HMRC has announced that it is possible for the joint elections transferring liability for national insurance contributions ("NICs") from employer to employee to be made electronically.
HMRC has published its third Employment-Related Shares & Securities Bulletin. This contains articles on a number of subjects including 'NICs elections in electronic form'. The bulletin states that joint NICs elections may be made electronically if:
- The employee is able to see the full terms of the election; and
- The joint election is available for inspection by HMRC.
Please note that joint elections require to be approved in advance by HMRC, even where HMRC's model joint election is used.
HMRC has confirmed to us that electronic signatures include, for example, "on-line confirmation or email voting buttons". This would appear to cover the situation where a joint election, in an approved format, is sent to employees by an email which contains voting buttons. Should the employee agree to enter into the joint election, then by clicking on the appropriate voting button and sending the resulting email he would be deemed to have 'signed' the joint election electronically. However, electronic 'signatures' must be capable of being verified and stored to HMRC’s satisfaction.
When the joint election is required to take effect as a deed please be aware that the formalities required for the execution of deeds still apply.
HMRC has previously confirmed that section 431 elections (elections to disapply restrictions for the purpose of calculating market value) may be made electronically, provided that they contain the required wording and are made within the relevant time limit. The employee must also be made aware of the effect of entering into the election prior to entering into it. The employer must be able to provide HMRC with a copy of the election and demonstrate to HMRC that the employee agreed to the making of the election.
Having elections signed electronically may simplify the process for employers, especially where a large number of elections require to be signed quickly, or for overseas parent companies. However, employers should ensure that there are systems in place which adequately verify and store the electronic signatures.