11.—(1) Schedule 1 to the principal Regulations (which, with extensions and modifications, contains provisions formerly contained in the Income Tax (Employments) Regulations 1973(1) as they applied to earnings-related contributions under the Social Security Act 1975 and subsequently to Class 1A contributions under the Social Security Contributions and Benefits Act 1992(2)) shall be amended in accordance with the following provisions of this regulation.
(2) In the heading(3) to Schedule 1 and in the heading to Part IV of that Schedule(4) for “AND CLASS 1A CONTRIBUTIONS”, substitute “, CLASS 1A CONTRIBUTIONS AND CLASS 1B CONTRIBUTIONS”.
(3) In Regulation 13 (calculation of deduction) of Schedule 1 to the principal Regulations—
(a)in paragraph (1) for “section 4(3) of the Act”, substitute “section 6(3) of the Social Security Contributions and Benefits Act 1992”;
(b)in paragraph (2A)—
(i)in head (ii) of sub-paragraph (b) for “section 18 of the Social Security (Miscellaneous Provisions) Act 1977”, substitute “section 112 of the Social Security Contributions and Benefits Act 1992 (certain sums to be earnings)(5)”,
(ii)in head (iii)(6) of sub-paragraph (b) omit the words from “except where,” to “apply”;
(c)in paragraph (3A)(7)—
(i)for “the provisions of the preceding paragraph”, substitute “paragraphs (2A), (3C) and (3F)”,
(ii)for the words “that paragraph” in both places where they occur, substitute “those paragraphs”;
(d)after paragraph (3A), insert—
“(3B) Paragraph (3C) of this Regulation applies where an employer makes a payment consisting of solely 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 amount of earnings-related contributions which the employee, or ex-employee as the case may be, is liable to pay under section 6(3)(a) of the Social Security Contributions and Benefits Act 1992;
for these purposes an “ex-employee” means a person who—
ceases to be employed by the employer in a particular year (“the cessation year”), and
receives such earnings from the employer after the cessation of employment but in the cessation year.
(3C) Where, in the circumstances specified in paragraph (3B) of this Regulation, the employer does not deduct from the earnings referred to in that paragraph the full amount of earnings-related contributions which by virtue of these Regulations he is entitled to deduct, he may, subject to the provisions of paragraph (3A) of this Regulation, recover the amount so underdeducted by deduction from any subsequent payment of monetary earnings to that employee, or ex-employee as the case may be, during the same year.
(3D) Paragraph (3F) of this Regulation applies where—
(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 shares,
(ii)a conditional interest in shares or a beneficial interest in convertible shares treated as earnings by virtue of regulation 17AB of the Main Regulations (further provision as to payments to be treated as earnings),
(iii)any gain on which the ex-employee is chargeable to tax by virtue of section 135 of the Income and Corporation Taxes Act 1988 (gains by directors and employees from share options); and
(c)at the time of the payment of those earnings there are no, or insufficient, monetary earnings from which the employer could deduct the amount of earnings-related contributions which the employee is liable to pay under section 6(3)(a) of the Social Security Contributions and Benefits Act 1992.
(3E) For the purposes of paragraph (3D) of this Regulation—
(a)“conditional shares” means shares within the meaning given for the purposes of sections 140A and 140B of the Income and Corporation Taxes Act 1988(8) in section 140C of that Act and, by virtue of section 140A(9) of that Act, includes securities issued by a company;
(b)“convertible shares” means shares which are convertible within the meaning of section 140D of the Income and Corporation Taxes Act 1988.
(3F) Where, in the circumstances specified in paragraph (3D) of this Regulation, the employer has not deducted from the earnings referred to in sub-paragraph (b) of that paragraph the full amount of earnings-related contributions which by virtue of these Regulations he is entitled to deduct, he may, without prejudice to the provisions of paragraph (3C) of this Regulation and subject to the provisions of paragraph (3G)(b) below, recover the amount so underdeducted by deduction from the proceeds of sale of some, or all, of—
(a)the shares referred to in sub-paragraph (b)(i) and (ii) of paragraph (3D),
(b)the shares which form the subject matter of the option referred to in sub-paragraph (b)(iii) of paragraph (3D).
(3G) For the purposes of paragraph (3F) of this Regulation—
(a)the whole of the amount underdeducted may be recovered from the proceeds of sale of some, or all, of the shares referred to in that paragraph; and
(b)the employee’s prior written consent to that sale and the recovery of all or part of the underdeduction from the proceeds thereof, shall be required.”.
(4) In Regulation 26C (payment of Class 1A contributions)(9)—
(a)in the heading after “Class 1A contributions”, add “and Class 1B contributions”;
(b)after paragraph (1)(10), insert—
“(1A) A person who is liable to pay a Class 1B contribution (“the employer”), shall pay that Class 1B contribution to the Collector not later than 19th October in the year immediately following the end of the year in respect of which that contribution is payable.”;
(c)in paragraph (3) after “Class 1A contributions”, insert “or Class 1B contributions”.
(5) For Regulation 28 (recovery of earnings-related contributions or Class 1A contribu tions)(11), substitute—
28.—(1) The provisions of the Income Tax Acts and of any regulations under section 203 of the Income and Corporation Taxes Act 1988 (pay as you earn)(12) 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 to the Collector for any income tax period in accordance with Regulation 26(13) or 26A(14) or which he is deemed to be liable to pay to the Collector for any income tax period under Regulation 27A(15);
(b)any amount of Class 1A contributions which an employer is liable to pay to the Collector in respect of any year in accordance with Regulation 26C(1) or 26D(5)(16) or which he is deemed to be liable to pay to the Collector in respect of any year under Regulation 27B(17); or
(c)any amount of Class 1B contributions which an employer is liable to pay to the Collector in respect of any year in accordance with Regulation 26C(1A),
as if each of those amounts had been charged to tax by way of an assessment on the employer under Schedule E:
Provided that, in the application to any proceedings taken by virtue of this Regulation of any such provisions limiting the amount which is recoverable in those proceedings, there shall be disregarded any amount of tax which may by virtue of paragraphs (2) to (4) of this Regulation be included as part of the cause of action or matter of complaint in those proceedings.
(2) Proceedings may be brought for the recovery of the total amount of—
(a)earnings-related contributions which the employer is liable to pay to the Collector for any income tax period;
(b)Class 1A contributions which the employer is liable to pay to the Collector in respect of any year;
(c)Class 1B contributions which the employer is liable to pay to the Collector in respect of any year;
(d)a combination of those classes of contributions as specified in sub-paragraphs (a), (b) and (c) of this paragraph; or
(e)any of the contributions as specified in sub-paragraph (a), (b), (c) or (d) of this paragraph in addition to any tax which the employer is liable to pay to the Collector for any income tax period,
without specifying the respective amounts of those contributions and of tax, or distinguishing the amounts which the employer is liable to pay in respect of each employee and without specifying the employees in question.
(3) For the purposes of—
(a)proceedings under section 66 of the Taxes Management Act 1970(18) (including proceedings under that section as applied by the provisions of this Regulation);
(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 tax which the employer is liable to pay to the Collector for any income tax period, referred to in paragraph (2) of this Regulation shall, subject to the provisions of the proviso to paragraph (1) of this Regulation, be one cause of action or one matter of complaint.
(4) Nothing in paragraph (2) or (3) of this Regulation 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 income tax period in respect of each of his several employees;
(b)Class 1A contributions which the employer is liable to pay in respect of any year in respect of each of his several employees;
(c)Class 1B contributions which the employer is liable to pay in respect of any year in respect of each of his several employees; or
(d)tax which the employer is liable to pay for any income tax period in respect of each of his several employees.”.
(6) In Regulation 28A (interest on overdue earnings-related contributions or Class 1A contributions)(19)—
(a)in the heading for “or Class 1A contributions”, substitute “, Class 1A contributions or Class 1B contributions”;
(b)for paragraph (1), substitute—
“(1) Subject to Regulation 28D(20), where, in relation to the year ended 5th April 1993 or any subsequent year, an employer has not—
(a)within 14 days of the end of the year paid an earnings-related contribution which he is liable to pay in respect of that year or a Class 1A contribution which he is liable to pay in that year;
(b)by 19th October next following the year in respect of which it was due paid a Class 1B contribution,
any contribution not so paid shall carry interest at the rate applicable under paragraph 6(3) of Schedule 1 to the Social Security Contributions and Benefits Act 1992 from the reckonable date until payment.”;
(c)in paragraph (2) for “or a Class 1A contribution,” substitute, “, a Class 1A contribution or a Class 1B contribution,”;
(d)for paragraph (3), substitute—
“(3) For the purposes of this Regulation—
(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 Social Security Contributions and Benefits Act 1992;
(b)“the reckonable date” means, in relation to—
(i)an earnings-related contribution, the 14th day after the end of the year in respect of which it was due;
(ii)a Class 1A contribution, the 14th day after the end of the year in which it was due to be paid;
(iii)a Class 1B contribution, the 19th October next following the year in respect of which it was due.”.
(7) For Regulation 28B (payment of interest on repaid earnings-related contributions or Class 1A contributions)(21), substitute—
28B.—(1) Where an earnings-related contribution or a Class 1A 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 Social Security Contributions and Benefits Act 1992 from the relevant date until the order for the repayment is issued.
(2) For the purposes of paragraph (1) of this Regulation “the relevant date” is—
(a)in the case of an earnings-related contribution or a Class 1A 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;
(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, a Class 1A 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 Social Security Contributions and Benefits Act 1992 from the relevant date until the order for the repayment is issued.
(4) For the purposes of paragraph (3) of this Regulation “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,
(ii)a Class 1A contribution, the 14th day after the end of the year in which that contribution was due to be paid, or
(iii)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, Class 1A contribution or Class 1B contribution was paid if that date is later than the date referred to in sub-paragraph (a) of this paragraph.”.
(8) For Regulation 28C (repayment of interest)(22), substitute—
28C. Where a secondary contributor or a person liable to pay a Class 1A contribution or a Class 1B contribution has paid interest on an earnings-related contribution, a Class 1A contribution or a Class 1B contribution, that interest shall be repaid to him where—
(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, Class 1A 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 32 or 33A of the Main Regulations.”.
(9) In Regulation 28D (remission of interest)—
(a)in paragraph (2)(a) for “or a Class 1A contribution”, substitute “, a Class 1A contribution or a Class 1B contribution”;
(b)after paragraph (2)(b), add—
“(c)an appeal against a determination as to the amount of income tax in respect of which the person liable to pay a Class 1B contribution is accountable in accordance with a PAYE settlement agreement has been brought but not finally determined.”;
(c)after paragraph (3)(c)(ii), add—
“(iii)paragraph (2)(c) of this Regulation, “the first relevant date” means the date on which the appeal against the determination as to the amount of income tax payable to the Collector is submitted to the Board of Inland Revenue and “the second relevant date” means the date 14 days after that appeal is finally disposed of.”.
(10) In Regulation 30(6) (which provides for the preparation of a certificate of unpaid contributions by the Collector at the end of the year)(23), omit “paragraphs (1) and (2) of”.
(11) In Regulation 32 (inspection of employer’s records)—
(a)in paragraphs (1)(aa)(24) and (2)(aa)(25) after “Class 1A contributions” in each place where they appear, insert “or Class 1B contributions”;
(b)in paragraph (2)(b)(26) for “or Class 1A contributions, or both”, substitute “, Class 1A contributions or Class 1B contributions, or a combination”;
(c)in paragraph (4), omit “paragraphs (1) and (2) of”;
(d)in paragraph (5)(27) after “Class 1A contribution”, insert “or Class 1B contribution”;
(e)after paragraph (5), add—
“(6) For the purposes of this Regulation “employer” means, in relation to a Class 1B contribution, the person liable to pay such a contribution in accordance with section 10A of the Social Security Contributions and Benefits Act 1992.”.
S.I. 1973/334; this and its subsequent amending instruments were consolidated as S.I. 1993/744.
The Social Security Contributions and Benefits Act 1992 consolidated, inter alia, the Social Security Act 1975 (c. 14) (“the 1975 Act”). Schedule 1 to the Social Security (Contributions) Regulations 1979 which was made, inter alia, pursuant to powers in Schedule 1 to the 1975 Act, contained provisions of the Income Tax (Employment) Regulations 1973 as they applied (with extensions and modifications) to earnings-related and Class 1A contributions under the 1975 Act.
The heading to Schedule 1 was amended by regulation 10 of S.I. 1992/97.
The heading to Part IV was amended by regulation 14 of S.I. 1992/97.
Section 112 was amended by paragraph 51(4) of Schedule 1 to the Employment Rights Act 1996 (c. 18).
Head (iii) was amended by regulation 3 of S.I. 1982/1033.
Paragraph (3A) was amended by regulation 16(b) of S.I. 1984/77.
Sections 140A-H were inserted by sections 50-53 of the Finance Act 1998 (c. 36).
Regulation 26C was inserted by regulation 15 of S.I. 1992/97.
Paragraph (1) was amended by regulation 8 of S.I. 1992/1440 and regulation 7(3) of S.I. 1996/2407.
Regulation 28 was substituted by regulation 18 of S.I. 1992/97 and amended by regulation 12 of S.I. 1992/1440 and regulation 7(4)(c) of S.I. 1996/2407.
Section 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) and paragraph 38 of Part II of Schedule 19 and Part V of Schedule 26 to, the Finance Act 1994 (c. 9) and section 119 of the Finance Act 1998 (c. 36).
Regulation 26 was substituted by regulation 2(3) of S.I. 1991/1632 and amended by regulation 13(3) of S.I. 1996/195.
Regulation 26A was substituted by regulation 2(3) of S.I. 1991/1632 and amended by regulation 3(2) of S.I. 1995/730 and regulation 13(4) of S.I. 1996/195.
Regulation 27A was inserted by regulation 3 of S.I. 1985/396 and amended by regulation 2(2) of S.I. 1990/605, regulation 2(5) of S.I. 1991/1632 and regulation 3(3) of S.I. 1995/730.
Regulation 26D was inserted by regulation 9 of S.I. 1992/1440 and amended by regulation 3 of S.I. 1997/820.
Regulation 27B was inserted by regulation 17 of S.I. 1992/97 and amended by regulation 11 of S.I. 1992/1440, regulation 3(4) of S.I. 1995/730 and regulation 7(4)(b) of S.I. 1996/2407.
1970 c. 9. Section 66 was amended by Part II of Schedule 1 to the County Courts (Northern Ireland) Order 1980 (S.I. 1980/397), section 57(2) of the Finance Act 1984 (c. 34) and the Schedule to the High Court and County Courts Jurisdiction Order 1991 (S.I. 1991/724).
Regulation 28A was inserted by regulation 2 of S.I. 1993/821.
Regulation 28D was inserted by regulation 2 of S.I. 1993/821.
Regulation 28B was inserted by regulation 2 of S.I. 1993/821.
Regulation 28C was inserted by regulation 2 of S.I. 1993/821.
Paragraph (6) was substituted by regulation 19(6) of S.I. 1992/97 and amended by regulation 13(4) of S.I. 1992/1440.
Paragraph (1)(aa) was inserted by regulation 20(2) of S.I. 1992/97.
Paragraph (2)(aa) was inserted by regulation 20(4) of S.I. 1992/97.
Paragraph (2)(b) was amended by regulation 20(5) of S.I. 1992/97.
Paragraph (5) was added by regulation 8(b) of S.I. 1981/82 and amended by regulation 18 of S.I. 1984/77, regulation 20(6) of S.I. 1992/97 and regulation 7(4)(d) of S.I. 1996/2407.