Social Security Act 1973

93 Priority of certain debts in bankruptcy, etc.

(1) Subject to and in accordance with Schedule 24 to this Act, the debts specified in subsection (2) of this section shall be included among those accorded priority under the relevant enactments specified in that Schedule (being enactments relating to personal insolvency, companies' winding-up and the remedies of debenture holders and chargees); and in subsection (2) below " the relevant event " has the meaning indicated by that Schedule.

(2) The debts referred to in subsection (1) above are—

(a) any sum owed on account of Class 1 contributions (primary or secondary) or Class 2 contributions payable in either case in the period of 12 months immediately preceding the date of the relevant event;

(b) any sum owed on account of an earner's contributions to an occupational pension scheme, or of primary reserve scheme contributions, being in either case contributions deducted from earnings paid in the period of 4 months immediately preceding the date of the relevant event, or otherwise due in respect of earnings paid or payable in that period;

(c) subject to subsection (4) below, any sum owed on account of an employer's contributions to a recognised occupational pension scheme in respect of recognised pensionable employment, and payable in the period of 12 months immediately preceding the date of the relevant event (the reference to an employer being construed in accordance with regulations made under section 51(5) of this Act);

(d) any sum owed on account of secondary reserve scheme contributions payable in the period of 12 months immediately preceding the date of the relevant event; and

(e) subject to subsection (5) below, any sum owed on account of a reserve scheme premium payable at any time before, or in consequence of, the occurrence of the relevant event.

(3) Any priority accorded by the enactments relating to personal insolvency which are specified in Schedule 24 to this Act to debts consisting of income tax assessed and unpaid shall be accorded, to the same extent and subject to the same limitations, to debts consisting of Class 4 contributions assessed and unpaid, so far as owed to the Inland Revenue and not to the Secretary of State or the Northern Ireland Ministry.

(4) Contributions falling within subsection (2)(c) above are those payable, in respect of earners in recognised pensionable employment by reference to the recognised scheme in question, towards the provision for those earners of the minimum benefits of the scheme; and insofar as contributions cannot from the terms of the scheme be identified as being so payable, the following shall apply—

(a) the amount of the debt having priority by virtue of that paragraph shall be deemed to be an amount equal to—

(i) 4 per cent, of the total reckonable earnings paid, in the period of 12 months referred to in that paragraph, to or for the benefit of non-contributing earners; or

(ii) 2.5 per cent, of the total reckonable earnings paid in that period to or for the benefit of contributing earners;

(b) the earnings to be taken into account under paragraph (a) above as reckonable earnings are those paid to or for the benefit of earners in recognised pensionable employment (by reference to the scheme) in the whole or any part of that period ; and

(c) for the purposes of the above paragraphs—

(i) " reckonable earnings " has the same meaning as in section 54(3) of this Act, and " paid " includes payable; and

(ii) earners are to be identified as contributing, or non-contributing, in relation to any service of theirs in recognised pensionable employment by reference to the scheme, according to whether or not in the period in question they were liable under the terms of the scheme to contribute (in respect of that service) towards the provision of the minimum benefits of the scheme.

(5) Where any such premium as is mentioned in subsection (2)(e) above is payable in respect of a period of service of more than 12 months (taking into account any previous linked qualifying service), the amount to be paid in priority under the enactments specified in Schedule 24 to this Act shall be limited to the amount of the premium which would have been payable if the service had been confined to the last 12 months taken into account in fixing the actual amount of the payment.

(6) Where—

(a) by virtue of subsection (1) above the whole or part of a reserve scheme premium is required to be paid in priority to other debts of the debtor or his estate; and

(b) the person liable for the payment would be entitled to recover the whole or part of any sum paid on account of it from another person either under section 79 of this Act or under any provision made by the relevant scheme for the purposes of that section,

then that other person shall be liable for any part of the premium for the time being unpaid ; but so that no person shall be liable by virtue of this subsection for an amount in excess of the sum which might thereunder be recovered from him if the premium had been paid in full by the person liable for it, after deducting from that sum any amount which has been or may be recovered from him in respect of any part of that payment paid otherwise than under this subsection.

(7) The payment under subsection (6) above of any amount in respect of a reserve scheme premium shall have the same effect upon the rights and liabilities of the person making it (other than his liabilities under that subsection) as if it had been a payment of that amount on account of the sum recoverable from him in respect of the premium as mentioned in subsection (6) (b).