Statute of limitation

Several employers had taken advantage of schemes in the 1990s mitigating their liability to employers’ National Insurance by saying that the payments were payments in kind.

HMRC determined that contributions were due the payments and the employers appealed. The department’s claims were subject to the Limitation Act 1980 s 9 limiting recovery to six years.

Realising that the six year limit was likely to expire before the case finished HMRC devised a way of keeping the years in date. They asked the employers to pay £1 on account of the National Insurance claim to be accompanied by an express denial of liability.

Doubt was cast on the effectiveness of the plan so HMRC relied on the written exchanges between themselves and the employers to prevent the latter from relying on s 9.

The substantive appeals were found in favour of...