§ Mr. Milburn
To ask the Secretary of State for Social Security how many self-employed individuals have been found to be avoiding national insurance contribution payments; and what has been the value of the revenue recovered in each year since 1984–85(a) in each region and (b) nationally.
§ Mr. Hague
The administration of national insurance is a matter to Miss Ann Chant, the chief executive of the Contributions Agency. She will write to the hon. Member and a copy will be placed in the Library.
Letter from Ann Chant to Mr. Alan Milburn, dated 26 July 1993:1024WAs Chief Executive of the Contributions Agency I am responsible for answering questions about relevant operational matters. I have been asked to reply to your question about how many self-employed individuals have been found to be avoiding payment of National Insurance Contributions (NICs), and the value of the revenue recovered in each year since 1984–85.In general, all self-employed people aged between sixteen and pension age are required to pay Class 2 NICs, unless they have applied for, and been granted, an exception from payment on the grounds of small earnings. Where payment is not made arrangements are in place for the contributor to be reminded and if necessary pursued for non-payment. It is the aim of the Agency to obtain current compliance and payment of any arrears at the smallest cost of public funds.Most people commencing self-employment notify the Agency or the Inland Revenue that they have done so, but we are aware that some do not. In addition, there are some with whom the Agency loses contact if they have changed address and not reported the change. We have no reliable information as to the total numbers who are self-employed and are avoiding payment of NICs. Since April 1991, the Secretary of State has set a High Level Target to identify self-employed people not previously known to the Agency. This target has been increased each year, from 60,000 in the 1991/92 year to 70,000 in the 1992/93 year and 103,000 in 1993/94: in the first two years we have exceeded the target set. Of course, some of the newly-identified self-employed will be earning low amounts and may qualify for exception from payment on the grounds of low income. The important element is, however, that they have become known to the Agency, and may well subsequently be liable to pay Class 2 NICs.Because of the method of recording our statistical information I cannot supply the information you have asked for in relation to the amount of money recovered from our efforts in the pursuit of unpaid National Insurance debt. However, I have supplied in annexes, which will be tabled in the Library, information on the numbers and amounts involved where proceedings have been undertaken by the Agency or instalment arrangements have been accepted.When a contributor acknowledges that he or she owes arrears of Class 2 NICs, but is unable to settle the debt by payment of a lump sum, the Agency will consider, in appropriate circumstances, the acceptance of payment of the arrears by instalment. Such an arrangement is always conditional upon the contributor undertaking to pay future Class 2 NICs timeously. An annex to my reply gives details of the instalment arrangements accepted in the years in question.If necessary, the Agency will pursue unpaid Class 2 NICs by either civil or criminal prosecution and a further annex gives details of the number of prosecutions undertaken and the amounts involved.I am supplying the figures from 1984–85 (Instalments from 1985–86) on a regional basis and for the 1992–93 year on a national basis. A regional breakdown of the 1992–93 year is not yet available.I regret that I have been unable to give you the precise information that you requested in your question but I hope that my reply has proved helpful.
§ Mr. Milburn
To ask the Secretary of State for Social Security, pursuant to his answer of 25 June,Official Report, columns 324–25, how many cases of national insurance contributions avoidance have been uncovered; and how much revenue has been recovered in each year since 1984–85.
§ Mr. Hague
The administration of national insurance is a matter for Miss Ann Chant, the chief executive of the Contributions Agency. She will write to the hon. Member and a copy will be placed in the Library.
Letter from Ann Chant to Mr. Alan Milburn, dated 26 July 1993:As Chief Executive of the Contributions agency I am responsible for answering questions about relevant operational matters. I have been asked to reply to your question about how many cases of avoidance have been uncovered and the value of the revenue recovered in each year since 1984–85.As I explained in my reply to your earlier question, where non-compliance with National Insurance law is uncovered the Agency does not attempt to differentiate between cases involving genuine mistakes and suspected evasion or avoidance of liability.There are several ways in which the incorrect or non-payment of National Insurance Contributions (NICs) can be discovered including survey visits made by inspectors, examining and processing employers' End of Year Returns, and enquiries made by individual contributors.Since achieving full Executive Agency status in April 1991 the Contributions agency has been set High Level Targets on the number of surveys undertaken and their subsequent Class 1 yield and on the identification of self employed contributors previously unknown to the Department. The targets and published achievements were as follows:—
Surveys of Employers
- 1991–92 88,000 (achieved 106,353)
- 1992–93 114,000 (achieved 118,032)
- 1993–94 123,000
- £33.8 million (achieved £59.23 million)
- £71.24 million (achieved £89.14 million)
I am attaching, as an annex, details for potential arrears going back to 1986–87, identified as a result of survey. Collection of these arrears is largely the responsibility of the Inland Revenue, and figures for the actual amounts recovered are not available.
Self Employed identified
- 1991–92 60,000 (achieved 84,040)
- 1992–93 70,000 (achieved 93,981)
- 1993–94 110,000
Not all the self-employed identified would have been liable to pay Class 2 NICs in the years in question, so no details of the precise yield can be calculated. But once someone has been brought into the system, their future liability will be monitored.
I hope that the information that I have supplied is useful.
Arrears of NICs identified on survey Year £ Amount of Class 2 underpaid 1986–87 6,542,075 1987–88 5,803,847 1988–89 4,947,683 1989–90 5,682,563 1990–91 10,482,893 1991–92 21,311,394 1992–93 19,604,506 Amount of Class 1 Underpaid 1986–87 8,041,677 1987–88 5,949,893 1988–89 4,518,164 1989–90 6,031,229
Year £ 1990–91 25,035,006 1991–92 58,891,925 1992–93 89,670,327