National Insurance Contributions Bill

The amendments are intended to limit the application of Clauses 5 and 6. The effect of that limitation would be that agreements and elections entered into before 2 December could continue to operate, and to allow the employer to pass any employers’ backdated national insurance liabilities on to the employee on payments made through an avoidance scheme since that date. That is not acceptable because the consequence of the amendment is to say to the employer that, if you are caught by a backdated national insurance liability on avoidance payments, you need not worry. You can use a facility put in place to help employee share ownership to continue avoiding your liability. The Government are not willing to extend a helping hand to that minority of employers who may have entered into an agreement and election before 2 December 2004 by giving them the opportunity to pass on their national insurance liability on avoidance payments made since that date to their employees. Where a chargeable event that results in backdated national insurance liabilities occurs on or after 2 December 2004, no transfer should be allowed. This is also about fairness and protecting employees who entered into an election before 2 December 2004, but who would not have contemplated at the time that they would also have to meet their employer’s national insurance liability in the event of action being taken to close down an avoidance scheme. I shall make a point of clarification. It has been suggested that the provision would negate the agreements entirely. That is not correct. Where agreements and elections predate 2 December 2004, it is only the backdated national insurance liabilities to 2 December 2004 arising from regulations following the Bill that will be affected. The agreements otherwise stay in place. I hope that that assists the noble Baroness, but I shall be happy to try to explain further.