National Insurance Numbers had been issued with the prefix of KC by Jobcentre Plus (on behalf of the Department for Work and Pensions). These National Insurance numbers are valid. HMRC had issues with these NINOs with the KC prefix as HMRC has not included the KC prefix as a valid prefix on their list of valid prefixes to software developers. So HMRC's systems did not recognise the prefix KC and most payroll software did not recognise it either. But from 15 November 2016, as advised by HMRC, employers will be able to submit RTI data to HMRC for employees using this NINO prefix.
Some software products, including HMRC’s Basic PAYE Tools, may not be updated before April 2017. If this applies to you then you should continue to follow this guidance when submitting your returns:
• Do not enter the NINO for the employee - this field should be left empty
• The employee's address has to be entered, the first two lines are the minimum requirement
• You do not need to request a new NINO as the NINO with the KC prefix is valid.