PART 1 Preliminary

Citation, commencement and application

1. —(1) These Regulations may be cited as the Social Security Contributions (Amendment No. 4) Regulations 2010.

(2) These Regulations shall come into force on 6th April 2010 immediately after the coming into force of the Finance Act 2009, Schedule 56 (Appointed Day and Consequential Provisions) Order 2010( 4 ) and the Income Tax (Pay As You Earn) (Amendment) Regulations 2010( 5 ).

(3) Regulations 3, 4, 5(a) and (c), 6, 7, 8(1) and 9(b) shall apply only in relation to the tax year 2010-11 and subsequent tax years.

(4) Regulations 5(b), 8(2) and 9(a) shall apply only in relation to the tax year 2011-12 and subsequent tax years.

Amendment of the Social Security (Contributions) Regulations 2001

2.The Social Security (Contributions) Regulations 2001( 6 ) are amended as follows.

PART 2 Collection of Class 1, 1A and 1B contributions: penalties

Penalties for failure to make payments of Class 1, 1A and 1B contributions on time

3. After regulation 67 insert—

“ Penalty for failure to make payments on time: Class 1 contributions

67A. Schedule 56 to the Finance Act 2009 ( 7 ) (“Schedule 56 FA 2009”) (penalty for failure to make payments on time) shall apply in relation to the late payment of Class 1 contributions, as if—

(a) the Class 1 contributions were an amount of tax falling within item 2 of the Table in paragraph 1 of Schedule 56 FA 2009 (“the Table”),

(b) references to the PAYE Regulations were references to these Regulations, and

(c) references to “an assessment or determination” in item 24 of the Table were references to a decision made under section 8(1)(c) of the Social Security Contributions (Transfer of Functions, etc ) Act 1999 ( 8 ) .

Penalty for failure to make payments on time: Class 1A and Class 1B contributions

67B. Schedule 56 to the Finance Act 2009(“Schedule 56 FA 2009”) shall apply in relation to the late payment of Class 1A and Class 1B contributions, as if—

(a) the Class 1A and Class 1B contributions were an amount of tax falling within item 3 of the table in paragraph 1 of Schedule 56 FA 2009,

(b) in the case of Class 1B contributions, the reference to “amount shown in return under section 254(1) of FA 2004” was a reference to the amount payable under section 10A of the Act ( 9 ) , and

(c) the reference to section 254(5) of the Finance Act 2004 ( 10 ) was a reference to these Regulations. ” .

Penalties for errors in Class 1A returns and decisions

4. For regulation 81(1) (penalties for failure to make returns and incorrect returns) substitute—

“ (1)Schedule 24 to the Finance Act 2007 ( 11 ) (penalties for errors) applies to the return of contributions referred to in regulation 80(1) (return by employer) as if—

(a) Class 1A contributions were a tax; and

(b) that tax and the return of contributions in relation to it were listed in the table in paragraph 1 of that Schedule.

(1A) That Schedule also applies to decisions made under section 8(1)(c) of the Social Security Contributions (Transfer of Functions, etc) Act 1999 regarding Class 1A contributions and for that purpose a reference in the Schedule to an assessment is to be treated as if it included a reference to a decision and “under-assessment” shall be construed accordingly.

(1B) Paragraphs (6) to (9) do not apply in relation to penalties under paragraphs (1) and (1A). ” .

PART 3 Electronic communications

Mandatory electronic payment

5. In regulation 90H (mandatory electronic payment)—

(a) for paragraph (1) substitute —

“ (1) An employer who is a large employer within the meaning of regulation 191 (large and medium sized employers) of the PAYE Regulations must pay the specified payment using an approved method of electronic communications ” ,

(b) in the paragraph (1) inserted by paragraph (a) of this regulation, for the words “191 (large and medium sized employers)” substitute “198A (large employers)”, and

(c) after paragraph (4) insert—

“ (5) A specified payment is not treated as received in full by HMRC on or before the date by which that specified payment is required in accordance with paragraph 10 or paragraph 11 of Schedule 4 unless it is made in a manner which secures (in a case where the specified payment is made otherwise than in cash) that, on or before that date, all transactions can be completed which need to be completed before the whole amount of the specified payment becomes available to the Commissioners for Her Majesty’s Revenue and Customs. ” .

Default and surcharges

6. The following are omitted—

(a) regulation 90I (employer in default if specified payment not received by applicable due date),

(b) regulation 90J (default notice and appeal),

(c) regulation 90K (default surcharge), and

(d) regulation 90L (surcharge notice and appeal).

Paragraph 22 return and specified payments

7. In regulation 90M (paragraph 22 return and specified payments), for the definition of “specified payments” substitute—

“ “specified payments” means payments of earnings-related contributions under paragraph 10 (payments made monthly by employer) or paragraph 11 (payments made quarterly by employer) of Schedule 4. ” .

Mandatory use of electronic communications

8. —(1) For regulation 90N (mandatory use of electronic communications) substitute the following—

“ Mandatory use of electronic communications

90N. —(1) An employer (as to which see regulation 90NA) must deliver a paragraph 22 return to an official computer system using an approved method of electronic communications .

(2) If the Commissioners for Her Majesty’s Revenue and Customs have made a direction under regulation 205B(1) of the PAYE Regulations requiring a particular method of electronic communication to be used in the case of an employer, the employer must use that method.

(3) This regulation does not apply to a return in respect of retrospective earnings where those earnings relate to a tax year which is closed (see paragraph 1(2) of Schedule 4) at the time the relevant retrospective contributions regulations come into force.

Employers

90NA. —(1) For the purposes of regulation 90N, the following shall not be regarded as employers—

(a) an individual who is a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications,

(b) a partnership, if all the partners fall within sub-paragraph (a),

(c) a company, if all the directors and company secretary fall within sub-paragraph (a),

(d) an employer who is authorised by HMRC to deduct tax from relevant payments made to employees in accordance with regulation 34 of the PAYE Regulations (simplified deduction scheme for personal employees) and who has not received an incentive payment, and

(e) a care and support employer.

(2) In paragraph (1)(c), “company” means a body corporate or unincorporated association but does not include a partnership.

(3) In paragraph (1)(e), a “care and support employer” means an individual (“the employer”) who employs a person to provide domestic or personal services at or from the employer’s home where—

(a) the services are provided to the employer or a member of the employer’s family,

(b) the recipient of the services has a physical or mental disability, or is elderly or infirm,

(c) the employer has not received an incentive payment in respect of the last 3 tax years, and

(d) it is the employer who delivers the paragraph 22 return (and not some other person on the employer’s behalf).

(4) In this regulation “incentive payment” means an incentive payment received under the Income Tax (Incentive Payments for Voluntary Electronic Communication of PAYE Returns) Regulations 2003 ( 12 ) . ” .

(2) In paragraph (2) of regulation 90N inserted by paragraph (1) for “205B(1)” substitute “205(2)”.

Penalties and appeals

9. In regulation 90P (penalties and appeals)—

(a) for paragraph (3)(b) substitute—

“ (b) been subject to a penalty for failing to deliver the return and accompanying information required by regulation 73 of the PAYE Regulations (annual return of relevant payments liable to deduction of tax (Forms P35 and P14)) in accordance with regulation 205 (mandatory use of electronic communication) of those Regulations. ” , and

(b) after paragraph 4(a) insert—

“ (aa) the employer is not regarded as an employer for the purposes of regulation 90N, ” .

PART 4 Deduction of earnings-related contributions

Certificate of contributions paid

10. In paragraph 9(2) of Schedule 4 (deduction of earnings related contributions), omit the words “or the employee was not in the employer’s employment on the last day of the tax year”.