The
Chairman: I am sure it was not the
Minister.
Jane
Kennedy: It is hard to deny without
blushing. I
understand the concerns behind amendment No. 285 and why it
was tabled. I am conscious that questions were raised during the
consultation about the extent to which the provisions will apply to tax
credits and child benefit. I acknowledge that this is a matter of
concern for many who have made representations on the Bill. I want to
reassure the Committee that HMRC will not seek to use an ongoing tax
credit award or a child benefit award to satisfy other tax debts that
may have arisen. Section 45 of the Tax Credits Act 2002 and section 187
of the Social Security Administration Act 1992 make entitlement to tax
credits and child benefit an inalienable right. We have no intention
whatever of moving away from that
principle. Secondly,
except in very limited circumstances, which I will explain, HMRC will
not set a tax repayment against a tax credit or child benefit
overpayment. Where a tax credit or child benefit award has been made,
and an overpayment subsequently arises, HMRC will not upset procedures
for instalment plans or for recovery from an ongoing award. However, as
explained there may be certain circumstances, as now, where at the
request of the customer, HMRC will set off a tax repayment against a
tax credit or a child benefit overpayment. We have had requests for
that in the
past. As
set out in the discussion paper “Tax Credits: Improving Delivery
and Choice”, which I published last month, from next April, HMRC
will begin a small trial to offer tax credit customers in employment
the option of having their overpayment recovered by a deduction in
their wages through an adjustment of their pay-as-you-earn code. This
is a small pilot designed to improve choice for tax credit customers.
It is a suggestion that I have heard over the last year from tax credit
customers. It seemed a sensible idea to
trial. We
will make no changes to the policy I have outlined without first coming
back to the House. I do believe, however, that there are circumstances
where a customer would like the flexibility to offset a tax repayment
against a tax credit overpayment and where that is the case it ought to
be possible for us to accommodate that. The discussion document
includes examples of other Administrations, such as those in New
Zealand and Australia, which use a similar arrangement. That is
something that we should consider offering to tax credit
customers in the UK. I hope that I have reassured hon. Members on the
proper concerns that they have raised. I hope that they will not take
up time by pressing their amendments to a
vote. Mr.
Mark Field (Cities of London and Westminster) (Con): I
will detain you, Sir Nicholas, and the rest of the Committee only very
briefly. Some quite deep concerns have come out in the course of this
debate. Although the Minister has to an extent assuaged some of the
concerns where there is consent between the Revenue and taxpayer on
some sort of set-off arrangement, most taxpayers still have a deep
concern that all too often the authorities do not get this right. That
applies particularly in relation to the amendment where we discussed
the working tax credit system, which has become almost notorious for
its
unreliability. Where
there is consent between a taxpayer and the authorities it is
absolutely fine, but this is not about consent. It is about imposing a
system. There is deep concern on the part of the taxpayer where there
is a lack of reliability or a perceived lack of reliability, as is
often the case, not least where there are potential interest payments.
It always seems to be a one-sided situation: late payments from the
Revenue do not seem to attract interest to the taxpayer, whereas they
do in the opposite direction. There is quite some concern about the
notion that set-off now becomes the norm, irrespective of the consent
or arrangements where there has been a complicated tax situation
between the taxpayer and the Revenue. It is not for me to suggest that
this might go to a Division, but these are deep concerns. For my part
at least, I am not sure that the Minister has been able to assuage
them.
The
Chairman: I say to the Financial Secretary that an ability
to blush is a sign of an honest person.
Mr.
Gauke: Thank you very much, Sir Nicholas, and I must say
that you are looking very rosy-cheeked yourself, which I think confirms
your
dictum. The
Financial Secretary’s remarks are helpful in assuaging our
concerns about tax credits. She has been very explicit on that,
although I am still not convinced that the proposal could not be put in
the Bill. I also note her comments on amendment No. 283, which is of a
practical nature. However, as I indicated in my opening remarks, we are
particularly concerned about the matter addressed in amendment No. 284,
which talks about sums being payable only when they are agreed. My hon.
Friend the Member for Cities of London and Westminster eloquently set
out the reasons for our concerns, and so we seek to press that
amendment to a
Division.
The
Chairman: The hon. Gentleman has to make a request for a
Division, because amendment No. 284 is not the lead amendment. I shall
give the matter some consideration, but I now intend to call the hon.
Member for Taunton, who is responsible for the lead
amendment.
Mr.
Browne: Thank you, Sir Nicholas. Your guidance on such
matters is instructive. I am happy to withdraw amendment No. 197, which
will pave the way for the hon. Member for South-West Hertfordshire to
move his amendment, as I understand it. I beg to ask leave to withdraw
the amendment
The
Chairman: The hon. Gentleman’s remarks have
persuaded me to grant a Division on amendment No. 284. First, however,
I must call amendment No. 198. We will come to amendment No. 284 a
little later, at which point I shall put it to a
Division. Amendment,
by leave,
withdrawn.
Mr.
Browne: I beg to move amendment No. 198, in
clause 125, page 77, line 36, at
end insert— ‘(2A) The person
concerned may appeal to the First-tier Tribunal against a decision by
the Commissioners under subsection (2) if that decision can be
reasonably shown to have had a significant adverse effect on the
financial stability of the person
concerned.’.
The
Chairman: With this it will be convenient to discuss
amendment No. 286, in clause 125, page 78, line 26, at end
add— ‘(14) A person may
appeal to the First-tier Tribunal against any decision of the
Commissioners under subsection
(2). (15) Notice of an appeal
must be given— (a) in
writing, and (b) before the end
of the period of 30 days beginning with the date on which the
Commissioners’ notification under subsection (2B) was
issued. (16) On an appeal under
subsection (14), the First-tier Tribunal
may— (a) confirm the
decision, (b) cancel the
decision, (c) substitute for
the decision another decision that the Commissioners had power to make
having regard to subsection
(2A).’.
Mr.
Browne: Unsurprisingly, the amendments overlap to a degree
and touch on some of the issues discussed in the previous group. I
shall be brief and specific. Amendment No. 198 would insert a new
subsection to allow a person to appeal to the first-tier tribunal
against a decision by HMRC to offset. Currently the clause gives no
right to the taxpayer to contest a decision by HMRC, and the Institute
of Chartered Accountants, and other bodies, have expressed concern that
offset could damage businesses and force insolvency if exercised in
inappropriate circumstances.
Clause 126, to
which I shall not speak now, but which we shall come to shortly, would
prevent set-off where insolvency procedure has been applied already.
Providing an appeal route for the taxpayer, in clause 125, would allow
a taxpayer to raise concerns and prevent set-off causing insolvency. As
a safeguard, the amendment would allow an appeal only if the
“decision can be
reasonably shown to have had a significant adverse effect on the
financial stability of the person
concerned.” The
purpose of the amendment—this is the same point that I sought to
make 10 minutes or so ago, and similar to the one made by my hon.
Friend the Member for Cities of London and Westminster—is to
address the balance between the power held by HMRC and that held by the
individual taxpayer, who should have the opportunity, should he or she
wish, to make a formal appeal if they feel that the behaviour and
procedures followed by HMRC are unfairly to their
disadvantage.
1.45
pm
Mr.
Gauke: With regard to the previous group of amendments, I
am grateful to the Liberal Democrats for standing aside and helping us
on this point of principle.
Stephen
Pound (Ealing, North) (Lab): They are not standing in
Haltemprice and
Howden.
Mr.
Gauke: The hon. Gentleman gets exactly what I am alluding
to. I am grateful to him for making it more
explicit. Amendments
Nos. 198 and 286 both essentially insert a right of appeal in the
context of set-off. Our amendment No. 286 provides slightly more detail
than No. 198 but both seek to achieve the same objective and provide
the safeguards that Opposition Members think may be necessary with
regard to matters of
set-off.
Jane
Kennedy: Set-off will initially take place manually rather
than as a bulk process, and the customer will be informed at the time
that set-off is made.
I understand
the concerns expressed but set-off will be made in the course of
HMRC’s day-to-day dealings with taxpayers in debt, so there will
be the opportunity for dialogue. It will be made only in respect of
established debt where the normal appeal routes concerning the amount
of debt have run their course.
It would be
wrong to allow debtors a further opportunity to reopen a dialogue in
the courts on how much they have to pay. An appeal process as suggested
could undermine the whole benefit of set-off by unnecessarily
complicating and delaying the time it takes to collect debts and to
make repayments to taxpayers. It would prolong uncertainty and thereby
potentially add to the taxpayer’s financial
instability.
Appeals with
little prospect of success could be used as delaying tactics. A
successful appeal would leave a collectable debt which HMRC would then
pursue perhaps even through the civil courts. The debt would still be
collected but through a far more burdensome process. That is not fair
to the general taxpayer and HMRC.
Clearly, there
has to be some channel for discussion. As now, HMRC would consider
particular circumstances, where the taxpayer raises concerns where
set-off has been made. HMRC would continue to consider these on a
case-by-case basis. That has not been changed by this
measure.
I found this
debate helpful, Sir Nicholas, in understanding the concerns around
set-off and I want to keep this matter under review, but I think we
have the balance right in the Bill as it stands and that the amendments
are
unnecessary.
Mr.
Gauke: We continue to have concerns. The amendment we have
yet to vote on would address a lot of our concerns in general with
regard to set-off but, given that we are to have one Division on this
set-off issue, we will not request
another.
Mr.
Browne: I am happy to beg leave to withdraw my amendment
as we are to have a Division on an aspect of the clause and that would
be helpful for testing the opinion of the Committee.
Amendment,
by leave, withdrawn.
Amendment
proposed: No. 284, in clause 125, page 78, line 15, at
end insert ‘and a sum is
payable only when it is agreed between the parties to be payable or
where the person has exhausted all possible appeal
routes.’.—[Mr.
Gauke.] Question
put, That the amendment be
made:— The
Committee divided: Ayes 8, Noes
14.
Division
No.
14] Question
accordingly negatived.
Clause 125 ordered to stand
part of the Bill.
Clause
126No
set-off where insolvency procedure has been
applied
Mr.
Gauke: I beg to move amendment No. 287, in
clause 126, page 78, line 31, leave
out ‘that’ and insert
‘a’.
The
Chairman: With this it will be convenient to discuss
amendment No. 288, in clause 126, page 78, line 32, at end
insert ‘or a
post-insolvency debit against a pre-insolvency
credit’.
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