Summary
3.This Act takes forward the Paymaster General's Pre-Budget Report 2004 announcement that the Government would be prepared to act against tax and National Insurance Contributions avoidance involving employee remuneration. (Written Ministerial Statement made on 2 December 2004 – see House of Commons Hansard Vol. 428 Col 45 WS). The Act provides for a power to make regulations in respect of National Insurance Contributions ("NICs") that reflect retrospective tax changes that take effect on or after 2 December 2004. Existing NICs legislation does not allow regulations to be made which can take effect that far back. The powers allow for NICs liability to be changed back to 2 December 2004, if necessary. They also allow for consequential changes to contributory benefit and statutory payments where appropriate. This power will be used in the first instance to reflect the employment-related securities anti-avoidance provisions included in Schedule 2 to the Finance (No.2) Act 2005, which received Royal Assent in July 2005 but which took effect from 2 December 2004.
4.The other main provisions in the Act:
	will prevent NICs elections and agreements being used by employers to pass on any secondary NICs liability, on certain security based employment income, which is created retrospectively by virtue of the new powers; and
	provide for a power to extend to NICs the existing tax disclosure rules brought in by Part 7 of the Finance Act 2004.