National Insurance Contributions Bill (HC Bill 80)

National Insurance Contributions BillPage 10

(2) In subsection (1), after “Class 2 contribution” insert “under section 11(6)”.

(3) In subsection (2), for “to (5)” substitute “and (4)”.

(4) In subsection (3), for “(4) to (6)” substitute “(4) and (6)”.

(5) Omit subsection (5).

(6) 5In subsection (6)—

(a) omit “or (5)”;

(b) in paragraph (a), omit “in a case falling within subsection (3) above,”;

(c) omit paragraph (b) and the word “and” preceding it.

(7) Omit subsection (7).

(8) 10In subsection (8)—

(a) in the definition of “ordinary contribution”, for “under section 11(1)
above” substitute “of the amount specified in section 11(6)”;

(b) in the definition of “higher-rate contribution”, for the words from
“under regulations” to the end substitute “of an amount provided for
15in regulations under section 11(8)”.

5 In section 18 (Class 4 contributions recoverable under regulations), in
subsection (1)(b), for “subsection (3)” substitute “subsection (8)”.

6 In section 35A (appropriate weekly rate of maternity allowance under
section 35), in subsection (5)(c)—

(a) 20in sub-paragraph (i), after “she” insert “has”;

(b) in sub-paragraph (ii), for “was excepted (under section 11(4) above)
from liability for” substitute “could have paid, but has not paid,”.

7 In section 35B (state maternity allowance for participating wife or civil
partner of self-employed earner), in subsection (1)(c), for “is liable to pay”
25substitute “has paid”.

8 In section 176(1)(a) (parliamentary control: instruments subject to
affirmative procedure), for “section 11(3)” substitute “section 11(8) or (9)”.

9 (1) Schedule 1 (supplementary provisions) is amended as follows.

(2) In paragraph 7B, omit sub-paragraph (7).

(3) 30After paragraph 7BA insert—

7BB (1) Regulations may provide, in connection with maternity allowance
under section 35 or 35B, for a person who is, or will be, either liable
or entitled to pay a Class 2 contribution in respect of a week in a
tax year to be able to pay a Class 2 contribution in respect of that
35week at any time in the period—

(a) beginning with that week, and

(b) ending with a prescribed date.

(2) The regulations may provide that where a person pays a Class 2
contribution in respect of a week in a tax year under the
40regulations—

(a) the contribution is to be treated, before the end of the tax
year, as a Class 2 contribution under section 11(6);

National Insurance Contributions BillPage 11

(b) the contribution is to be treated, after the end of the tax
year—

(i) if the person is liable under section 11(2) to pay a
Class 2 contribution in respect of that week, as a
5Class 2 contribution under section 11(2);

(ii) otherwise, as a Class 2 contribution under
section 11(6).

(3) Regulations under this paragraph are to be made by the Treasury
acting with the concurrence of the Secretary of State.

(4) 10In paragraph 8(1), omit paragraphs (j) and (k).

SSCB(NI)A 1992

10 SSCB(NI)A 1992 is amended as follows.

11 In section 1 (outline of contributory system), in subsection (2)(c), omit
“weekly”.

12 15For section 11 (liability for Class 2 contributions) substitute—

11 Class 2 contributions

(1) This section applies if an earner is in employment as a self-employed
earner in a tax year (the “relevant tax year”).

(2) If the earner has relevant profits of, or exceeding, the small profits
20threshold, the earner is liable to pay Class 2 contributions for the
relevant tax year at the rate of £2.75 in respect of each week in that
year that the earner is in the employment.

(3) “Relevant profits” means profits, from the employment, in respect of
which Class 4 contributions are payable under section 15 for the
25relevant tax year (or would be payable if the amount of the profits
were to exceed the amount specified in subsection (3)(a) of that
section in excess of which the main Class 4 percentage is payable).

(4) The “small profits threshold” is £5,885.

(5) Class 2 contributions under subsection (2) are to be payable in the
30same manner that Class 4 contributions in respect of relevant profits
are, or would be, payable (but see section 11A for the application of
certain provisions in relation to such Class 2 contributions).

(6) If the earner does not have relevant profits of, or exceeding, the small
profits threshold, the earner may pay a Class 2 contribution of £2.75
35in respect of any week in the relevant tax year that the earner is in the
employment.

(7) No Class 2 contributions are to be paid under this section in respect
of any week in the relevant tax year—

(a) before that in which the earner attains the age of 16, or

(b) 40after that in which the earner attains pensionable age.

(8) The Treasury may by regulations make provision so that, in relation
to an earner, the Class 2 contribution in respect of a week is higher
than that specified in subsections (2) and (6) where—

National Insurance Contributions BillPage 12

(a) in respect of any employment of the earner, the earner is
treated by regulations made under section 2(2)(b) as being a
self-employed earner, and

(b) in any period or periods the earner has earnings from that
5employment and—

(i) those earnings are such that (disregarding their
amount) the earner would be liable for Class 1
contributions in respect of them if the earner were not
so treated in respect of the employment, and

(ii) 10no Class 4 contribution is payable in respect of the
earnings by virtue of regulations under section 18(1).

(9) The Treasury may by regulations—

(a) modify the meaning of “relevant profits”;

(b) provide that Class 2 contributions under subsection (6) may
15not be paid—

(i) if the employment or the earner is of a prescribed
description, or

(ii) in prescribed circumstances.

(10) Regulations under subsection (9)(a) may amend this section.

(11) 20Regulations under subsection (9)(b) are to be made with the
concurrence of the Department.

11A Application of certain provisions of the Income Tax Acts in relation to
Class 2 contributions under section 11(2)

(1) The following provisions apply, with the necessary modifications, in
25relation to Class 2 contributions under section 11(2) as if those
contributions were income tax chargeable under Chapter 2 of Part 2
of the Income Tax (Trading and Other Income) Act 2005 in respect of
profits of a trade, profession or vocation which is not carried on
wholly outside the United Kingdom—

(a) 30Part 2 (returns), Part 4 (assessment and claims), Part 5
(appeals), Part 5A (payment of tax), Part 6 (collection and
recovery) and Part 10 (penalties) of the Taxes Management
Act 1970;

(b) sections 101 and 102 of the Finance Act 2009 (interest);

(c) 35Schedules 55 and 56 to that Act (penalties for failure to make
returns etc or for failure to make payments on time);

(d) Part 4 (follower notices and accelerated payments) and Part 5
(promoters of tax avoidance schemes) of the Finance Act
2014;

(e) 40any other provisions of the Income Tax Acts as to assessment,
collection, repayment or recovery.

(2) But section 59A of the Taxes Management Act 1970 (payments on
account) does not apply in relation to Class 2 contributions under
section 11(2).

(3) 45This section and section 11(5) are subject to any contrary provision in
regulations made under Schedule 1 in relation to Class 2
contributions under section 11(2).

13 (1) Section 12 (late paid Class 2 contributions) is amended as follows.

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(2) In subsection (1), after “Class 2 contribution” insert “under section 11(6)”.

(3) In subsection (2), for “to (5)” substitute “and (4)”.

(4) In subsection (3), for “(4) to (6)” substitute “(4) and (6)”.

(5) Omit subsection (5).

(6) 5In subsection (6)—

(a) omit “or (5)”;

(b) in paragraph (a), omit “in a case falling within subsection (3) above,”;

(c) omit paragraph (b) and the word “and” preceding it.

(7) Omit subsection (7).

(8) 10In subsection (8)—

(a) in the definition of “ordinary contribution”, for “under section 11(1)
above” substitute “of the amount specified in section 11(6)”;

(b) in the definition of “higher-rate contribution”, for the words from
“under regulations” to the end substitute “of an amount provided for
15in regulations under section 11(8)”.

14 In section 18 (Class 4 contributions recoverable under regulations), in
subsection (1)(b), for “subsection (3)” substitute “subsection (8)”.

15 In section 35A (appropriate weekly rate of maternity allowance under
section 35), in subsection (5)(c)—

(a) 20in sub-paragraph (i), after “she” insert “has”;

(b) in sub-paragraph (ii), for “was excepted (under section 11(4) above)
from liability for” substitute “could have paid, but has not paid,”.

16 In section 35B (state maternity allowance for participating wife or civil
partner of self-employed earner), in subsection (1)(c), for “is liable to pay”
25substitute “has paid”.

17 In section 172(11A) (instruments subject to Parliamentary affirmative
procedure), for “11(3)” substitute “11(8) or (9)”.

18 (1) Schedule 1 (supplementary provisions) is amended as follows.

(2) In paragraph 7B, omit sub-paragraph (7).

(3) 30After paragraph 7BA insert—

7BB (1) Regulations may provide, in connection with maternity allowance
under section 35 or 35B, for a person who is, or will be, either liable
or entitled to pay a Class 2 contribution in respect of a week in a
tax year to be able to pay a Class 2 contribution in respect of that
35week at any time in the period—

(a) beginning with that week, and

(b) ending with a prescribed date.

(2) The regulations may provide that where a person pays a Class 2
contribution in respect of a week in a tax year under the
40regulations—

(a) the contribution is to be treated, before the end of the tax
year, as a Class 2 contribution under section 11(6);

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(b) the contribution is to be treated, after the end of the tax
year—

(i) if the person is liable under section 11(2) to pay a
Class 2 contribution in respect of that week, as a
5Class 2 contribution under section 11(2);

(ii) otherwise, as a Class 2 contribution under
section 11(6).

(3) Regulations under this paragraph are to be made by the Treasury
acting with the concurrence of the Department.

(4) 10In paragraph 8(1), omit paragraphs (j) and (k).

SSAA 1992

19 SSAA 1992 is amended as follows.

20 In section 141 (annual review of contributions), in subsection (4)—

(a) in paragraph (a), for “section 11(1)” substitute “section 11(2) and (6)”;

(b) 15in paragraph (b), for the words from “amount” to the end substitute
“small profits threshold for the purposes of Class 2 contributions”.

21 (1) Section 143 (power to alter contributions with a view to adjusting the level
of the National Insurance Fund) is amended as follows.

(2) In subsection (1)(c), for “section 11(1)” substitute “section 11(2) and (6)”.

(3) 20In subsection (3)—

(a) for “section 11(1)” substitute “section 11(2) and (6)”;

(b) for the words from “amount” to the end substitute “small profits
threshold for the purposes of Class 2 contributions”.

22 In section 145 (power to alter primary and secondary contributions), in
25subsection (4)(a)—

(a) for “section 11(1)” substitute “section 11(2) and (6)”;

(b) omit “in that subsection”.

SSC(TF)A 1999

23 SSC(TF)A 1999 is amended as follows.

24 30In section 4 (recovery of contributions where income tax recovery provisions
not applicable)—

(a) in paragraph (a), for “, Class 1B and Class 2” substitute “and Class
1B”;

(b) after paragraph (a) insert—

(aa) 35those Class 2 contributions in relation to which—

(i) the regulations mentioned in paragraph (a),
and

(ii) Part 6 of the Taxes Management Act 1970
(collection and recovery),

40do not apply,.

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25 In section 8 (decisions by officers of HMRC), after subsection (1) insert—

(1A) No decision in respect of Class 2 contributions under section 11(2) of
the Social Security Contributions and Benefits Act 1992 may be made
under subsection (1) in relation to an issue specified in paragraph (c)
5or (e) of that subsection if the person to whom the decision would
relate—

(a) has appealed under Part 5 of the Taxes Management Act 1970
in relation to that issue,

(b) can appeal under that Part in relation to that issue, or

(c) 10might in the future, without the agreement of Her Majesty’s
Revenue and Customs or permission of the tribunal, be able
to appeal under that Part in relation to that issue.

26 In Schedule 3 (transfer of other functions to the Treasury or Board), omit
paragraph 12.

27 15In Schedule 9 (further consequential amendments), omit paragraphs 3 and
7(7).

Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999
(S.I. 1999/671S.I. 1999/671)

28 The Social Security Contributions (Transfer of Functions, etc) (Northern
20Ireland) Order 1999 is amended as follows.

29 In Article 7 (decisions by officers of HMRC), after paragraph (1) insert—

(1A) No decision in respect of Class 2 contributions under section 11(2) of
the Contributions and Benefits Act may be made under paragraph
(1) in relation to an issue specified in sub-paragraph (c) or (e) of that
25paragraph if the person to whom the decision would relate—

(a) has appealed under Part 5 of the Taxes Management Act 1970
in relation to that issue,

(b) can appeal under that Part in relation to that issue, or

(c) might in the future, without the agreement of Her Majesty’s
30Revenue and Customs or permission of the tribunal, be able
to appeal under that Part in relation to that issue.

30 In Schedule 3 (transfer of other functions to the Treasury or Board), omit
paragraph 13.

31 In Schedule 8 (further consequential amendments), omit paragraphs 1 and
355(7).

Social Security (Contributions) Regulations 2001 (S.I. 2001/1004S.I. 2001/1004)

32 (1) In regulation 127 of the Social Security (Contributions) Regulations 2001
(elections by married women and widows), in paragraph (3)(b), after “Class
2 contribution” insert “, nor shall she be entitled to pay any such
40contribution,”.

(2) The amendment made by sub-paragraph (1) is without prejudice to any
power to make regulations amending or revoking the provision inserted.

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Commencement

33 The amendments made by this Schedule, other than those mentioned in
paragraph 34, have effect for the tax year 2015-16 and subsequent tax years.

34 The amendments made by paragraphs 4, 9(2), 13, 18(2), 27 and 31 have effect
5in relation to a Class 2 contribution in respect of a week in the tax year 2015-
16 or a subsequent tax year.

35 The Treasury may by regulations made by statutory instrument make
transitional or transitory provision or savings in connection with the coming
into force of any of the amendments made by this Schedule.

Section 3

10SCHEDULE 2 Application of Parts 4 and 5 of FA 2014 to national insurance contributions

Part 1 Follower notices & accelerated payments: Class 1, 1A, 1B and certain Class 2

Introduction

1 15Part 4 of FA 2014 (follower notices and accelerated payments) has effect with
the following modifications.

General

2 References to tax or a relevant tax, other than references to particular taxes,
include relevant contributions.

3 20References to a charge to tax include a liability to pay relevant contributions
and references to a person being chargeable to tax, or to tax being charged,
are to be construed accordingly.

4 References to an assessment to tax include a NICs decision relating to a
person’s liability for relevant contributions.

5 25References to a tax enquiry include a relevant contributions dispute.

6 A “relevant contributions dispute” arises if—

(a) without making a NICs decision, HMRC notifies a person in writing
that HMRC considers the person to be liable to pay an amount of
relevant contributions, and

(b) 30the person notifies HMRC in writing (a “notification of dispute”) that
the person disputes liability for some or all of the contributions (“the
disputed contributions”).

7 The relevant contributions dispute is in progress, in relation to the
notification of dispute, during the period which—

(a) 35begins with the day on which the person gives the notification of
dispute, and

(b) ends (at which point it is to be treated as completed) with the day on
which—

(i) the disputed contributions are paid in full,

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(ii) HMRC and the person enter into an agreement in writing as
to the person’s liability for the disputed contributions and
any amount of those contributions that the person is to pay
under that agreement is paid,

(iii) 5an officer of Revenue and Customs makes a NICs decision in
relation to the person’s liability for the disputed
contributions, or

(iv) without making a NICs decision, HMRC notifies the person
in writing that HMRC no longer considers the person to be
10liable to pay the disputed contributions.

8 References to a return into which a tax enquiry is in progress include a
notification of dispute in relation to which a relevant contributions dispute
is in progress.

9 References to a tax appeal include a NICs appeal.

10 15A “NICs appeal” means—

(a) an appeal, under section 11 of SSC(TF)A 1999 or Article 10 of the
Social Security Contributions (Transfer of Functions, etc) (Northern
Ireland) Order 1999 (S.I. 1999/671S.I. 1999/671), against a NICs decision relating
to relevant contributions, or

(b) 20an appeal against any determination of—

(i) an appeal within paragraph (a), or

(ii) an appeal within this paragraph.

11 (1) A reference to a provision of Part 7 of FA 2004 (disclosure of tax avoidance
schemes) (a “DOTAS provision”) includes a reference to—

(a) 25that DOTAS provision as applied by regulations under section 132A
of SSAA 1992 (disclosure of contributions avoidance arrangements);

(b) any provision of regulations under that section that corresponds to
that DOTAS provision,

whenever the regulations are made.

(2) 30Regulations under section 132A of SSAA 1992 may disapply, or modify the
effect of, sub-paragraph (1).

List of relevant taxes

12 The definition of “relevant tax” in section 200 (“relevant tax”) has effect as if
relevant contributions were listed in it.

35Circumstances in which follower notice may be given

13 For the purposes of section 204 (circumstances in which a follower notice
may be given), Condition B is also met if, in a relevant contributions dispute,
a person disputes liability for relevant contributions on the basis mentioned
in subsection (3) of that section (regardless of whether the notification of
40dispute was given on that basis).

Follower notices: corrective action and penalties

14 (1) This paragraph applies in a case in which, by virtue of this Part of this
Schedule, a follower notice is given by virtue of section 204(2)(a).

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(2) For the purposes of section 208 (penalty if corrective action not taken in
response to follower notice), the necessary corrective action is taken in
respect of the denied advantage if (and only if)—

(a) in a case in which the denied advantaged can be counteracted by
5making a payment to HMRC, P makes that payment and notifies
HMRC that P has done so, or

(b) in any case, P takes all necessary action to enter into an agreement in
writing with HMRC for the purpose of relinquishing the denied
advantage.

(3) 10Accordingly—

(a) subsections (4) to (7) and (9) to (11) of section 208 do not apply, and

(b) the reference in section 209(3)(a) to P amending a return or claim is
to be treated as a reference to P making a payment mentioned in sub-
paragraph (2)(a).

(4) 15Terms used in this paragraph that are defined for the purposes of section 208
have the same meaning as in that section.

Follower notices: aggregate penalties

15 (1) In section 212 (aggregate penalties), references to a “relevant penalty
provision” include—

(a) 20any provision mentioned in subsection (4) of that section, as applied
in relation to relevant contributions by regulations (whenever
made);

(b) section 98A of TMA 1970, as applied in relation to relevant
contributions by regulations (whenever made);

(c) 25any provision specified in regulations made by the Treasury under
which a penalty can be imposed in respect of relevant contributions.

(2) The Treasury may by regulations disapply, or modify the effect of, sub-
paragraph (1)(a) or (b).

(3) The Treasury may by regulations modify section 212 as it has effect in
30relation to a relevant penalty provision by virtue of sub-paragraph (1)(b) or
(c).

(4) Section 175(3) to (5) of SSCBA 1992 (various supplementary powers) applies
to a power to make regulations conferred by this paragraph.

(5) Regulations under this paragraph must be made by statutory instrument.

(6) 35A statutory instrument containing regulations under this paragraph is
subject to annulment in pursuance of a resolution of either House of
Parliament.

Circumstances in which accelerated payment notice may be given

16 For the purposes of section 219 (circumstances in which an accelerated
40payment notice may be given), Condition B is also met if, in a relevant
contributions dispute, a person disputes liability for relevant contributions
on the basis mentioned in subsection (3) of that section (regardless of
whether the notification of dispute was given on that basis).

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Nature and recovery of accelerated payment

17 (1) This paragraph applies in relation to an accelerated payment (see section
223(2)) so far as (but only so far as) it represents understated tax (see section
220) that consists of an additional amount that would be due and payable in
5respect of relevant contributions (“the understated contributions”).

(2) The accelerated payment is a payment of the understated contributions (and
not a payment on account of them).

(3) Accordingly, subsections (3) and (7) to (9) of section 223 do not apply in
relation to the accelerated payment.

(4) 10The accelerated payment must be paid before the end of the payment period
regardless of whether P brings a NICs appeal that relates to the understated
contributions.

(5) Section 117A of SSAA 1992 and section 111A of SSA(NI)A 1992 (issues
arising in proceedings: contributions etc) do not apply to proceedings for the
15recovery of any amount of the accelerated payment that is unpaid at the end
of the payment period.

(6) A certificate of an officer of Revenue and Customs under section 25A of
CRCA 2005 (certificates of debt) that the accelerated payment has not been
paid is to be treated as conclusive evidence that the amount is unpaid.

(7) 20If some or all of the understated contributions are subsequently repaid
to P—

(a) the contributions repaid are to be treated, for the purposes of
determining a person’s entitlement to benefit, or the amount of a
person’s benefit, as not having been paid, but

(b) 25that does not affect any payments of benefit made to a person before
the repayment.

(8) In sub-paragraph (7) “benefit” means a contributory benefit or a statutory
payment.

(9) Terms used in this paragraph that are defined for the purposes of section 223
30have the same meaning as in that section.

Effect of accelerated payment notice in respect of appeal

18 (1) This paragraph applies where—

(a) a person (“P”) has been given an accelerated payment notice by
virtue of section 219(2)(b) (notice given when appeal pending),
35which has not been withdrawn, and

(b) the appeal by virtue of which the notice could be given was a NICs
appeal in relation to relevant contributions.

(2) P must pay the disputed contributions (see sub-paragraph (8))—

(a) if no representations were made under section 222 in respect of the
40notice, on or before the last day of the period of 90 days beginning
with the day the notice is given, and

(b) if representations were so made, on or before whichever is later of—

(i) the last day of the 90 day period mentioned in paragraph (a),
and