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	United Kingdom Special Commissioners of Income Tax Decisions
You are here: BAILII >> Databases >> United Kingdom Special Commissioners of Income Tax Decisions >> Adojutelegan v Clark (Office of Board) [2004] UKSC SPC00430 (21 September 2004) URL: http://www.bailii.org/uk/cases/UKSPC/2004/SPC00430.html Cite as: [2004] UKSC SPC430, [2004] UKSC SPC00430

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SPC00430

NATIONAL INSURANCE CONTRIBUTIONS – whether failure to pay Class 3 Contributions within the time limits was the result of the contributor's failure to exercise due care and diligence – yes

THE SPECIAL COMMISSIONERS

MRS ADEDOLAPO FEHINOLA ADOJUTELEGAN Appellant

- and -

DEREK CLARK

(OFFICER OF THE BOARD) Respondent

Special Commissioner: DR JOHN F AVERY JONES CBE

Sitting in public in London on 17 September 2004

Nathaniel Adojutelegan, Solicitor, NatAdo, for the Appellant

Barry Williams, Inland Revenue Appeals Unit, London for the Respondent

© CROWN COPYRIGHT 2004


 


DECISION

1. Mrs Adedolapo Fehinola Adojutelegan appeals against a Notice of Decision dated 3 February 2003 that:

"Mrs A.F. Adojutelegan's failure to pay Class 3 contributions for the period from 6 April 1980 until 5 April 1994 within the prescribed period is attributable to her ignorance or error, however, that ignorance or error is due to her failure to exercise due care and diligence."

The Appellant was represented by her son Mr Nathaniel Adojutelegan, and the Officer was represented by Mr Barry Williams.

2. The Appellant gave evidence. I find the following facts:

(1) The Appellant was born on 25 May 1934. She was married on 13 January 1954 in Nigeria. Her husband died on 8 March 1989.

(2) The Appellant arrived in the United Kingdom from Nigeria on 12 September 1961.

(3) She entered insurance on 5 October 1961 and was allocated National Insurance number YB 08 26 68 A. From 5 October 1961 to 23 September 1962 she paid or was credited with Class 1 contributions as an employed person. On 24 September 1962 she exercised her right as a married woman and chose not to pay contributions. This election was cancelled on 1 October 1962. From 1 October 1962 to 12 August 1968 she paid or was credited with Class 1 contributions as an employed person. On 12 August 1968 she again exercised her right as a married woman and chose not to pay contributions. She does not now remember making these elections.

(4) She was employed in the United Kingdom as a civil servant from 17 April 1967 to 26 January 1968 and from 29 January 1968 to 29 August 1969.

(5) Her National Insurance record card shows that she made 14 claims to benefits, in the form of sickness benefit and maternity benefit. She was paid the latter but not the former. She does not remember making these claims. The sickness benefit claims probably merely consisted of giving to her employer a form that she received from her doctor.

(6) She returned to Nigeria on 5 September 1969.

(7) She made no enquiries about National Insurance until her son made an enquiry on her behalf about her entitlement to a pension on 26 May 2000.

3. When the Appellant returned to Nigeria she was not entitled to pay Class 3 Contributions whilst abroad in view of her election not to pay Contributions. Her election lapsed as the result of a change in the legislation on 5 April 1980 after which she was entitled to pay Class 3 Contributions until she attained the age of 60 on 25 May 1994. The time limit for making Contributions is six years, or two years before 6 April 1982. She wishes to pay class 3 Contributions out of time in order to qualify for a retirement pension.
4. In order to pay Class 3 contributions out of time she has to satisfy both regulation 50 of the Social Security (Contributions) Regulations 2001 and regulation 6 of the Social Security (Crediting and Treatment of Contributions, and National Insurance Numbers) Regulations 2001. They provide:

"50—(1) If—

(a) a person ('the contributor')—

(i) was entitled to pay a Class 3 contribution under regulation 48, 146(2)(b) or 147; and

(ii) failed to pay that contribution in the appropriate period specified for its payment; and

(b) the condition in paragraph (2) is satisfied,

the contributor may pay the contribution within such further period as an officer of the Board may direct.

(2) the condition is that an officer of the Board is satisfied that—

(a) the failure to pay is attributable to the contributor's ignorance or error, and

(b) that ignorance or error was not the result of the contributor's failure to exercise due care and diligence."

"6—(1) In the case of a contributions paid by or in respect of a person after the due date, where—

(a) the contribution is paid after the time when it would, under regulation 4 or 5 above, have been treated as paid for the purpose of entitlement to contributory benefit; and

(b) it is shown to the satisfaction of the Inland Revenue that the failure to pay the contribution before that time is attributable to ignorance or error on the part of that person or the person making the payment and that ignorance or error was not due to any failure on the part of such person to exercise due care and diligence

the Inland Revenue may direct that, for the purposes of those regulations, the contribution shall be treated as paid on such earlier day as the Inland Revenue may consider appropriate in the circumstances, and those regulations shall have effect subject to any such direction…."

5. The tests in regulation 50(2) and 6(1)(b) are identical. Mr Williams contends, and I agree, that I can decide whether I am satisfied that the condition is satisfied in place of the officer of the Board in Regulation 50, or in place of the Inland Revenue in Regulation 6; I am not merely reviewing whether the officer's (or the Inland Revenue's) decision was reasonable. The burden of proof is on the Appellant. Regulation 10 of the Social Security Contributions (Decisions and Appeals) Regulations 1999 provides:

"If, on an appeal to the tax appeal Commissioners under Part II of the Transfer Act or Part III of the Transfer Order, it appears to the majority of the Commissioners present at the hearing, by examination of the appellant on oath or affirmation or by other evidence, that the decision should be varied in a particular manner, the decision shall be varied in that manner, but otherwise shall stand good."

6. Mr Adojutelegan in an elegant argument contended that it was not possible for an ignorant person to exercise due care and diligence over something of which he was ignorant. To quote a passage from his skeleton argument:

"…it is impossible for an ignorant person to exercise due care and diligence. To expect an ignorant person to exercise due diligence is tantamount to requiring an illiterate who is unable to read to exercise due diligence in reading properly or a blind person to see properly. The illiterate or blind person cannot read or see. End of story; they cannot be expected to show due care and diligence."

7. Mr Williams relied on Walsh v Secretary of State for Social Security (unreported, 28 March 1994) in which the appellant contended that he was entitled to rely on the fact that he was not chased-up for payment of contributions. Owen J said that the appellant had no right to make that assumption:

"It was easy enough to ask. In any event, there would have no demand until January 1976. He should have enquired then, or before, and he would have done if he had been exercising due diligence."

Exercising due diligence involves the positive step of making enquiries. Mr Williams contended that while the National Insurance authorities try to keep a contributor informed of what he needs to know to maintain his contribution record, it can do this effectively only if a contributor personally contacts them. The Appellant had failed to make any enquiries and therefore had not exercised due care and diligence.

8. Mr Adojutelegan pointed to the facts in this case being very different from those in Walsh.
9. The question for me is whether the Appellant has satisfied me that her failure to pay Contributions, which it is accepted was attributable to her ignorance, was not due to any failure on her part to exercise due care and diligence. I do not accept Mr Adojutelegan's argument that an ignorant person cannot be expected to exercise due diligence in relation to that of which they are ignorant any more than an illiterate person cannot exercise due diligence in reading properly. It depends on what one is ignorant about. If she had never heard of National Insurance I would readily agree that it could not be said that she had failed to exercise due care and diligence if she had made no inquiries about it. However, she was not ignorant about the existence of the National Insurance Scheme and must have known the basic principle that benefits were in some way related to contributions. She had some dealings with National Insurance while she was in the United Kingdom, although her employer would have done all the work in deducting Contributions. She did know enough to make a married woman's election not to pay contributions on two occasions, and to make various claims to benefits.
10. I follow the principle in Walsh that she should have made some enquiries. I entirely accept Mr Adojutelegan's point that the facts here are not comparable to that case as she was living abroad and so it was harder for her to make enquiries. But it was not impossible. Although she was in Nigeria she could have made enquiries by post, and I presume that her son was in the United Kingdom and she could have asked him to make enquiries on her behalf. Doing nothing is not the exercise of due care and diligence. Had she made an enquiry she would have been told that there was a six-year time limit for paying Contributions. Her ignorance of this was due to her failure to make enquiries, which is a failure to exercise due care and diligence.
11. Accordingly, like the officer, I am not satisfied that the Appellant's failure to pay contributions was not the result of her failure to exercise due care and diligence. I dismiss the appeal and confirm the Notice of Decision.

J F AVERY JONES

SPECIAL COMMISSIONER

Released Date: 21 September 2004

SC 3063/04