National Insurance Contributions Act 2015
2015 CHAPTER 5
Commentary on Sections
Section 6: Categorisation of earners etc: anti-avoidance
149.Subsection (1) inserts a new regulation 5A (anti-avoidance) after regulation 5 of SS(CE)R 1978.
150.Paragraph (1) of new regulation 5A provides that paragraph 2 applies if 3 conditions are met:
a person (the earner) holds an employment in which they personally provide services to another person who is resident or has a place of business or is present in Great Britain.
a third person (therefore not the earner or the person having a service provided to them) enters into relevant avoidance arrangements (as defined in paragraph (3)), and
but for paragraph (2), the earner would not be or be treated as being within the category of an employed earner in regards to their employment.
151.Paragraph (2) provides that where all the condition in paragraph (1) are met the earner is to be treated as an employed earner in regards to their employment.
152.Paragraph (3) provides a definition for “relevant avoidance arrangements” used in paragraph 1(b).
153.Paragraph (4) provides that paragraph (5) applies if both of the following conditions are met:
a person enters into arrangements the main purpose, or one of the main purposes, of which is to ensure that the person is not treated as the secondary Class 1 contributor (commonly referred to as the employer) for payments of earnings to or for the benefit of the employed earner (commonly referred to as the employee or worker) in relation to an employment, and
in the absence of paragraph (5) no person who is resident or present or has a place of business in Great Britain would (i) be the secondary Class 1 contributor (commonly referred to as the employer) in respect of these payments or (ii) be treated as the secondary Class 1 contributor under provisions of SS(CE)R 1978 other than the provisions that provide for a person who has provided fraudulent documents to be treated as the secondary Class 1 contributor.
154.Paragraph (5) provides that if the conditions in paragraph (4) are satisfied and the person who entered into the arrangements described there is resident or present or has a place of business in the Great Britain, they are to be treated as the secondary Class 1 contributor in respect of payments of earnings to or for the benefit of the employed earner.
155.Paragraph (6) provides a definition for “relevant provision” used in paragraph (4)(a). The definition is divided into:
provisions of Schedule 3 to SS(CE)R 1978 (with the exception of those that cause a person to be treated as the secondary Class contributor where they provided fraudulent documents) that apply where the deemed secondary contributor would be based in Great Britain, and
the provisions of Schedule 3 to SS(CE)R 1978 that apply where either the employer or certain intermediaries are based outside the UK.
156.Paragraph (7) provides a definition of “arrangements” for the purposes of new regulation 5A.
157.Subsection (2) of section 6 makes corresponding provision for Northern Ireland.
158.Subsection (3) inserts a new subsections (2ZA) and (2ZB) after subsection (2) of section 2 of SSCBA 1992 (categories of earner).
159.New subsection (2ZA) provides that regulations under section 2(2)(b) of SSCBA 1992 may provide for a person to be treated as falling within a category of earner in relation to an employment where arrangements have been entered into the main purpose, or one of the main purposes, of which is to secure that the person is not treated under regulations under that section as being within that category of earner in relation to that employment, or that another person is not treated as the secondary contributor in relation to that employment.
160.New subsection (2ZB) provides a definition of “arrangements” used in subsection (2ZA).
161.Subsection (4) inserts new subsections (2A) and (2B) after subsection (2) of section 7 of SSCBA 1992 (“secondary contributor”).
162.New subsection (2A) provides that regulations under subsection (2) may provide that a person is the secondary contributor in relation to earnings paid to or for the benefit of the earner where arrangements have been entered into the main purpose, or one of the main purposes, of which is to secure that the person is not treated as the secondary contributor.
163.New subsection (2B) provides a definition of “arrangements” used in subsection (2A).
164.Subsections (5) and (6) of section 6 make provision for Northern Ireland corresponding to that made for Great Britain by subsections (3) and (4).
165.Subsection (7) provides that subsections (1) and (2) are to be treated as having come into force for purposes of inserting regulation 5A(1) to (5), (6)(a) and (7) on 6 April 2014 and for the purposes of inserting 5A(6)(b) on the day the Act is passed.
166.Subsection (8) provides that paragraphs (4) and (5) of regulation 5A (inserted by subsections (1) and (2)) have effect in relation to arrangements entered into on or after 6 April 2014 where the main purpose or one of the main purposes is to ensure that a person is not treated under a provision mentioned in paragraph (6)(b) as a secondary Class 1 contributor (commonly referred to as employer).
167.Subsection (9) provides that where payments of earnings are made as a result of arrangements mentioned in subsection (8), regulation 5A(5) only applies to the payments of earnings that are made on or after the day on which the Act is passed.
168.Subsection (10) provides that references to regulation 5A in subsections (7) to (9) refer to that regulation inserted by (a) subsection (1) into SS(CE)R 1978 and (b) subsection (2) into the Social Security (Categorisation of Earners) Regulations (Northern Ireland) 1978 (S.R. (NI) 1978 No. 401).
169.Subsection (11) provides that the changes made by subsections (1) and (2) do not affect powers to make regulations amending or revoking the provision inserted.
- Previous
- Explanatory Notes Table of contents
- Next
