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Q: National Insurance numbers, P14s and P46s – can you provide some clarity?
A: The Social Security Contributions and Benefits Act 1992 (Schedule 1, paragraph 7A) provides for Regulations to be made that would require employers to be penalised for failing to provide information or for providing incorrect information on a 'contributions return,' where that is done fraudulently or negligently. An article in the Inland Revenue's Tax Bulletin 46, published in April 2000, explained that this provision was intended to address the problem of unacceptably high levels of inaccuracy on P14s, in particular the omission of many National Insurance numbers.
No regulations have yet been made under these provisions that affect P14 returns. Employers can be penalised for filing 'late, fraudulent or negligent' returns, but not if information is omitted or inaccurate but the National Insurance Contributions (NICs) paid for the year are correct. Therefore, if an employer submits P14s that do not show employees permanent NI numbers, the employer cannot be penalised.
With the introduction of electronic filing of P14s, the Inland Revenue has produced Quality Standards that define precisely what is or is not acceptable on a P14. If an employer does not know an employee's NI number, a temporary number (i.e. one starting with 'TN') may not be used. Instead, the NI number field must be left blank and the employee's sex and date of birth entered. If these validation rules are not followed and one or more P14s have errors, all of the employee's submission will be rejected and, if the work involved in correcting the returns means that the employer misses the May 19 filing deadline, the employer may incur late filing penalties. However, no penalties can be applied if some P14s do not show NI numbers.
The Tax Bulletin article confirms the Inland Revenue's intention to handle the causes of missing and inaccurate NI numbers through education rather than penalties. Even if Regulations were made in the future, the Revenue's commitment is that breaches would be handled by educational visits to offending employers to resolve the difficulty before any penalties were imposed.
Employers are, nevertheless, expected to hold permanent NI numbers for all employees and to quote them on all tax and NI forms and correspondence. Temporary NI numbers should not be shown on any paper or electronic returns. The Revenue has put procedures in place to help employers trace employee's permanent NI numbers and these are set out in Revenue booklet E13, on pages 24 and 25. There are two ways of tracing missing NI numbers:
- if form P46 is sent to the tax office and it does not show an NI number, the second copy is forwarded to the National Insurance Contributions Office(NICO)
- otherwise, a CA6855 National Insurance Number Trace can be completed and sent direct to the NICO. The form allows for several numbers to be requested. Alternatively, if many NI numbers need tracing, a schedule may be sent instead that contains the same details as the CA6855.
The NICO traces the NI number(s) and notifies the employer on form CA6856.
However, as reported in an item in the newsletter of the Institute of Payroll and Pensions Management, the Inland Revenue has changed the format of form P46 so that it is now a single-part form. It no longer has a page for sending to the NICO. As a result, the P46 method of tracing NI numbers no longer exists. The only way of tracing NI numbers now is by submitting the CA6855 number trace form or an equivalent schedule.
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