Commentary on Sections Part 2: Regional secondary contributions holiday for new businesses Section 8: Making of deductions or refunds
67.This section explains how a deduction or refund is made.
68.Subsection (1) lays down the primary means of obtaining the benefit of the Holiday. The appropriate amount (see section 7) may be deducted from any one or more Class 1 contributions payments made by P in respect of the same tax year as the one in which the earnings giving rise to the appropriate amount were paid. Section 11(1) defines “Class 1 contributions payments” as monthly or quarterly payments of Class 1 NICs.
69.Subsection (2) lays down the secondary means of obtaining the benefit of the Holiday. To the extent that the appropriate amount cannot be deducted under this section, P is entitled to a refund from HMRC if P requests a refund.
70.Subsection (3) provides that no deductions or refund may be made until an application is made to HMRC and HMRC grants the application.
71.As the Holiday is a scheme to help new businesses in targeted areas of the UK it is considered under EU rules as a state aid. The details of the Holiday are such that in connection with Articles 107 and 108 of the Treaty on the Functioning of the European Union (TFEU) the “de minimis” Regulations apply so that the state aid is lawful aid granted by the UK. The ceiling for the aid covered by the de minimis rule is in general €200,000 (cash grant equivalent) over any three fiscal year period. Lower ceilings apply for some sectors. Road transport has a ceiling of €100,000, agriculture has a ceiling of €7,500, and fisheries and aquaculture has a ceiling of €30,000. HMRC’s mandatory application process for new businesses is in place to ensure compliance with these limits.
72.The applicable legislation (which refers to the Treaty provisions in place before TFEU came into force) comprises:
	Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid;
	Commission Regulation (EC) No 1535/2007 of 20 December 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the sector of agricultural production; and
	Commission Regulation (EC) No 875/2007 of 24 July 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the fisheries sector and amending Regulation (EC) No 1860/2004.
73.Subsection (4) provides that HMRC can specify what information the application is to contain, the form in which it is to be made, and the manner in which it is to be made. The information requested in the application form includes:
	PAYE and Accounts Office references;
	business name;
	the date the business started;
	the business address and post code; and
	the region or country in which the principal business address falls.
74.Businesses that have not received any state aid are required to apply online. Businesses that fall within the agriculture or fisheries and aquaculture sectors which have had any form of de minimis state aid, or any other aid towards the costs of hiring new employees, during the current and two previous financial years will not qualify for the Holiday. Other businesses that are in receipt of state aid are required to submit a paper application.
75.Subsection (5) provides that the deadline for making an application for a refund in respect of a qualifying employee is four years from the day on which the last deduction could be made in respect of the qualifying employee.
76.Subsection (6) provides for a right of appeal. The standard NICs appeal procedures which apply in relation to decisions about (for example) the categorisation of earners as employed or self-employed will also apply to decisions about deductions or refunds under section 8. Paragraphs (a) and (b) apply, respectively, the Great Britain legislation and the Northern Ireland legislation relating to NICs appeals to the decisions to which this subsection applies.
77.Subsection (7) specifies the decisions to which subsection (6) applies, and which can therefore be appealed. They are decisions about entitlement to deductions, and the amount of a deduction, if entitled, and decisions about refunds and the amount of a refund, if entitled.