Supplementary memorandum submitted by
the Inland Revenue
Question 40 (Mr Bacon): How old is this function?
The function to automatically delete redundant
records which are over three years old was introduced in April
1992.
Questions 110-113 (Mr Williams): Can you give
us any idea how many hardship cases you have had put to you and
how many you have accepted and how many you have turned down?
BACKGROUND
Our Code of Practice 26, What happens if we
have paid you too much tax credit? explains:
— the Department's approach to
recovering overpayments,
— that there are limits by which continuing
payments can be adjusted to recover overpayments from the previous
year, and
— the circumstances in which we can
make additional payments.
Tax credits payments may be adjusted during the year
following a change in a claimant's circumstances. If, as a result,
the claimant was paid too much in the earlier part of the year,
their payments will be reduced.
HARDSHIP CASES
We ask claimants to contact us if the reduced
payments cause them or their families hardship. We will consider
whether to increase their payments for the rest of the year. If
we do, the claimant will pay off some of the amount they owe during
the year and will be expected to pay back the rest after the end
of the year.
In 2003-04 we received around 43,500 requests
for additional payments of which some 32,500 were accepted. In
the first 10 months of 2004-05 we have identified some 11,500
requests for additional payments. Around 4,200 have been accepted,
6,200 rejected and some are still under consideration.
Where there is no award in the current year, the
customer will receive a Notice to Pay, and can pay back the overpayment
in 12 monthly instalments if they wish.
Exceptionally, if payment would cause hardship, we
may decide not to collect all or part of an overpayment, or allow
more time to pay. In the first 10 months of 2004-05, some 42,500
requests for time to pay were received by our Receivables Management
Section. Approximately 42,000 requests have been accepted, eight
have been rejected and others are under consideration.
Question 150 (Mr Bacon): Who owns the intellectual
property of Customs' Fujitsu systems?
Under the terms of the Infrastructure Services Agreement
(ISA) that Customs have with Fujitsu, the Department holds Intellectual
Property Rights unless specifically agreed otherwise. This applies
to all applications and software developed at our request. Fujitsu
retain the rights for any systems that they have previously developed
and brought with them.For any work done outside of the ISA, Customs
follow Office of Government Commerce guidelines on the ownership
of Intellectual Property Rights. The broad policy is to achieve
best value for money for the Department. The main principle is
that the rights should be held by the party best able to exploit
them.Work is currently being done to review the best commercial
model for HM Revenue and Customs.
Question 174 (Chairman): Could we have a note
please on paragraphs 3.18 to 3.20 on the avoidance opportunities
in stamp duty land tax?
What is the current estimate of the "tax gap"?
The NAO Report refers to the "tax gap".
In this context the "tax gap" means the amount of extra
tax we estimated would have been payable if:
(a) payment of stamp duty had been compulsory,
and
(b) it had been payable on all land transactions.
The estimated yield from the measures in table
A2.1 of Budget 2003 was £350 million. This included reform
of the charge on new leases and other reforms so the strict yield
from anti-avoidance measures was £210 million. Of this £210
million, £130 million came from measures in Finance Act 2002.
It is not possible to identify the increase in yield
that has occurred as a result of the anti-avoidance measures alone,
and therefore the current size of the "tax gap" is uncertain.
However, the overall increase in yield observed between 2003-04
and 2004-05 is consistent with the £210 million increase
forecast at Budget 2003, after making allowance for forecast price
inflation, growth in transaction volumes, and usage of Disadvantaged
Areas Relief.
What plans do we have to further reduce the "tax
gap"?
As the "tax gap" (as defined above)
is structural it can only be reduced further by legislation. We
cannot anticipate what announcements in this respect might be
made by the Chancellor in his Budget.
We will use the new compliance powers available under
SDLT to detect and counter non-compliance in order to minimise
the gap between the amount due under SDLT and the amount we collect
and to inform our compliance strategy.
Has the introduction of SDLT reduced the use of special
purpose vehicles?
We have no way of monitoring the use of special
purpose vehicles incorporated offshore, since transactions in
the shares of such vehicles are not reported to us. Special purpose
vehicles have many advantages, not just tax advantages, and there
is no reason to suppose that their use will have decreased. However
the introduction of SDLT has made the avoidance of SDLT using
special purpose vehicles more difficult.
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