The Social Security (Contributions) (Amendment No. 4) Regulations 2009

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Social Security (Contributions) Regulations 2001 (S.I.2001/1004; “the Contributions Regulations”) to provide for mandatory electronic communication of the return and accompanying information required by paragraph 22 of Schedule 4 (return by employer at the end of year) to the Contributions Regulations (“the return”). It is already mandatory for employers employing 50 or more employees to deliver these returns by an approved method of mandatory electronic communications, this is now extended to all employers.

These Regulations also amend the Contributions Regulations to provide that section 108 (suspension of penalties during currency of agreement for deferred payment) of the Finance Act 2009 applies with modifications to surcharges under regulation 90K (default surcharge) of the Contribution Regulations.

Regulation 1 provides for citation and that the Regulations commence on 13th August 2009 and that regulation 3 has effect in relation to deferred payment agreements made on or after that date and regulation 4 to 8 have effect for the tax year 2009-10 and subsequent years.

Regulation 3 inserts a new paragraph 8 in regulation 90K of the Contributions Regulations, so as to apply section 108 of the Finance Act 2009 to surcharges under regulation 90K for electronic payments made late. That section provides for the suspension of penalties during the currency of a deferred payment agreement.

Regulations 4 and 5 amend and clarify the definitions contained in regulation 90M (specified information and specified payments) of the Contribution Regulations.

Regulation 6 amends paragraph (1) of regulation 90N (mandatory use of electronic communications) to provide that where an employer is required to deliver a relevant annual return by an approved method of electronic communications to Her Majesty’s Revenue and Customs under regulation 205 (mandatory use of electronic communication for delivering relevant annual returns) of the Income Tax (Pay As You Earn) Regulations 2003 (S.I. 2003/2682; the PAYE Regulations), the employer must deliver the return in relation to that tax year to an official computer system using an approved method of electronic communications. Regulation 6 also makes consequential amendments in respect of recent amendments made to the PAYE Regulations by the Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2009 (S.I. 2009/2029; “the PAYE Regulations”.)

Regulation 7 makes consequential amendments to regulations 90O (standards of accuracy and completeness) of the Contributions Regulations required because of the changes made to regulation 90M.

Regulation 8 amends paragraphs (1) and (2) of regulation 90P (penalties and appeals), substitutes Table 2 and inserts a new paragraph (2A) and a Table 3, to set out the amount of penalty which is payable when the employer fails to deliver the return or any part of it. The amount depends on the number of employees in respect of whom particulars should have been included in the return. It also amends paragraph (3) to provide that an employer is not liable to a penalty if the employer had been subject to a penalty for failing to comply with regulation 205 of the PAYE Regulations (mandatory use of electronic communication for delivering relevant annual returns) in relation to the same year.

These Regulations also make minor corrections.

A full impact Assessment has not been produced in relation to regulation 3 of this instrument as no impact on the private or voluntary sectors is foreseen.

A full Impact Assessment of the effect that regulations 4 to 8 of this instrument will have on the costs of business and the voluntary sector is available on the HMRC website and is annexed to the Explanatory Memorandum which is available alongside the instrument on the OPSI website.