United Kingdom Special Commissioners of Income Tax Decisions

 


Rose v Revenue & Customs [2006] UKSPC SPC00574 (20 September 2006)

SPC00574

National insurance contributions – contributions and credits before 1975-76 - accuracy of records maintained by Records Branch of National Insurance Contributions Office – credits and excusals from contributions during periods of education and training – entitlement to make late payment of excused contributions – power of HMRC to accept late payment of excused contributions – whether contributor in ignorance or error and failing to exercise due care and diligence

THE SPECIAL COMMISSIONERS

PHILIP LANGLEY ROSE Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents Special Commissioner: DR DAVID WILLIAMS

Sitting in public in Birmingham on 20 September 2006

The Appellant in person

Akash Nawbatt counsel, instructed by the Acting Solicitor for HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2006 DECISION
1. This appeal involves an issue of concern to many National Insurance ("NI") contributors who remained in education or training after they were 18. The appellant questions his personal NI contribution record during the period while he was undergoing education and training before he started full time work. He challenges the accuracy of the NI contribution records maintained by the respondents. He also questions the refusal of the respondents to allow him to pay additional NI contributions for periods during which the record showed that he neither paid, nor was credited with, NI contributions.

The parties

2. Dr Rose, the appellant, reached state pensionable age (that is, he was 65) on 25 September 2000. As he made clear, the purpose of this appeal is to secure a full state retirement pension. He presented his case, and gave evidence under oath in support, politely but firmly. I accept his frank admission of his limited recollections from the years in question and the absence of any personal records to assist those recollections. He freely agreed that he remembers little of the events of up to five decades ago to which his appeal relates. He therefore gave little direct evidence about his position. But he was concerned about the content and reliability of the NI contribution records made at that time. He did not understand the records. And he wanted to know what those records showed he had done and what he had been asked to do. He also wanted to know why the respondents refused to let him pay extra contributions when he asked to do so.
3. A few months before he was 65, Dr Rose was sent a pre-retirement estimate of his pension by (as he put it) "the pension agency (under various names!)". The pre-retirement estimate is issued as standard practice by what is currently the Pension Service of the Department for Work and Pensions ("DWP"). It is that service – in law acting for and in the name of the Secretary of State for Work and Pensions – that currently decides the level of pension entitlement of any claimant to the state retirement pension. Dr Rose objected when he was told that he would not receive a full state retirement pension. He was told that this was a contribution question and not a benefit question. It was therefore not a matter for DWP and the Pension Service but for HMRC and NICO.
4. I refer to the respondents as "HMRC". It is HMRC that collect NI contributions and maintain contribution records. HMRC currently maintain the contribution records for everyone who has paid or been credited with NI contributions at any time since 1948. Other government departments have previously performed that function. For the purposes of this decision "HMRC" also refers to the government department that at any particular time was responsible for those functions. HMRC maintains the official contribution records through the Records Branch of its National Insurance Contributions Office ("NICO"). At various times in the past NICO had other names, such as the Contributions Agency. For the purposes of this decision "NICO" also refers to all previous offices and agencies responsible for maintaining the official NI contribution records. That reflects the underlying reality that the central NI contributions records themselves have been maintained continuously in one national centre since 1948.

The issues under appeal

5. Dr Rose was in full time education for several years after he was 16 and before he started full time work. He undertook his two years of national service during that period. He had a full contribution record while in the Forces. But his contribution records shows that he received credits for part only of the period of education. It also shows that he paid no voluntary contributions at the time or since. If his contribution record is correct, Dr Rose is not entitled to a full state basic pension. When he learnt that, he offered to make good the deficiency. HMRC refused to accept any additional contributions. HMRC contend that it is too late for him to pay additional contributions. That is why he appealed.
6. Dr Rose is a highly qualified research scientist. In the best traditions of his science research training, Dr Rose questioned every aspect of the decisions about his pension. He questioned whether the records were correct and what they meant. He questioned why he was not asked to pay contributions he did not pay. This involves his entitlement to "credits" – credited contributions – for periods when someone does not work because of education after the age of 16. He questioned whether the records showed proper credits for those periods. When he was told that he still had a deficient NI contribution record, he offered to pay the extra contributions. HMRC refused to accept those contributions. He also questioned that. That is his right. HMRC responded fully to all his questions. He did not accept those answers.
7. I indicated to the parties at the start of the hearing that I was aware of the general issues in the appeal not only as a Special Commissioner but also in my other capacity as a Social Security Commissioner. Dr Rose's challenge to the accuracy of his NI contributions records is not unusual. And it raises points often of concern to pensioners in appeals to both tax tribunals and social security tribunals. Mr Nawbatt agreed, on instructions, that HMRC were happy that their evidence on the issue of the reliability of NI contribution records generally be recorded in this decision. In that context, I am grateful to Mr Greenshields for answering not only Dr Rose's questions but also my more general questions about NICO and the records. I accept his evidence in full as conscientiously given by someone exceptionally well placed to confirm the nature of, the methods behind, and the verification procedures for, the standard form of contribution record kept by NICO from the start of the National Insurance scheme until the major changes that took place in 1973.
8. I must deal with each of Dr Rose's specific questions. I list them as follows:

(a) what contributions did NICO record Dr Rose as having paid;

(b) whether that record was correct;

(c) whether he was properly credited with contributions; and

(d) whether he is entitled to pay any missing contributions.

Dr Rose also raised issues about the advice he had been given by, and statements made by, various officers of HMRC and DWP. I explained at the hearing that my jurisdiction is limited to dealing with questions of law and fact about these contribution and credit questions. I cannot comment on matters of administration that go beyond those questions and I therefore do not set those issues out here.

The law relating to pension entitlement and contribution conditions

9. The way in which contributions are taken into account and credits are awarded depends on the benefit for which they are recorded and awarded. I therefore set out briefly the social security context within which this appeal is to be decided. A state retirement pension for everyone under 80 consists of three elements:

basic pension,

additional (or earnings related) pension, and

graduated retirement benefit.

10. Entitlement is given by the Social Security Contributions and Benefits Act 1992 ("the 1992 Act"), sections 44 and 62. All three elements are contributory. And there are separate contribution conditions for entitlement to each element. There are also other conditions, the most obvious being age and the need to claim.
11. As Dr Rose discovered, responsibility for deciding on a state pension is formally divided between HMRC and the Secretary of State for Work and Pensions.

HMRC, through NICO, is responsible for collecting and recording contributions. It is also responsible for decisions about contributions and contribution liability. It passes that information and those decisions to the Secretary of State, operating through the Pension Service. The Secretary of State is responsible for deciding if a claimant meets all the other conditions for a pension and also how much pension someone gets. I set out the borderlines between the two government departments in a decision I took as a Social Security Commissioner and reported as decision R(P) 1/04 , a decision to which both HMRC and the Secretary of State were parties. In this case Dr Rose was rightly told that his objection was not to the decision taken by the Secretary of State and the Pension Service, but to HMRC.

12. There is an important point about appeals behind this division of powers between HMRC and the Secretary of State. Appeals against decisions of HMRC on contribution questions go to the General or Special Commissioners of Income Tax. Appeals against the decisions taken by the Secretary of State about levels of pension or other conditions go to the social security appeal tribunals. This is why Dr Rose's appeal comes before me as a Special Commissioner and did not go to the social security appeal tribunal.
13. This appeal is concerned only with the basic pension, and I need not discuss the conditions that apply to the other elements. I am also only concerned with the contribution conditions for the pension. As I have just indicated, another government department and another tribunal are responsible for the other aspects of his pension entitlement.
14. The contribution conditions for the basic pension are currently set out in Schedule 3, paragraph 4, to the 1992 Act. They appeared in similar terms in legislation from 1948. In broad terms, a male pensioner is entitled to a full basic pension if he has paid or been credited with the requisite number of NI contributions for 44 of the 49 years starting with the contribution year in which he became 16 and ending with the contribution year ending before the year in which he became 65. So a contributor can "miss" five years of his working life, but only five, if he wishes to receive a full basic pension. If he does not meet that level, he will receive a 75% pension - less if his total contributions are below other lower levels.
15. The formula for calculating the number of contributions that must be paid or credited changed from the year 1975-76. This appeal is concerned with the rules before then, and I do not need to look at the law since 1975. The key provision applying to Dr Rose's claim is in Schedule 2, paragraph 4 to the National Insurance Act 1965. It was in the same form in previous Acts. This provides:

"4(1) The contribution conditions for widow's benefit, a retirement benefit or a child's special allowance are that –

(a) not less than 156 contributions of the appropriate class have been paid by the relevant person in respect of the period between the person's entry into insurance and the relevant time; and

(b) the yearly average of the contributions paid by or credited to that person (ascertained as at the relevant time) is not less than 50.

(2) In this paragraph –

(a) the expression "relevant person" means the person by whom the conditions are to be satisfied;

(b) the expression "relevant time" means the date of the relevant person attaining pensionable age or dying under that age."

16. Under the system that applied before 1975, all males entered the National Insurance system at the latest when they were 16. They were then classed as insured persons. An insured person working for an employer and the employer were both required to pay a Class 1 contribution for every week in which the insured person was employed by the employer. An insured person who was not employed but was ordinarily self-employed had to pay a Class 2 contribution every week. An insured person who was neither employed nor ordinarily self-employed had to pay a "non-employed" Class 3 contribution every week. For pension purposes, the total of contributions paid includes contributions of all three classes.
17. Class 3 contributions are now voluntary. They were compulsory before 1975 unless an individual was entitled to be excused from payment. There were a specific list of grounds for exception from liability, or excusal as it was also called, laid down by law. Those who were excepted from liability could pay contributions voluntarily if they wished.
18. Payment of contributions of all three classes, including paying voluntary Class 3 contributions, was made by the insured person or employer buying a stamp for each week and sticking it on an official NI contribution card. Each insured person was supplied with a contribution card each year. That card had to be returned to NICO at the end of the year. NICO then recorded the contributions paid in its central records.
19. It was and is standard practice for NICO to inform contributors of deficiencies in their contribution records. Both DWP and its predecessors and HMRC and its predecessors routinely issue leaflets advising all contributors about paying contributions. I discuss the evidence of notices and leaflets given to Dr Rose, and of his records, below. That evidence is important because of the terms of the discretion given to HMRC to accept late payment of Class 3 contributions. I also discuss that further below.

Dr Rose's contribution records

20. The NI contribution records of all insured persons before 1975 are kept on documents called form RF1. This is a permanent record kept from the first year in which the contributor contributed until the annual records were transferred to a data store in 1975-76 or thereabouts. The old records are still kept in paper form.
21. The original RF 1 maintained for Dr Rose was produced in evidence. It showed that he had paid or been credited with a full contribution record from 1965-66. His contribution record was patchy before then. He was a student when he entered the National Insurance scheme on 25 September 1950 (when he was still 15). He left school on 21 July 1954. The RF1 showed that he paid or was credited with 52 contributions for 1951-52 and 1952-53. After that, his contribution record was patchy until 1965-66. when he paid a full 52 contributions. He continued paying (or received credits) at the full rate until 1974-75 when he paid 44 contributions with no credits. After that, his contribution record went on to the new system, and is outside the scope of this decision.
22. The relevant part of the record on the RF1 for this appeal is as follows:

Year:	Contributions	Notes
50/51	36 credits	No- student 25 9 50
51/52	52 credits	No
52/53	2 paid; 50 credited	No
53/54	2 paid; 16 credited	Forms 170 issued
54/55	38 paid	Form 170 and CRF169 issued
55/56	52 paid
56/57	19 paid
57/58	11 paid	Form 170 issued – registered as
		student from 8/10/56
		to 19/12/64
58/59	Blank card	Form 172 issued and returned
59/60	Form 172 issued and returned
60/61	"No"
61/62	"No"
62/63	Blank card
63/64	Blank card
64/65	22 paid	Ceased FTE 19/12/64.

23. Dr Rose was required to pay a contribution for every week in each year unless he was excused from a contribution for that week. Save for the weeks when he was employed, he was required to pay at the Class 3 rate of contribution applying to the non-employed unless excepted from liability. He questioned whether this applied during the weeks when he was both in full time education and not working.

Credits and excusal from contributions during education

24. Dr Rose was 16 on 25 September 1951 (in the 51/52 year). The RF1 shows that he entered insurance on his sixteenth birthday. He was given credits in the 50/51, 51/52, 52/53, 53/54 and 54/55 years. He left school on 21 7 1954. He was entitled to credits for weeks in which he did not work but was receiving education or training from his entry into insurance at 16 until he left school aged 18. After that, he was not credited with contributions, but was excepted from liability to pay Class 3 contributions. This applied during each "week of education, apprenticeship or training". The relevant regulation providing for this at the time was regulation 7 of the National Insurance (Contributions) Regulations 1948 (SI 1948 No 1417) ("the Regulations") as amended. I set out this regulation in the forms relevant to this appeal as an annex to this decision. It is not in dispute that Dr Rose was entitled to exemption from liability while regulation 7 applied to him. But he was only entitled to credits for the weeks when he qualified under those regulations. The RF1 shows that he was given credits while still at school. For other periods he was exempt but obtained no credits. Without going through the details of regulation 7 and Dr Rose's record, I am satisfied that the RF1 properly records all the credits and excusals to which Dr Rose was entitled because he continued in education beyond the age of 16.

Total contributions before 1965-66

25. If the RF1 is accurate, Dr Rose benefits from all contributions paid or credited from September 1951 to the end of the 51/52 year and then for all contributions and credits thereafter. If the 51/52 year is taken as showing 30 contributions for that year for calculation purposes, the RF1 shows 220 contributions paid or credited for the years from 51/52 to 63/64 and 22 in 64/65. So the total number of contribution years – taken as 50 contributions a year – is less than five years before 1965-66 when his full record starts. As these 4 or 5 years are drawn from contributions over 14 years, it is clear that Dr Rose's record falls significantly short of the number of contribution years he requires for a full state pension even if his contribution record is assumed to be complete from 1965-66.

Is the RF1 accurate?

26. Mr Greenshields tendered in evidence a general statement entitled "Working in Record Branch Ledger Sections – Maintenance of Forms RF1". I understand that this is a general statement put before Commissioners and tribunals in appeals such as this. Mr Greenshields accepted, so far as he was able from his personal knowledge, and Mr Nawbatt confirmed on instructions that the statement was an accurate summary of the matters covered in it. I set that note out in full as an annex to this decision. Dr Rose questioned Mr Greenshields closely on the potential for error in his record and in records generally. I shared with Dr Rose some puzzlement about precisely what some of the entries on his RF1 meant, and we both questioned Mr Greenshields about that. He answered all questions fully.
27. The general statement explains how the records were compiled. But it makes no attempt to explain the standard abbreviations and abbreviated comments used in the records. It is to be expected that records like these use abbreviated codes. And I accept Mr Greenshields' evidence that the abbreviations used on an RF1 had specific forms and meanings that were to be used by all those who helped keep those records. But the very efficiency of the abbreviations renders the record as a whole less than clear in its content to those not informed of the codes.
28. I quote two examples from Dr Rose's records:

(1) For the year 1958-59 there is a comment "172 27/4/59" struck through with two oblique lines. Mr Greenshields explained that this means that (a) Records Branch issued through the NI local office a form 172 asking Dr Rose on that date to return his contribution card for the year 1958-59 and (b) Dr Rose did so. I am told that this is indicated in part by the precise direction taken by the lines striking out the entry.

(2) For the year 1960-61 the comment "No" means that (a) Dr Rose returned his contribution card for that year without reminder, (b) Records Branch received it, and (c) Records Branch was satisfied on examining it that there was a reason why the card had not been stamped in that year.

The two examples also both show that communications were taking place between HMRC and Dr Rose. As these would have been by post, the implication is that HMRC had Dr Rose's proper address at relevant times. I also note a series of addresses on the RF1, and Dr Rose raised no point about that list being inaccurate. I mention those points because Dr Rose had queried whether HMRC had his proper address, and had sent documents to his proper address, at relevant times. The details on the form, read together, suggests that his address was known at all times, and therefore that he had kept them informed of this. The examples therefore show the efficiency of the abbreviations for those that understand them fully. They further show the necessity, when the record on an RF1 is questioned, of a full explanation of precisely what the abbreviations mean. Having heard Mr Greenshields' explanation of the abbreviations and strikings out on his record, Dr Rose accepted that nothing on the record conflicted with his own recollection of events.

Retention of original records

29. The RF1 produced to me was the original record for Dr Rose. All other forms produced were stock copies of forms or leaflets. Dr Rose pursued another line of attack against his record. It recorded, and Mr Greenshields explained about, the issue of forms CF 169, 170 and 172 to Dr Rose. But the originals of the forms sent to, and returned by, Dr Rose were not retained in the records. The only evidence about them was in the form of the copies of those forms read with the abbreviated notes referring to them. Dr Rose questioned why the forms he had returned were no longer available.
30. Mr Nawbatt pointed to the indication in the general statement that if Dr Rose's forms had been retained, fairness would require similar retentions for each of the other 38 million RF1 records maintained in respect of each of the years of contribution applying to each contributor. Dr Rose nonetheless considered that there must be some doubt about accuracy, and that the records should have been kept. He raised in his original grounds of appeal the suggestion that the purpose of the destruction of the records could be to cover their inaccuracy. While he stepped back from repeating that after hearing Mr Greenshields' evidence, he did not entirely withdraw the point and I must deal with it.
31. Mr Nawbatt relied on the decision of Commissioner Mitchell in R(IS) 11/92. In the decision, the commissioner considered the status of a challenge to social security entitlement decisions recorded in official documents that had been destroyed in accordance with normal departmental procedures. It was argued for the claimant in that case that he was entitled to the benefit of an adverse assumption against the Secretary of State then responsible for social security records on a number of points because the Secretary of State had organised the destruction of the claimant's records.
32. After an extensive discussion of relevant authority, Commissioner Mitchell set out his conclusions in respect of missing documents at paragraph 39:

"I set these out thus:

(a) None of the documents which are now "missing" was destroyed with any intention of destroying evidence.

(b) On the contrary, most, if not all, of such documents as would (if extant) bear upon [the current decisions under appeal] were destroyed pursuant to routines prescribed in order to keep the storage of documents within manageable proportions.

(c) Those routines are not, of themselves, unreasonable.

(d) No reasonable person would have supposed that the documents with which this particular case is concerned would ever be required again

(e) In consequence, no presumptions as to the contents of those documents fall to be made (in either party's favour).

(f) Secondary evidence, whether written or oral, is admissible as to what the original documents contained.

(g) Such secondary evidence falls to be evaluated upon the principles applicable to evidence in general."

That approach has been followed by social security commissioners since. It is trite law in that jurisdiction that no adverse conclusion is drawn from the routine destruction of social security documents under a proper policy for destruction, and that relevant secondary evidence as to content can be relied on. This applies unless the policy of destruction is open to challenge or unless there is evidence that records are destroyed otherwise than during routine procedures as, for example, after a specific request that they be produced had been made or during an ongoing appeal.

33. That is the approach I apply when acting as a social security commissioner. I apply the same approach here for what is essentially the same issue. Save for test (d) of the tests set out by Commissioner Mitchell, I can apply those tests without further discussion. Tests (a), (b) and (c) are established as applying on the evidence in this case. But the essence of Dr Rose's argument is that (d) is not met. It is in his view reasonable that he should now be able to see what he did or did not say in, for example, in 1958-59 (see one of the examples above).
34. I agree with Mr Nawbatt that the underlying reality is that if Dr Rose is right, then NICO must keep the originals of all of several forms that may routinely be issued to any one of millions of contributors in any one of the 49 years of the working life of each (male) contributor in case any of them may wish, on retirement, to make the sort of submission that Dr Rose made in this case.
35. The reality is also that the secondary evidence of those forms produced by HMRC shows which forms were issued, what those forms contained, when they were issued, whether Dr Rose returned them, and what he replied.
36. In that context, I do not see any sound reason in current administrative law for an additional test (d) to that in (c). It is the policy of destruction that is in question, not the particular decision by an official to destroy a form in accordance with that policy. Points (c) and (d) can in practical terms be tested together by a reference to the standards now observed generally in administrative law: those of fairness, legitimate expectation and proportionality. In that wider sense I see nothing that suggests that the destruction of Dr Rose's forms was undertaken otherwise than in accordance with a standard policy, nor that the policy under which they were destroyed was unfair or unreasonable.
37. I reject the argument that any adverse inference can be drawn against HMRC because they cannot now produce forms issued to Dr Rose nearly 50 years ago. HMRC is entitled to rely on the secondary evidence it has produced and proved.

I find that the RF1 produced and explained to me as Dr Rose's contribution record is a reliable record. Having read the evidence produced for HMRC and having heard the evidence on oath of Mr Greenshields, and applying the civil burden of proof, I accept the statements in the RF1, as explained in his evidence, as accurate. In making that finding, I reject the submission of Dr Rose that the record is incomplete or inaccurate.

Late payment of contributions

38. The right, subject to time limits, to pay voluntary Class 3 contributions arises during the periods when he was exempt from the compulsory contributions under

regulation 7(2)(b) of the Regulations. This provided:

For any week or education, apprenticeship or training, a person -

(b) may, if he so desires and is not entitled to be credited with a contribution for that week … pay a contribution as a non-employed person, and payment thereof may be made at any time before the end of the [fourth][sixth] contribution year following the contribution year in which the education, apprenticeship or training terminated.

The bracketed alternative ordinal numbers reflect an amendment in the regulation that came into effect on 22 December 1956. Until then, four further years were allowed for payment. After that date six further years were allowed.

39. It was common ground before me that Dr Rose paid no voluntary contributions during that period. Whether he can still do so depends upon regulation 50 of the Social Security (Contributions) Regulations 2001 set out below. HMRC contend that the records showed that he could have paid at the time, that he was or should have been aware of this at the time, and that he should have considered doing so then if he wished to do so. As he did not do so, any opportunity to do so under this regulation finally ran out at the end of the contribution year 1970-71.
40. The power of HMRC to accept late payment of voluntary Class 3 contributions is in regulation 50 of the Social Security (Contributions) Regulations 2001. This provides:

"(1) If –

(a) a person ("the contributor")

(i) was entitled to pay a Class 3 contribution under regulation 48, 146(2)(b) or 147, and

(ii) failed to pay that contribution in the appropriate period specified for its payment and

(b) the condition in paragraph (2) is satisfied the contributor may pay the contribution within such further period as an officer of the Board may direct.

(2) The condition is that an officer of the Board is satisfied that –

(a) the failure to pay is attributable to the contributor's ignorance or error, and

(b) that ignorance or error was not the result of the contributor's failure to exercise due care and diligence.

HMRC contend that the evidence shows that Dr Rose was not ignorant or in error about the failure to pay or, if he was, then that was as a result of his personal failure to exercise due care and diligence. That is why HMRC refused to accept his late payment of contributions. Dr Rose disagreed.

Dr Rose's knowledge of the need to pay voluntary contributions

41. I rely on the evidence of the record in the RF1, as interpreted by Mr Greenshields and supplemented by copies of the various forms issued at the time to establish what Dr Rose knew or should have known when he was not paying contributions. As noted above, Dr Rose was unable himself to add usefully to that evidence.
42. The record shows that Dr Rose was sent a CF 169 in July 1954. HMRC produced standard copies of this letter and all the relevant leaflets in evidence. CF 169 is a standard letter that warns the addressee that he or she has not paid NI contributions for a stated period and that "you have stated, in reply to enquiries, that you are not at present in a position to pay the outstanding contributions". It then warns of the consequences of not paying. However, Dr Rose started his national service a few weeks after this, and I assume for that reason no action was taken by either HMRC or him. But it is evidence that Dr Rose was aware at the time that he was not paying contributions. Further, it was standard practice – as the letter itself states – to send copies of two leaflets with the letter. Leaflet NI 22 explains about stamping and return of contribution cards. The other leaflet, NI 27, explains the position of persons with small incomes. NI 27 draws attention to leaflets NI 30 and NI 31 about the position of students and apprentices. NI 30, Students, Unpaid apprentices and trainees, explains the position of someone such as Dr Rose then was fully in terms of liabilities, entitlements and procedures.
43. Forms 172 were issued to Dr Rose in 1958-59 and 1959-60. These were formal requests for the return of a NI contribution card after the end of the contribution year. The abbreviations explained above are evidence that Dr Rose returned the cards for those years after the requests were made, and that the Records Branch was satisfied why no contributions were paid for the year. Mr Greenshields gave evidence that this record was likely to have been completed in that form because Dr Rose had completed a form CF 223 attached to each card. CF 223 is a formal declaration that during the currency of the NI card to which it is attached the individual signing the declaration was a student at a named institution. I accept that evidence as more probably than not applying to Dr Rose.
44. The "No" against subsequent years was explained by Mr Greenshields as noted above. The RF1 also contains other details about Dr Rose including a series of addresses. Together with the leaflets and other evidence set out above, I am satisfied that proper procedure was followed by those responsible for NI contribution collection and recording for Dr Rose's contributions.
45. I have already found that the RF1 is accurate. As a result, I also find that Dr Rose was given notice of the non-payment and of the position of someone who did not pay.

Can Dr Rose now pay the unpaid contributions?

46. Had Dr Rose offered to do so at the time, he could have made voluntary payment of Class 3 contributions. And he remained entitled to do so for some years after the year in which the contributions were due. That entitlement was under regulation 7(2) of the 1948 Regulations. Once that time limit passed, Dr Rose no longer had a right to pay. He may do so only if HMRC agrees to accept his offer. The relevant law is in regulation 50 of the NI (Contributions) Regulations 2001 set out above. An officer may accept payment only if Dr Rose failed to pay because of his ignorance or error and "that ignorance or error was not the result of the contributor's failure to exercise due care and diligence".
47. HMRC did not dispute that Dr Rose failed to pay as a result of his "ignorance or error". "Ignorance" sometimes has a pejorative meaning in current English. That is not the meaning here. It means ignoring something. That may be because the person does not know of it, or it may mean that despite knowing of it the person ignored it – in this case, he either took no action or he decided not to pay. The limited evidence here is that Dr Rose decided not to pay because he could not afford to do so. Alternatively, he was in error – he was wrong so to decide that as he now sees it.
48. Was that "ignorance or error" the result of his failure to exercise due care and diligence? Mr Nawbatt cited a number of authorities about that test to me in argument. But I do not consider that the phrase presents any difficulty in this case. The evidence is that Dr Rose was aware at the time of his choices, or at least he would have been aware of them had he read the leaflets he was sent and had he made the reasonable enquiries that those leaflets should have prompted. He chose at that time not to enquire or not to pay. In the context of the current question of protecting his NI record, he chose not to exercise due care and diligence in protecting his contribution record.
49. Had Dr Rose known that further payment Class 3 contributions within the time limited would have completed his contribution record, and that otherwise he would not receive a full state pension, I accept that he would have considered paying them. But that is to use the benefit of hindsight now he is 65. His actions at that time cannot be tested by reference to the effect of them now. He can now see the downside of non-payment. But the evidence clearly shows that he cannot say that he was not aware at the time that he was not paying, or at least that he was not warned that his deficient pension entitlement might be a consequence of not paying. It follows both that Dr Rose cannot now require HMRC to accept any late contributions and that HMRC have no power to accept them.

My decision

50. I am required to find facts on the evidence before me on the balance of probabilities. Dr Rose, drawing on his scientific training, asked me to apply a much higher standard of possibilities of error, even that error was not impossible. I do need to do so. But I have seen no evidence in this case to suggest that the RF1 is wrong in fact, and nothing to indicate any errors in law. I can therefore state that in this case I have no doubt about the findings of fact on which I reach the following conclusions: (a) the contribution record RF1 produced by HMRC for Dr Rose is accurate; (b) Dr Rose was awarded all credits to which he is entitled; (c) he is not now entitled to pay contributions not previously paid or credited; and (d) HMRC has no power to accept late payment of those contributions. I cannot comment on the other matters of administration he raises. I must therefore dismiss the appeal on all grounds.
DAVID WILLIAMS SPECIAL COMMISSIONER RELEASED: 20 September 2006

SC/3031/06