NIM17100 - Class 1A National Insurance contributions: Refunding Class 1A NICs: Special refund arrangements in re-categorisation cases involving a change of employment status from employed earner to self-employed

Section 19A of the Social Security Contributions Act 1992 (SSCBA 1992)

Regulation 59 of the Social Security (Contributions) Regulations 2001 (SSCR 2001) (SI 2001 No 1004)

Special provisions under section 19A SSCBA 92 allow Class 1A NICs, which have been paid in error, to be treated as paid correctly. This occurs where Class 1A NICs have been paid incorrectly because:

  • the employee to whom benefits were provided was not in employed earner’s employment, but
  • the HMRC did not advise the person paying the Class 1A NICs of the error before the end of the second tax year following the tax year in which the incorrect payment was made.

Regulation 59 provides that section 19A will not apply where Class 1A NICs have been paid and either:

  1. an application for the determination of a question by the Secretary of State for Social Security as to the category of earners in which the earner was to be included (employment status) has been made under section 17(1)(a) of the Social Security Administration Act 1992; or
  2. a question of law arising in connection with the employment status has been referred by the Secretary of State for Social Security to a court under section 18 of the Social Security Administration Act 1992; or
  3. a request in writing for a categorisation decision or variation of a previous decision under section 8(1)(a) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (The Transfer Act 1999) has been requested and the question, reference or request, has not been determined by the end of the second tax year referred to above.

Cases falling into 1 and 2 above are likely to be rare. Questions under section 17 and 18 of the Social Security Administration Act were replaced by decisions under section 8 of the Transfer Act 1999 from 1st April 1999.