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With effect from 6 April 2012, the relevant provisions of the Social Security (Categorisation of Earners) Regulations 1978 were repealed to no longer apply to lecturers, teachers, instructors and those in a similar capacity.
Before the date, HMRC guidance may have led training providers, particularly in the vocational or recreational sectors, to apply the regulations incorrectly, with the effect that class 1 National Insurance (NI) may have been accounted for and paid in error.
The taxman will now consider claims for the refund of incorrectly paid contributions. Revenue & Customs Brief 28/12 explains who is likely to be affected and what they should do.
Three categories of training provider may be eligible:
- First aid training providers who were subject to a compliance intervention.
- Other vocational and recreational training providers who were subject to a compliance intervention.
- Any other first aid training or other vocational and recreational training providers not the subject of a compliance intervention but who wrote to the Revenue requesting a decision as to the NI category under which their trainers should be included.
Trainers who were engaged under self-employment contracts and who were subject to the regulations by their training provider can choose to not have errouneously paid primary contributions refunded and instead let them count instead towards contributory benefit entitlement as if they had been correctly paid.
If a successful refund claim is received from a training provider that meets the statutory criteria, HMRC will write to the affected individuals, asking them whether they want the contributions to be refunded.
This does not prevent the engager from seeking a refund of the wrongly paid secondary contributions where one is due, or the trainer notifying HMRC before pension age that they wish to apply for a refund.
Where trainers request to have class 1 contributions refunded, the Revenue will offset the contributions refundable against the class 2 and 4 NI correctly payable by virtue of the trainer’s self-employed status.
Refundable contributions will be set against outstanding tax debts before repayment.
Providers who believe they have eligible should write to the Employment Status Team, HMRC, PT (Product & Process), Area 1E 09, 100 Parliament Street, London SW1A 2HQ.
