Scotland and the Statute of Limitations Act

Photo of Justine Ricccomini By Justine Riccomini, Head of Taxation (Scottish Taxes, Employment and ICAS Tax Community)

12 April 2017

NICs are considered to be a civil debt and as such are treated differently for recovery purposes than tax and other duties owed to the Crown. 

As such, they are included in the Limitations Acts which have been drafted over the years for each of the UK jurisdictions.

The Limitations Act 1980, NICs and Scotland – an important differential

The Government announced in its Autumn Statement 2016 that NICs would be removed from the Limitations Act 1980 (including the corresponding NI legislation) so that the enforcement of NICs debts could be aligned with that of other taxes from April 2018.

However, in Scotland, different legislation applies where NICs debts are considered by the Scottish courts, and HMRC has not yet offered a view on how it proposes to handle these.

Prescription and Limitation (Scotland) Act 1973

The Prescription and Limitation (Scotland) Act specifically includes NICs as a debt covered by the Act and places a limit of 20 years where a debt is handled by the Scottish Courts. In the rest of the UK, the 20-year limit only applies to discovery cases but for other matters, a six-year time limit applies.


The main difficulty here is what constitutes a ‘Scottish employer’ or a Scottish NICs payer (for example, with Class 2 recoveries). Historically, HMRC has had difficulty in identifying Scottish NICs payers on its ‘NPS(NI)’ system and so has often merely resorted to recovering six years’ worth of debt until and unless a Scottish NICs payer is readily identified.

From an employer’s point of view, it appears that some confusion exists over whether the business has to be registered in Scotland or simply has to have premises in Scotland from where the debt is deemed to have arisen, and where HMRC decides to pursue the debt through the Scottish courts system.

A secondary area of confusion is whether HMRC has the right to pursue a 20 year NICs debt from a ‘Scottish employer’ outside the Scottish court system (i.e. in an ordinary settlement case) or whether it must revert to the six-year norm used elsewhere.

The government will consult on this matter during 2017.


  • Tax

Previous Page