First-tier Tribunal (Tax)

[2010] UKFTT 70 (TC)

                                                            TC00383

Appeal number TC/2009/10991

National Insurance Contributions – Class 2 self-employed – Whether Commissioners’ record correct – Appeal dismissed

FIRST-TIER TRIBUNAL

TAX CHAMBER

                                                MARTIN BREEN                               Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

REVENUE AND CUSTOMS (National Insurance)                                                                Respondents

                                                TRIBUNAL: MISS J C GORT (Judge)

                                                                        MR R LAW

Sitting in public in London on 21 December 2009

The Appellant in person

Mr Peter Rooney of HMRC, appeared on behalf of the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.        This is an appeal against a decision made on the 29 October 2008 that Mr Breen had paid national insurance contributions between 1975/1976 and 2005/2006 as set out in a schedule to the Commissioners’ decision.

2.         The grounds of appeal were that the decision had failed to take account of the circumstances of the case. In particular the Appellant contended that the Commissioners had wrongly calculated the contributions he had made in the following ways:

1.         Incomplete record-keeping between the relevant employment agency and employer contributions when changing employment.

2.         Discrepancy caused by lost, late or missing sickness credits.

3.         Lost insurance stamps.

4.         Lost, misplaced or unrecorded supplementary payments.

3.         At the hearing of the appeal Mr Breen produced a written statement setting out his case, and in addition produced a copy of his cash book for the year 1979 which showed that on 9 May he had issued a cheque in the sum of £50 to the Department of Health and Social Security (at the time the relevant department).

The Issue

4.         The decision was made under Section 8(1)(e) of the Social Security Contributions (Transfer of Functions Act) 1999.  The issue to be decided is whether the number of Class 2 (self-employed) National Insurance Contributions Mr Breen paid from 6 April 1975 to 1 February 2003 (the date he ceased to be self-employed) is correctly recorded by the Commissioners.  His National Insurance account does not show that he paid a Class 2 national insurance contribution for every week of his self-employment after 6 April 1975, and Mr Breen disputes the record after that date.  It is accepted by the Commissioners that he fully met his Class 2 liability before 6 April 1975.  It was also accepted by the Commissioners that from April 1996 to April 2001 Mr Breen had made voluntary contributions and from April 2001 he was entitled to automatic credits and there is therefore no dispute from April 1996 onwards.

The evidence

5.         In addition to the statement and the copy from his cash book produced at the hearing by Mr Breen, a bundle of documents was provided by the Commissioners, it being disputed by Mr Breen that that bundle properly contained all the relevant documents.  Mr Breen had to leave the hearing after completing his own evidence.  He made it clear that he was content for the matter to continue in his absence.  We heard evidence from a Mr Barry Quinn of HMRC who was an adjudicating officer in the Department of Work and Pensions.

6.         The principal matter relied on by Mr Breen in support of his allegations was the evidence contained in his cash book of his having paid a cheque of £50 in 1979 to the Department of Health and Social Securities which he believed was not recorded in the schedule, which showed no contributions being made in 1978/79.  He gave evidence to the effect that on several occasions during the relevant years he had had health problems and had not always been able to work.  He also was concerned because he felt he had not been made properly aware of the rules and regulations regarding his contributions, nor had he been properly reminded when he had not paid sufficient stamps in any one year.  Over the time in which Mr Breen had been contesting this issue with the Commissioners he had raised a variety of matters which are not within the jurisdiction of this Tribunal, and at the hearing he was reminded of his right to go to the adjudicator with those grievances.  We do not propose to list those matters as Mr Breen made it clear at the hearing that he was well aware what those matters were, and he was also aware that whatever the decision made by this Tribunal, it would make no difference to the amount of money he and his wife had to live on, the pension credits and the means test being such that any increase in his pension would be off-set by them.

7.         The background facts are that Mr Breen became self-employed in the 1971 contribution year and paid Class 2 national insurance contributions by stamping a stamp card.  From 1975 onwards the law relating to Class 2 contributions changed and the Commissioners’ record shows that there are years with missing or no Class 2 contribution payments which resulted in those years not qualifying for the purposes of his pension.

8.         After 6 April 1975 for a tax year to count towards basic state pension 50 national insurance contributions had to be paid and/or credited.  This situation pertained until 6 April 1978 from when 52 national insurance contributions had to be paid and/or credited in a tax year.  It appears that Mr Breen was not aware of this change; the notification of change was recorded in very small type on his contribution card which itself was coloured making it all the harder to read.  Evidence of this was given by Mr Quinn in the course of the hearing. Mr Breen having had to leave prior to the completion of Mr Quinn’s evidence, may not have been aware of this fact.

9.         Another fact of which Mr Breen may not have been aware was that it was the practice of the Commissioners, where there was a deficiency in a preceding year to allocate payment received the following year to the preceding year.  There was clear evidence before us that for each year where there was a deficiency, a deficiency notice would be issued, and in addition a ‘no card’ notice would be issued on those occasions where it was deemed necessary.  From the record it appears that in respect of the tax in 1975/76 a class 2 deficiency notice was issued, as it was in the tax year 1976/77.  For the tax year 1977/78 a class 2 ‘no card’ notice was issued.  A no card notice was also issued in respect of the tax year 1978/79 and all the succeeding relevant tax years.  The schedule shows that on 9 May 1979, the date of the payment of £50 recorded in Mr Breen’s bank book, there was a late paid contribution of £70 by him.  We had no explanation of the difference between these amounts as Mr Breen had left the hearing by the time this evidence was given to us.  In correspondence Mr Breen had claimed that he had not received any of the notices issued by the Commissioners.  Mr Breen was not present at the Tribunal to hear Mr Quinn’s evidence that the payment of £70 made by Mr Breen which he had assumed was in respect of the year 1978/79 had been applied to 1977/78 because there had been a deficiency in that year.  Up until 1983 a taxpayer had 2 years after the end of each tax year in which to make good any shortfall in contributions.  After 1983 the length of time was extended to 6 years.  It was accepted by Mr Quinn that on one of the schedules produced by the Commissioners (but not on the record) it is wrongly shown that for the year 1978-9 there was a stamped card. This was not in fact the case and the record itself was correct in that it showed contributions for that period as being ‘nil’, given the application of the payment of £70 to the earlier period.  Mr Quinn confirmed that at that time £70 represented 26 weekly contributions, and the schedule does indeed show 26 contributions in 1977/78 made by cash/cheque in addition to 16 contributions on the stamped card.

10.       With regard to Mr Breen’s evidence that he was ill for large parts of the relevant periods, Mr Quinn gave evidence that, had he claimed benefit for those periods, he would have been given a credit by the Department of Work and Pensions in respect of any complete week from Sunday to Saturday in which he was ill and unable to work.  We were informed by Mr Quinn that at up until 1993 it was a criminal offence not to affix a stamp to a card.  It would have been possible for the Commissioners to have taken either criminal or civil proceedings against Mr Breen.  However, if he were ill, then he had no liability to pay, and in such circumstances proceedings would not have been taken.

11.       It had been contended by Mr Breen that it was possible that the stamps had fallen off the cards or had in some other way been lost.  We had evidence that the cards were accorded the same security as any receipt of money, and as a further precaution it was written on the right hand side of any card on the day of receipt the number of stamps which were on that card, in case they should become loose later.  It was not accepted by the Commissioners that the stamps could have been lost in the way suggested by Mr Breen, and we do not find that this happened in Mr Breen’s case.

12.       Whilst we found Mr Breen’s confusion understandable in circumstances in which it appears that it may have been difficult for him to have fully understood the situation, nonetheless we can find no evidence of errors in the Commissioners’ schedule and therefore we announced at the conclusion of the hearing that we were dismissing Mr Breen’s appeal.

MISS J C GORT

TRIBUNAL JUDGE

RELEASE DATE: 22 January 2010