Appendix 2
S.I. 2006/570: Memoranda from Her Majesty's Revenue
and Customs
Registered Pension Schemes and Overseas Pension
Schemes (Electronic Communication of Returns and Information)
Regulations 2006 (S.I. 2006/570)
The Committee considered the above
instrument at its meeting on 26th April 2006, and instructed
its Clerk to request a memorandum on the following point:
Explain fully the reason why
these Regulations do not specify the date on which they come into
force, and the justification for the statement in the Explanatory
Memorandum as to the effect of the Regulations pending commencement.
1. The delivery and maintenance
of pension scheme tax approval was in the past completely paper-based
process. This met neither the Government's commitment to e-business
nor the demands of the pensions industry. So, integral to the
tax regime for registered pension schemes introduced on 6 April
2006, is the facility for electronic registration, maintenance
and reporting of scheme information.
2. The Registered Pension Schemes
and Overseas Pension Schemes (Electronic Communication of Returns
and Information) Regulations 2006 facilitate e-delivery. Schedule
1 of these regulations sets out the information which must
be supplied to HMRC by an approved method of electronic communication.
And Schedule 2 the information which may be supplied either
to or by HMRC by an approved method of electronic communication.
3. Regulation 1 provides that
the regulations will come into force "on such day or days
as may be appointed by the Commissioners of HMRC and specified
in a notice in the London, Edinburgh and Belfast Gazettes."
The Committee have asked for a full explanation of why the Regulations
do not specify the date on which they come into force. They also
ask for the justification for the statement in the Explanatory
Memorandum as to the effect of the Regulations pending commencement.
This statement reads "These provisions will not commence
until a date to be appointed by HMRC imposing a requirement that
information must be delivered electronically. Until then any such
requirement is to be read as merely permitting electronic delivery."
4. The Pension Schemes Online
service, the portal through which registered pension scheme e-business
is delivered, successfully went live on 6 April 2006, albeit in
a reduced state. It had originally been anticipated that the full
online service would be delivered from that date. However, it
became clear during September 2005 that the need to deliver a
fully tested robust online service would be best met by introducing
e-business through a series of smaller phased releases over the
course of the first year.
5. HMRC announced this phased
approach to introducing the new electronic facilities in November
2005 and immediately held a series of meetings with representatives
of the pensions industry and its IT supplier. This ensured that
as far as possible the on-line service available from 6 April
2006 and the timing and content of the subsequent releases could
meet the requirements and priorities of HMRC's customers as they
arose.
6. HMRC anticipate and understand
that this approach will only marginally affect pension schemes
administrators and practitioners. Some online forms and scheme
information will not be immediately available or visible from
the outset. But in any event some of these forms would not have
required completion until later on in 2006 or even the start of
2007. For most scheme administrators and practitioners there will
be no evidence of delay as they will continue to be able to meet
all their statutory filing and reporting requirements online as
and when those requirements arise. For others, there will be some
initial inconvenience as they may be unable to use the online
services to support in full their tax administration of pension
schemes. The full Pension Schemes Online service will be delivered
over a number of releases between April 2006 and April 2007.
7. Because the online service
is to be released in stages, it was difficult to provide a firm
commencement date on The Registered Pension Schemes and Overseas
Pension Schemes (Electronic Communication of Returns and Information)
Regulations 2006. Whilst HMRC were able to estimate when certain
aspects of e-business would be available there was the additional
problem of ascertaining when system users would be ready and able
to use the system. This was an important issue given that the
regulations would make the e-filing of some information mandatory.
8. It was decided to put a
provision in the regulations that would allow them to come into
force on a specified day, publicised by public notice. HMRC intends
to consult fully with representatives of the pension industry,
and discuss with its IT supplier, the precise date. This will
ensure that all of those involved will have sufficient notice
and confidence in the quality of the electronic facilities before
online filing and reporting becomes mandatory. It was felt important
that these regulations should be made available in advance of
6th April in order to give the industry the full picture
of what information would be required to be delivered electronically
once the technology permitted.
9. As a matter of general law
where information is required to be delivered in writing, the
use of electronic means may be permitted even without the Regulations.
Indeed some information is already being delivered that way. But
the Regulations make specific provision as to the effects
of delivering information electronically (where it is not required
to be so delivered) if the method of delivery is not approved
by directions made by the Commissioners. So it would have been
more accurate for the Explanatory Memorandum to have read "These
provisions will not commence until a date to be appointed by HMRC,
The date fixed will be specified after consultation with the pensions
industry and the Department's IT suppliers.". HMRC apologise
to the Committee for this and will arrange for a corrected Memorandum
to be placed on the OPSI website at the earliest opportunity.
HM Revenue & Customs
2 May 2006
Registered Pension Schemes and Overseas Pension
Schemes (Electronic Communication of Returns and Information)
Regulations 2006 (S.I. 2006/570)
The Committee considered the above
instrument at its meeting on 10th May and instructed
its Clerk to request a further memorandum on the following point:
Identify the provision that
empowers the Commissioners to bring the Regulations into force
otherwise than by means of an instrument subject to annulment.
1. There is no specific provision
empowering commencement by Gazette notice in this case.
2. Commencement provisions,
in the form of appointed day orders, are very rarely subject to
any form of Parliamentary procedure. It is suggested that they
are therefore something of an exceptional class in the context
of Parliamentary control.
3. The view of the previous
Legal Adviser to the Committee (Alan Preston Esq.,) on the use
of Gazette commencement was solicited in the context of the Reporting
of Savings Income Regulations 2003 (S.I. 2003/3297). The
context here was the relevant EU directive required transposition
into domestic legislation at a time when the actual commencement
date (as opposed to that provided for in the directive) was unclear.
The directive provided for the Council of Ministers to appoint
a later date, but only at a time when it would not have been possible
to complete the necessary domestic formalities to change the commencement
date in compliance with proper Parliamentary procedures. The
political reality was that at the time of transposition it was
clear that a later date would be appointed because of difficulties
in the negotiations between the EU and third countries. This
led to an invidious choice: making the original Regulations with
a commencement date which would have been seriously misleading
to the sector directly affected, or Gazette commencement. The
possibility of making the instrument, with the original date provided
for by the Directive, would have involved an amending instrument
being made during the Christmas recess in 2004, itself logistically
difficult as the signatories were Lords Commissioners of the Treasury,
and would inevitably have led to a breach of the 21 day rule.
4. Mr Preston's view was that
Gazette commencement did not require any express authority and
made the point that commencement, unlike the substantive provisions
of an SI, would rarely, if ever, be a matter which would trouble
Parliament. He reiterated that view when the draftsman of the
present instrument spoke to him about the commencement provision
to be included in the Montserrat Reporting of Savings Income Order
2005 (S.I. 2005/1466). Although this was an instrument with
an overseas context (an Order under the West Indies Act 1962)
it fell to be laid before Parliament. The use of an Order in
Council occurred at the express request of the Governor of Montserrat
because of a lack of drafting resource in the colony. Mr Preston's
view was that no specific authority was required for Gazette commencement,
in this case in the Montserrat Government Gazette, if, as a matter
of practice, it enabled those who would be subject to the obligations
once they were brought into force, to know what would be required
of them sufficiently far in advance to be able to prepare for
those obligations.
5. The factual context is in
many ways similar here. The background is set out in the earlier
Memorandum and the Department respectfully refers the Committee
to that document.
6. It needs to be remembered
that, in the absence of some provision as to commencement a piece
of subordinate legislation will come into force immediately after
it is made (the position is different for Acts of Parliament -
see section 4 of the Interpretation Act 1978). So some provision
for commencement is clearly necessary in order to avoid an instrument
coming into force before it is laid before Parliament or, in this
case the House of Commons.
7. The question posed by the
Committee seems to suggest that sub-delegation of the commencement
of a statutory instrument to another instrument is not possible.
The Department would respectfully adopt the view expressed by
the Committee's previous legal adviser.
8. Even were that view wrong
as a matter of general law, the Department would draw the Committee's
attention to the fact that the powers conferred by section 132(5)(a)
of the Finance Act 1999 and section 135(4)(a) of the Finance Act
2002 both allow "any authorisation or requirement for which
the regulations may provide to be given or imposed by means of
a specific or general direction given by the Commissioners".
The commencement of the regulations is itself the mechanism by
which the obligations are imposed and the authorisations given.
It is therefore respectfully suggested that whatever may be the
position generally, commencement by a direction of the Commissioners
would be possible by virtue of these paragraphs in the
relevant enabling sections.
9. The Department readily acknowledges
that it would be undesirable for commencement to be effected by
a direction without appropriate publication (no formality is prescribed
for directions). It also accepts that Gazette commencement is
only to be used in cases where there is the clearest need to articulate
the law at a time when it cannot be said with confidence when
the obligations are to be commenced. Clearly those affected by
the Regulations need to know when the obligations arise. Striking
that balance was the basis for requiring the commencement to be
notified in the London Gazette, as the official organ of record
for such decisions.
HM Revenue and Customs
15th May 2006
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