DANSP46300 - Co-ordinating action on National Insurance contributions decisions and income tax determinations or assessments: Effect on National Insurance contributions decisions of amending regulation 80 income tax determinations

DANSP46100 explains about coordinating action when dealing with income tax determinations or assessments and National Insurance contributions (NIC) decisions. COG915170 tells you what action to take if a regulation 80 income tax determinations (reg 80 determination) needs amending.

If a reg 80 determination is amended, if any NIC decisions have been issued in relation to the same matter, you should consider whether the section 8 decisions should be varied. See DANSP44000 about varying decisions. If a reg 80 determination is amended do not assume that it is necessary to vary section 8 decisions.

Example 1 - Reg 80 determination amended, section 8 decision not varied

A worker, who is the employer’s spouse, has paid income tax, Class 2 and 4 NIC. A status review concludes that she is an employee. The engager asks for a review. The reviewing officer decides that the worker is self-employed. However, regulation 2 and paragraph 3 in Part I of Schedule 1 of the Social Security (Categorisation of Earners) Regulations 1978 (SI 1978 No 1689) means that even though the worker is self-employed, for NIC purposes she is treated as an employed earner. So, Class 1 NIC are due even though PAYE income tax is not due.

Example 2 - Reg 80 determination amended and section 8 decision varied

A worker has been paying income tax, Class 2 and 4 NIC as a self-employed earner for several years. HMRC conduct an employment status investigation and conclude that the worker is employed under a contract of service. PAYE income tax has not been paid so reg 80 determinations are issued. A section 8 decision is issued to the engager and the worker. The section 8 decision tells the engager and worker that the worker is an employed earner and Class 1 NIC are due and the amount due.

The engager appeals against the reg 80 determinations and the section 8 decision and asks for a review (see DANSP55000). The reviewing officer concludes that the worker is self-employed. The reg 80 determinations are vacated and the section 8 decision is varied to show that the worker is a self-employed earner.