Inland Revenue Forced To Write Off Over £700 Million In Uncollected NI Contributions

by Robert Lee, Tax-News.com, London

02 March 2004

It has emerged this week that the Inland Revenue has been forced to write off almost £1 billion in uncollected National Insurance contributions resulting from its failure to issue reminders between 1996 and 2002.

The fact has come to light after the government admitted in a written response to Treasury Select Committee MP Norman Lamb that it had given up its pursuit of £789 million in outstanding NI contributions as, according to Paymaster General Dawn Primarolo, it is no longer “practical nor cost effective” to chase the debt.

“I understand that some national insurance has to be written off, but this figure is way too high,” The Times quoted Mr Lamb as saying. “This is an awful lot of national insurance that is legitimately due. The burden will fall on law-abiding taxpayers who pay their tax,” added the Liberal Democrat member.

The shortfall has come about from the Revenue’s failure to send out reminder notices for the years between 1996-97 and 2001-2 after the department took over responsibility for collecting the levy.

According to the accounting industry, the £789 million write-off represents 1% of the total NI contributions collected annually by the government, and as such was judged not to be a “significant” amount to discard.

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