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Chapter NIM25031

Document Cited authorities 3 Cited in Related
Vincent
Published date11 April 2016
Record NumberNIM25031
Regulation 50(2)(a) Social Security (Contributions) Regulations 2001

NIM25030 explains that the time limits for the payment of Class 3 NICs may be extended when the two tests set out in regulation 50 are satisfied. The first test is that failure to pay the Class 3 NICs within the time limits was due to the contributor’s ignorance or error.

There is no legal definition of ignorance or error so the words must be given their normal meaning.

Various dictionaries define:

  • “ignorance “ as meaning a lack of knowledge or unawareness of something.
  • “error” as meaning a blunder or mistake.

The meanings of ignorance and error were considered by the High Court in Revenue and Customs Commissioners v Thompson [2007] STC 240. The issue before the (then) General Commissioners was whether the (then) Inland Revenue was correct in deciding, for the purposes of regulation 6 of the of the Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations 2001, that Mr Thompson’s failure to pay Class 2 (self-employed) NICs during the period from 1972 to 1983 within the prescribed times was:

  • attributable to ignorance or error on his part
  • which was due to a failure on his part to exercise due care and diligence.

Although the case was about regulation 6 and not regulation 50(2)(b), the two tests in the above bullets are the same as those in regulation 50(2)(a).

The Inland Revenue accepted - wrongly - that Mr Thompson’s failure to pay was attributable to his ignorance or error. Having accepted this however, it considered this ignorance or error to be attributable to his failure to exercise due care and diligence. Allowing Mr Thompson’s appeal, the General Commissioners disagreed and found that his failure to pay timeously was not due to his failure to exercise due care and diligence.

On appeal, the High Court allowed the Inland Revenue’s appeal. Although it was not necessary for him to consider whether there was ignorance or error - because the Inland Revenue had accepted there was - Mr Justice Patten said that, on the material that appears to have been before the Inland Revenue and the General Commissioners,,”…it is by no means clear that Mr Thompson did satisfy the first of the two sets...

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