First-tier Tribunal (Tax)

[2010] UKFTT 186

TC00490                         

   Appeal number TC/2009/10850

Appellant self employed married woman not liable to make Class 2 National Insurance Contributions – Whether such contributions made between 1970 and 1976 – Onus on Appellant to establish contributions made –  Appeal dismissed

FIRST-TIER TRIBUNAL

TAX

                                      MRS PATRICIA REGISTER                     Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                             REVENUE AND CUSTOMS (NIC)          Respondents

TRIBUNAL:              John Brooks (Judge)

                                    Mrs C Farquharson (Member)

Sitting in public in Colchester on 15 March 2010

The Appellant in person

Peter Rooney and Alan Greenshields of HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.     This is an appeal by Mrs Patricia Register against an amended decision made by an officer of H M Revenue and Customs (“HMRC”) under s 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (“SSCTFA”) on 3 December 2008 that, from 7 October 1967 to 5 April 1976, she was not liable to pay National Insurance Contributions (“NIC”) for periods of self employment.

2.     Mrs Register, who became entitled to receive a state pension in November 2004, accepts that she was not liable to pay NIC during this period but states that as she was self-employed throughout she chose to do so.

3.     However, HMRC contend that their records show that Mrs Register did not make any payments of NIC between 1970 and 1976 with the effect that she is only entitled to receive 95% of the state retirement pension as she has paid NIC for 37 years and not the 39 years required to receive a full pension.

4.     Therefore the issue for us to determine is whether or not Mrs Register paid Class 2 NIC between 1970 and 1976.

Facts  

5.     Mrs Register commenced self-employment in 1961 running a boarding kennels and cattery from the home of her parents. Following her first marriage in 1967 she moved the business to her present address where it continues. She kept working in the business until the birth of her first child in October 1969, when she claimed and received maternity benefit. She resumed her work in the business in December 1969 and has continued to do so without a break despite the birth of her second child in November 1971, her divorce in November 1976 and second marriage in 1981.

Law

6.     Under Regulation 3(1)(a) of the National Insurance (Married Women) Regulations 1973 a married woman was “excepted from liability to pay contributions in respect of any period which she is married and is a self-employed person unless, during that period she elects otherwise in accordance with the provisions of this regulation.”

7.     We understand from Mr Rooney that under the previous incarnation of this regulation (which we have not seen) a married woman was excepted from liability to pay NIC unless she elected otherwise and that there was “ministerial discretion” regarding the election.

8.     Mr Greenshields explained that the effect of the “ministerial discretion” in the regulation was that a woman who had been making Class 2 NIC as a self-employed person before her marriage was treated as having made an election to continue making such payments after she married but if she ceased to be in insurable employment (or self-employment), as would be the case if she received maternity benefit, an election was necessary to enable her to make Class 2 NIC on her return to self-employment.

9.     The exception from NIC for married women ceased in 1975 when the National Insurance scheme was reconstructed. However, it was possible for a married woman who was self-employed to elect not to pay NIC. A married woman who was excepted under Regulation 3(1)(a) National Insurance (Married Women) Regulations 1973 was treated as having made an election not to pay NIC by virtue of Regulation 100 of the Social Security (Contributions) Regulations 1975.

Contentions of the Parties

10.  Mrs Register accepts that the HMRC have no record of payments of NIC from her between 1970 and 1976 but considers this to be the result of human error.

11.  She told us that as she had been self-employed between 1970 to 1976 she had made payments of Class 2 NIC by buying NIC stamps at the post office and sticking these to her contribution card. At end of the year she took the card to the local office of the Department of Health and Social Security (the Government department then responsible) and exchanged it for a new card for which she bought NIC and affixed stamps for the subsequent year.

12.  As no receipt was given or copy of the contribution card taken Mrs Register explained the difficulty she had in obtaining any documentary evidence that she had paid NIC throughout this period. However, she was able to refer us to a letter dated 28 May 1976 which she had received from her accountant, L H Benton & Co.

13.  This letter enclosed her Profit and Loss Account for the year ended 31 March 1976 together with Capital Allowance computations for 1976-77. It is clear from the letter that her accountant was advising Mrs Register in the light of her pending divorce, he writes: —

In view of the fact that your last National Insurance Contributions were at the full rate, I think you should apply for reduced liability (in the case of a self employed married woman, this really means an exemption from liability to the weekly contribution of £2.01). Accordingly I am enclosing a form C.F.9 which I have completed as far as possible and I would suggest that you complete items 4, 5, 7 and 11 before signing the declaration and then taking the completed form to your local office of the Department of Health and Social Security.  

14.  Mrs Register explained that she followed the advice of her accountant and submits that the letter is documentary evidence that she paid Class 2 NIC at the full rate otherwise why would her accountant have advised her to elect for the exception to apply in 1976. However, she has no recollection of making an election, or being advised to do so, to be able to continue to make payment of Class 2 NIC following her return to self-employment after the birth of her son in 1969.

15.  Mr Greenshields, for HMRC, referred us to Mrs Register’s NIC record.

16.  This shows that she had paid NIC from 1959-60 until 1969-70 and that following her marriage in 1967 she was treated as having made an election to continue to pay Class 2 NIC as a self-employed married woman.

17.  The record also shows that Mrs Register received Maternity Benefit at the time of the birth of her son in 1969 and would have therefore ceased insurable employment to be able to receive the benefit and be credited with 17 weeks of NIC.

18.  A note on her records for the year “74/76” (sic) indicates that Mrs Register elected, as a married women, not to pay NIC from 6 April 1976 even though the exception from payment of NIC had applied from 6 April 1975.

19.  Although Mr Greenshields suggested that the reference to “76” was the result of very poor handwriting it would seem that this was due to the effect of the implementation of Regulation 100 of the Social Security (Contributions) Regulations 1975. 

20.  There is no further record of contributions until after her divorce in 1976 which Mr Rooney, for HMRC, submitted was because Mrs Register had not paid NIC during this period.

21.  It was explained that before it was computerised the NIC record was created centrally in Newcastle on Tyne using the information from stamped contribution cards that had been sent from the local office after being returned at the end of the year.

22.  It was contended that had Mrs Register paid NIC between 1970 and 1976 there would have been an enquiry as to why such payments had been made when Mrs Register was a married woman who had not elected to pay Class 2 NIC and to whom the exception from liability to pay applied.

23.  Mr Rooney submitted that Mrs Register’s NIC record was correct and it was extremely unlikely that the Department had lost her Class 2 card or made an error every year between 1970 through to 1976.

24.  As for the letter from Mrs Register’s accountant, Mr Rooney contended that as it did not refer to any year, its reference to her last NIC being at the “full rate” could be construed as meaning the last year she paid NIC and not the year in which the letter was written.

Decision

25.  In an appeal, such as this, against a decision under s 8 of SSCTFA, Regulation 10 of the Social Security Contributions (Decisions and Appeals) Regulations 1999 provides: —

If, on an appeal … it appears to the tribunal that the decision should be varied in a particular manner, the decision shall be varied in that manner, but otherwise shall stand good.

26.  The long established effect of such a provision is that the onus lies on the Appellant to satisfy the Tribunal upon sufficient evidence that the decision appealed against was erroneous (see T Haythornwaite & Sons v Kelly (H M Inspector of Taxes) (1927) 11 TC 657).

27.  Having carefully considered the evidence and the submissions of the parties we find that the evidence submitted by Mrs Register, who does not recall making, or being advised to make, an election to continue to be able to make Class 2 NIC following her return to self-employment after the birth of her son in 1969, is insufficient to show that the decision appealed against is erroneous or wrong.

28.  In the absence of sufficient evidence that the decision appealed against was erroneous it “shall stand good”.

29.  The appeal is therefore dismissed.

30.  We note that in August 2006 HMRC made an offer to Mrs Register to enable her to receive 98% of the full state retirement pension on payment of £63 and would hope that HMRC would now agree to allow her, should she wish, to avail herself of this opportunity.   

31.  The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules.   The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this Decision Notice.

JOHN BROOKS

TRIBUNAL JUDGE

RELEASE DATE: 26 April 2010