6. After regulation 87 insert—
87A.—(1) A person (P) to whom paragraph (2) applies shall immediately notify the relevant date to HMRC in writing or by such means of electronic communications as may be approved.
(2) This paragraph applies where P on or after 6th April 2009—
(a)becomes, or ceases to be, liable to pay a Class 2 contribution;
(b)becomes, or ceases to be, entitled to pay a Class 2 contribution although not liable to do so; or
(c)is entitled to pay a Class 3 contribution and wishes either to do so or to cease doing so.
(3) In paragraph (1) “the relevant date” means—
(a)in relation to a person to whom paragraph (2)(a) applies, the date on which P commences or ceases to be a self-employed earner;
(b)in relation to a person to whom paragraph (2)(b) or (c) applies, the date on which P wishes to commence or cease paying either Class 2 or Class 3 contributions, as the case may be.
(4) P is to be treated as having immediately notified HMRC in accordance with paragraph (1) if P has notified HMRC within such further time, if any, as HMRC may allow.
87B.—(1) A penalty is payable by P where—
(a)P becomes liable to pay a Class 2 contribution;
(b)P fails to comply with the requirement to notify in accordance with regulation 87A(1); and
(c)notification has not been made by 31st January following the end of the year(1) in which P became liable to pay a Class 2 contribution.
(2) A failure by P to comply with the requirement to notify is—
(a)“deliberate and concealed” if the failure is deliberate and P makes arrangements to conceal the situation giving rise to the requirement, and
(b)“deliberate but not concealed” if the failure is deliberate but P does not make arrangements to conceal the situation giving rise to the requirement.
(3) The penalty payable under paragraph (1) is—
(a)for a deliberate and concealed failure to comply with the requirement to notify, 100% of the lost contributions,
(b)for a deliberate but not concealed failure to comply with the requirement, 70% of the lost contributions, and
(c)for any other case, 30% of the lost contributions.
(4) “The lost contributions” are the amount of Class 2 contributions which P is liable to pay—
(a)beginning on the date on which P becomes liable to pay a Class 2 contribution, and
(b)ending on the 31st January preceding the day on which HMRC received notification of, or otherwise became fully aware of P’s liability to pay Class 2 contributions.
(5) When calculating the amount of “the lost contributions” no account is to be taken of any Class 2 contribution—
(a)that is unpaid after the end of the sixth year following the year in which liability for that contribution arose, or
(b)in respect of which P’s earnings meet the conditions set out in regulation 45(1) for the purposes of section 11(4) of the Act(2) (exception from liability for Class 2 contributions on account of small earnings).
(6) Liability to a penalty under paragraph (1) does not arise in relation to a failure to comply with the requirement to notify which is not deliberate if P satisfies HMRC or (on appeal) the tribunal that there is a reasonable excuse for the failure.
(7) For the purposes of paragraph (6)—
(a)an insufficiency of funds is not a reasonable excuse unless attributable to events outside P’s control,
(b)where P relies on any other person to notify HMRC, that is not a reasonable excuse unless P took reasonable care to avoid the failure,
(c)where P had a reasonable excuse but the excuse has ceased, P is to be treated as having continued to have that excuse if P notifies without unreasonable delay after the excuse ceased.
(8) For the purposes of this regulation, the reference to a failure by P includes a failure by a person who acts on P’s behalf; but P is not liable to a penalty in respect of a failure by P’s agent where P satisfies HMRC or (on appeal) the tribunal that P took reasonable care to avoid the failure.
87C.—(1) Regulation 87D makes provision for the reduction of a penalty where P discloses a failure to comply with the requirement to notify.
(2) P discloses a failure to comply with the requirement to notify by—
(a)telling HMRC about it,
(b)giving HMRC reasonable help in quantifying the contributions unpaid by reason of it, and
(c)allowing HMRC access to records for the purpose of checking the amount of contributions so unpaid.
(3) Disclosure of a failure to comply with the requirement to notify—
(a)is “unprompted” if made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the failure to comply with the requirement to notify, and
(b)otherwise, is “prompted”.
(4) In relation to disclosure “quality” includes timing, nature and extent.
87D.—(1) Where P, who would otherwise be liable to a 100% penalty has made an unprompted disclosure, HMRC shall reduce the 100% to a percentage not below 30%, which reflects the quality of the disclosure.
(2) Where P, who would otherwise be liable to a 100% penalty has made a prompted disclosure, HMRC shall reduce the 100% to a percentage, not below 50%, which reflects the quality of the disclosure.
(3) Where P, who would otherwise be liable to a 70% penalty has made an unprompted disclosure, HMRC shall reduce the 70% to a percentage, not below 20%, which reflects the quality of the disclosure.
(4) Where P, who would otherwise be liable to a 70% penalty has made a prompted disclosure, HMRC shall reduce the 70% to a percentage not below 35%, which reflects the quality of the disclosure.
(5) Where P, who would otherwise be liable to a 30% penalty has made an unprompted disclosure, HMRC shall reduce the 30%—
(a)if HMRC become aware of the failure to notify less than 12 months after 31st January following the end of the year during which a person became liable to pay a Class 2 contribution, to a percentage (which may be 0%), or
(b)in any other case, to a percentage not below 10%,
which reflects the quality of the disclosure.
(6) Where P, who would otherwise be liable to a 30% penalty has made a prompted disclosure, HMRC shall reduce the 30%—
(a)if HMRC become aware of the failure to notify less than 12 months after the 31st January following the end of the year during which a person became liable to pay a Class 2 contribution, to a percentage not below 10%, or
(b)in any other case, to a percentage not below 20%,
which reflects the quality of the disclosure.
87E.—(1) If HMRC think it right because of special circumstances, they may reduce a penalty under regulation 87B(1).
(2) In paragraph (1) “special circumstances” does not include P’s ability to pay.
(3) In paragraph (1) the reference to reducing a penalty includes a reference to—
(a)staying a penalty, and
(b)agreeing a compromise in relation to proceedings for a penalty.
87F.—(1) Where P becomes liable for a penalty in accordance with regulation 87B(1) an officer of Revenue and Customs(3) shall—
(a)make a decision in accordance with section 8(1)(k)(ii) of the Transfer Act (4);
(b)notify P; and
(c)state in the notice of decision the amount of the penalty imposed and the period to which it relates.
(2) The penalty referred to in regulation 87B(1)—
(a)must be paid before the end of the period of 30 days beginning with the date of the issue of the notice of decision; and
(b)shall be recoverable as if it were a Class 2 contribution due and payable.
(3) A notice of decision must be issued before the end of the period of 12 months beginning with—
(a)where there has been a decision that P was liable to pay Class 2 contributions and a determination of the amount P was or is liable to pay, the end of the appeal period; or
(b)if there is no such decision, the date on which the contributions unpaid by reason of the failure to notify are finally determined.
(4) In paragraph (3)(a) “appeal period” means the period during which—
(a)an appeal could be brought, or
(b)an appeal that has been brought has not been determined or withdrawn.
(5) A notice of decision under paragraph (1), may be combined with an assessment issued in accordance with paragraph 16 of Schedule 41 to the Finance Act 2008(5).
87G. P is not liable to a penalty under regulation 87B(1) in respect of a failure or action in respect of which P has been convicted of an offence.”.
Regulation 1(2) of the Social Security (Contributions) Regulations 2001 defines “year” as meaning “tax year”.
Regulation 1(2) of the Social Security (Contributions) Regulations 2001 provides that “the Act” means the Social Security and Contributions and Benefits Act 1992.
Section 7 of the Commissioners for Revenue and Customs Act 2005 (c. 11) provides that a function conferred on an Officer of the Board of Inland Revenue vests in an officer of Revenue and Customs.
Regulation 1 of the Social Security (Contributions) Regulations 2001 provides that the Transfer Act means the Social Security Contributions (Transfer of Functions, etc) Act 1999; regulation 156 of those Regulations provides that a provision of an enactment which applies only to Great Britain shall be construed so far as necessary as including a reference to the corresponding enactment applying in Northern Ireland.