A statutory instrument containing (with or without other provision)—

(a) regulations falling within subsection (1)(a) which decrease a person’s
employment allowance for a tax year, or

(b) regulations falling within subsection (1)(b),

20may not be made unless a draft has been laid before, and approved by a
resolution of, each House of Parliament.

(6) A statutory instrument—

(a) which contains regulations falling within subsection (1)(a) which
increase a person’s employment allowance for a tax year, and

(b) 25which does not have to be approved in draft under subsection (5),

must be laid before Parliament after being made.

(7) Regulations contained in a statutory instrument which is required to be laid
before Parliament under subsection (6) cease to have effect at the end of the
period of 40 days after the day on which the instrument is made unless, before
30the end of that period, the instrument is approved by a resolution of each
House of Parliament.

(8) If regulations cease to have effect as a result of subsection (7), that does not—

(a) affect anything previously done by virtue of the regulations, or

(b) prevent the making of new regulations to the same or a similar effect.

(9) 35In calculating the period of 40 days for the purposes of subsection (7), no
account is to be taken of any time during which Parliament is dissolved or
prorogued or during which either House is adjourned for more than 4 days.

6 Decisions and appeals about entitlements to make deductions etc

(1) In Part 2 of the Social Security Contributions (Transfer of Functions, etc) Act
401999 (decisions and appeals), in section 8(1) (decisions of officers of Revenue
and Customs), after paragraph (e) insert—

(ea) to decide whether a person is or was entitled to make a
deduction under section 4 of the National Insurance
Contributions Act 2013 (deductions etc of employment

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allowance) and, if so, the amount the person is or was entitled
to deduct,

(eb) to decide whether a person is or was entitled to a repayment
under that section and, if so, the amount of the repayment,.

(2) 5In Part 3 of the Social Security Contributions (Transfer of Functions, etc)
(Northern Ireland) Order 1999 (S.I. 1999/671S.I. 1999/671) (decisions and appeals), in
Article 7(1) (decisions of officers of Revenue and Customs), after paragraph (e)
insert—

(ea) to decide whether a person is or was entitled to make a
10deduction under section 4 of the National Insurance
Contributions Act 2013 (deductions etc of employment
allowance) and, if so, the amount the person is or was entitled
to deduct,

(eb) to decide whether a person is or was entitled to a repayment
15under that section and, if so, the amount of the repayment,.

7 Retention of records etc

(1) In Schedule 1 to SSCBA 1992 (supplementary provisions relating to national
insurance contributions), in paragraph 8(1) (general regulation-making
powers), after paragraph (a) insert—

(aa) 20for requiring persons to maintain, in such form and manner
as may be prescribed, records of such matters as may be
prescribed for purposes connected with the employment
allowance provisions (within the meaning of the National
Insurance Contributions Act 2013), and to retain the records
25for so long as may be prescribed;.

(2) In Schedule 1 to SSCB(NI)A 1992 (supplementary provisions relating to
national insurance contributions), in paragraph 8(1) (general regulation-
making powers), after paragraph (a) insert—

(aa) for requiring persons to maintain, in such form and manner
30as may be prescribed, records of such matters as may be
prescribed for purposes connected with the employment
allowance provisions (within the meaning of the National
Insurance Contributions Act 2013), and to retain the records
for so long as may be prescribed;.

(3) 35In paragraph 26 of Schedule 4 to the Social Security (Contributions)
Regulations 2001 (S.I. 2001/1004S.I. 2001/1004) (retention of records), after sub-paragraph
(4) insert—

(4A) Sub-paragraph (4B) applies in relation to an employer who makes
deductions, or applies for a repayment, under section 4 of the
40National Insurance Contributions Act 2013 on account of an
employment allowance for which the employer qualifies for a tax
year (or who intends to do so).

(4B) So far as they are not otherwise covered by sub-paragraph (4),
“contribution records” includes any documents or records relating
45to—

(a) the employer’s qualification for the employment allowance,
or

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(b) the calculation of any amount that has been, or could be,
deducted or repaid under section 4 of the National Insurance
Contributions Act 2013 on account of the employment
allowance.

(4) 5The amendment made by subsection (3) is to be treated as having been made
by the Treasury using the powers conferred by paragraph 8(1)(aa) of Schedule
1 to SSCBA 1992 (as inserted by subsection (1)) and paragraph 8(1)(aa) of
Schedule 1 to SSCB(NI)A 1992 (as inserted by subsection (2)).

(5) In section 110ZA of the Social Security Administration Act 1992 (powers to call
10for documents etc), in subsection (2)(a), after “Benefits Act” insert “or the
National Insurance Contributions Act 2013”.

(6) In section 104ZA of the Social Security Administration (Northern Ireland) Act
1992 (powers to call for documents etc), in subsection (2)(a), after “Benefits Act”
insert “or the National Insurance Contributions Act 2013”.

8 15Commencement of the employment allowance provisions etc

Sections 1 to 7 and Schedule 1 come into force on 6 April 2014.

Application of general anti-abuse rule to national insurance contributions

9 GAAR to apply to national insurance contributions

(1) In Part 5 of the Finance Act 2013 (general anti-abuse rule)—

(a) 20references to tax, other than in references to particular taxes, include national
insurance contributions, and

(b) references to a charge to tax include a liability to pay national insurance
contributions.

(2) Section 206(3) of that Act (list of taxes to which the general anti-abuse rule applies) has
25effect as if it included a reference to national insurance contributions.

(3) Section 207 of that Act (meaning of “tax arrangements” and “abusive”) has
effect as if, in subsection (4)(a), after “income,” there were inserted “earnings
(within the meaning of Part 1 of the Social Security Contributions and Benefits
Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern
30Ireland) Act 1992),”.

(4) Adjustments to be made in respect of national insurance contributions under
section 209 of the Finance Act 2013 (counteracting the tax advantages) may be
made by a notice given under paragraph 12 of Schedule 43 to that Act (notice
of final decision).

(5) 35For the purposes of section 210 of that Act (consequential relieving
adjustments)—

(a) if a claim under that section relates to Class 4 national insurance
contributions, Schedule 1A to the Taxes Management Act 1970 (as that
Schedule applies in relation to such contributions) applies to it, and

(b) 40if a claim under that section relates to any other class of national
insurance contributions, it must be made in such form and manner, and
contain such information, as HMRC may require.

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(6) Adjustments to be made in respect of national insurance contributions under
that section may be made by a notice given under subsection (7) of that section.

(7) This section has effect in relation to tax arrangements (within the meaning of
Part 5 of the Finance Act 2013 as modified by this section) entered into on or
5after the day on which this Act is passed.

(8) Subsections (9) and (10) apply where the tax arrangements—

(a) would not have been tax arrangements but for the modifications made
by this section, and

(b) form part of other arrangements entered into before the day on which
10this Act is passed.

(9) The other arrangements are to be ignored for the purposes of section 207(3) of
the Finance Act 2013, subject to subsection (10).

(10) Account is to be taken of the other arrangements for the purposes of that
section if, as a result, the tax arrangements would not be abusive.

(11) 15In this section—

10 20Power to modify application of GAAR to national insurance contributions

(1) Where a modification is made to Part 5 of the Finance Act 2013 (general anti-
abuse rule) that does not apply in relation to national insurance contributions
(“the tax only modification”), the Treasury may by regulations—

(a) make provision for the purpose of applying the tax only modification
25in relation to national insurance contributions (with or without
modifications),

(b) make provision in relation to national insurance contributions
corresponding to the tax only modification, or

(c) otherwise modify the general anti-abuse rule, as it has effect in relation
30to national insurance contributions, in consequence of, or for the
purpose of making provision supplementary or incidental to, the tax
only modification.

(2) Regulations under this section—

(a) may amend, repeal or revoke any provision of an Act or instrument
35made under an Act (whenever passed or made),

(b) may make consequential, incidental, supplementary, transitional,
transitory or saving provision, and

(c) may make different provision for different cases, classes of national
insurance contributions or purposes.

(3) 40Regulations under this section must be made by statutory instrument.

(4) A statutory instrument containing (with or without other provision)
regulations under this section that amend or repeal a provision of an Act may
not be made unless a draft has been laid before, and approved by a resolution
of, each House of Parliament.

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(5) A statutory instrument containing regulations under this section that does not
have to be approved in draft under subsection (4) is subject to annulment in
pursuance of a resolution of either House of Parliament.

(6) In this section—

Oil and gas workers on the continental shelf

11 10Oil and gas workers on the continental shelf: secondary contributors etc

(1) Section 120 of SSCBA 1992 (employment at sea: continental shelf operations) is
amended as follows.

(2) In subsection (1), after “persons” insert “(“continental shelf workers”)”.

(3) In subsection (3)—

(a) 15for “the regulations” substitute “regulations under subsection (1)”, and

(b) for “such person” substitute “continental shelf worker”.

(4) After that subsection insert—

(4) The Treasury may also, by regulations, make provision for, and in
connection with, the issue by Her Majesty’s Revenue and Customs of
20certificates to prescribed persons who are, by virtue of regulations
under subsection (1), to be treated as the secondary contributor in
relation to the payment of earnings to or for the benefit of one or more
continential shelf workers—

(a) confirming that the prescribed person’s liabilities to pay
25contributions in respect of the continental shelf workers
specified or described in the certificate are being met by another
person, and

(b) discharging the prescribed person, while the certificate is in
force, from liability to make any payments in respect of the
30contributions, in the event that the other person fails to pay
them in full.

(5) Regulations under subsection (4) may, in particular, make provision
about—

(a) applying for a certificate;

(b) 35the circumstances in which a certificate may, or must, be issued
or cancelled;

(c) the form and content of a certificate;

(d) the effect of a certificate (including provision modifying the
effect mentioned in subsection (4)(b) or specifying further
40effects);

(e) the effect of cancelling a certificate.

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