Tax Writer Taxwriter Ltd
Share this content

Rock drummer snared by NIC trap

18th Nov 2016
Tax Writer Taxwriter Ltd
Share this content

Failure to pay class 2 NIC during his working life almost cost a professional musician his state pension.  

Drum roll

Richard “plug” Thomas has worked as a drummer and percussionist since 1968. He played with Birmingham psychedelic rock band Breakthru then with the Jonesy band. Later he was the drummer with Dif Juz and worked with Butterfly Child, Moose, Cocteau Twins, The Wolfgang Press, and The Jesus and Mary Chain. He is described in the on a fan page for Dif Juz as being a “Jack of all Trades with thirst for mastering wind instruments and production values.”


In between these successful collaborations, Thomas had periods of little or no work, and changed address frequently, which is a typical for someone in the music business. Unfortunately, the national insurance contribution (NIC) system was designed for workers who enjoy continuous employment, or self-employment. If the individual does not pay sufficient NIC in a tax year, that year is not a “qualifying year” for contribution purposes, and the taxpayer doesn’t get an NI credit towards his state pension.

Back catalogue

When Thomas reached the age of 65 he enquired with the Pensions Office about his state pension. He was shocked to find there was no record of his self-employment since 1976, and he had no NI credits to allow him to qualify for the state pension.

Thomas had not paid sufficient class 2 NIC, although he had paid income tax and class 4 NIC for most of the intervening years. Payment of class 4 NIC does not count towards the taxpayer’s NI record as it carries no rights to benefits, it is a pure tax. It is only class 2 NIC which provides the necessary NI credits for a self-employed individual.

Repairing the record

HMRC allowed Thomas to restore his NI record for the years 6 April 2008 to 5 April 2014, but it refused to allow him to make late payments of class 2 NIC to create NI credits for any earlier years. Thomas appealed this decision which was considered by the Tax Tribunal (TC05463).

Thomas had to prove that his failure to pay class 2 NIC was not due to his carelessness, but was entirely due to his ignorance or genuine error. He appointed an accountant in 1978 to deal with his tax return, and had submitted all his tax returns in good time, which demonstrated a degree of care.


The tribunal judge believed Thomas when he said that his accountant had told him the class 4 NIC he was paying formed his contribution towards the state pension. Indeed, as class 4 NIC was introduced in 1976, just when Thomas resumed self-employment, he may not have understood that there were two types of NIC, one of which carried no benefit entitlements.

The tribunal allowed Thomas’s appeal, so he should now be permitted to pay the missing class 2 NIC for all the earlier years, and eventually receive his state pension.


From 2015/16 onwards both class 2 and class 4 NIC have been collected via self-assessment, so the taxpayer has less chance of being caught by the missing NIC trap. However, it is worth while checking the NI contribution record of self-employed clients to ensure that they will qualify for the level of state pension they expect.   

Replies (6)

Please login or register to join the discussion.

Anyone Without A Sense Of Humour Is At The Mercy Of Everyone Else
By WellHeeled
21st Nov 2016 02:23

Thank you Rebecca

Thanks (0)
My photo
By Matrix
22nd Nov 2016 09:16

I have a client who has 20 years of missing NI. He blames his accountant (and has since moved to me).

In the accountant's defence, she never had access to his bank account since he prepared his self-employment accounts on a spreadsheet and NI is not an allowable expense so would not appear on there. It is only from 2015-16 that NI is collected through self-assessment so the accountant knows if it is being paid or not.

Do you think I could use this case to reinstate this client's Class 2 NI record or would the facts have to exactly follow the case such that he had to be self-employed in the 70s when NI changed?

Thanks (0)
By Vaughan Blake1
22nd Nov 2016 11:35

Back in the early 90's we added a class 2 NIC question to the year end checklist. I was amazed at the number of clients that were not paying class 2. I was also amazed (I was very naïve in those days!) that HMIT hadn't picked this up.

It is well worthwhile doing a BR19 sweep on your clients to see if they have any unexplained gaps in their contribution history.

Thanks (0)
By keithas
23rd Nov 2016 11:42

A cymbalic victory?

Thanks (1)
By plummy1
23rd Nov 2016 13:20

So he wasn't deliberately trying to para "diddle" the HMRC then?

Thanks (0)
My photo
By Matrix
09th Dec 2016 10:48

Any idea why this tax tribunal case is no longer listed? I can't find the case details and I need to write to HMRC to try and get my client's NI record reinstated.

Thanks (0)