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Clause 12 Recovery of payments by HMRC
67. This clause gives the Treasury power to make regulations in regard to the recovery of payments made by HMRC.
68. Subsection (1) gives the Treasury power to make regulations requiring persons of a description specified in the regulations to account to HMRC for any sums incorrectly paid by HMRC in relation to Saving Gateway accounts. Regulations made under this power will, for example, enable HMRC to recover any amounts that have been overpaid to an account provider in response to a claim made under clause 11(3)(a).
69. Subsection (2) enables regulations to be made treating such sums as tax charged in an assessment for the purposes of Part 6 of the Taxes Management Act 1970 10. Such regulations would enable HMRC to collect these sums in the same way as sums of tax due to HMRC. Part 6 of the Taxes Management Act 1970 contains provisions relating to the collection and recovery of tax. Under these provisions, HMRC are able to issue formal demands for tax. Part 6 also makes provision for collection by distraint and for recovery of tax through Court proceedings where a person refuses to pay an amount charged.
70. Subsection (3) enables regulations to provide a time limit after which a person ceases to be required to account for an amount to HMRC.
Clause 13 Interest
71. This clause gives the Treasury power to make regulations in regard to the charging and paying of interest on amounts due to, and payable by, the Commissioners.
72. Subsection (1) enables regulations to be made providing for interest to be charged by HMRC, in prescribed circumstances, on any amount payable to the Commissioners under this Bill.
73. Regulations under subsection (2) may also provide for HMRC to pay interest where it makes a payment to an account provider for an amount claimed under clause 11(3)(a) later than the due date as set out in regulations.
74. Subsection (3) enables regulations to set the rate at which interest is to be paid, the way in which that rate is to be determined and the period in respect of which interest is to be paid. Regulations may also provide that interest payable to the Commissioners is to be treated for the purposes of Part 6 of the Taxes Management Act 1970 11 as tax due under an assessment, enabling HMRC to collect these sums in the same way as tax due to HMRC is collected (see paragraph 69 above).
Clause 14 Relief from income tax and capital gains tax
75. Clause 14 gives the Treasury powers to make regulations giving relief from income tax and capital gains tax in respect of Saving Gateway accounts.
76. Subsection (1) provides for regulations to be made giving relief from income tax and capital gains tax on any payment made by an account provider to or in relation to a Saving Gateway account.
77. Under subsection (2) regulations can be made modifying the effect of income tax or capital gains tax legislation in relation to Saving Gateway accounts.
78. Subsection (3) enables regulations to include provision for appropriate restitution to be made to HMRC in circumstances prescribed in the regulations. This will cover cases where tax relief was given where it was not due.
Clause 15 Alternative finance arrangements
79. Clause 15 allows a Saving Gateway account to be treated as an “alternative finance arrangement” for the purposes of Chapter 5 of Part 2 of the Finance Act 2005 12. For a deposit arrangement to come within section 49 of Finance Act 2005, the payments made to the depositor must come “out of any profit resulting from the use of the [deposited] money” and must equate in substance to the return on an investment of money at interest (under sections 49(1) (c) and (d)).
80. The payment of a maturity payment at the end of the Saving Gateway account, or a death payment following the death of the account holder, could be seen as breaching these conditions. This clause provides that a Saving Gateway account that would otherwise be treated, by virtue of section 49 or 49A of Finance Act 2005, as an alternative finance arrangement, but for the payment of a maturity payment or death payment, should not be disqualified because of it. It will give certainty that regulations made under clause 14 will apply to the tax treatment of an investment return paid on such an account as they do to interest. It will also give certainty of treatment in the provider’s own corporation tax returns.
Clause 16 Transfer of funds on account ceasing to be Saving Gateway account
81. This clause enables the Treasury to make regulations permitting the transfer of funds from an account that has ceased to be a Saving Gateway account to an investment plan of a kind prescribed in regulations. The Government intends to make regulations permitting the transfer of funds from an account that has ceased to be a Saving Gateway account to an Individual Savings Account (ISA). Regulations under this clause will permit an account holder to request that his or her account provider issues a certificate specifying the prescribed information. The account holder must supply this certificate to the provider of the ISA to which they wish to transfer the funds.
82. The Government intends to amend the ISA Regulations 1998 13 to allow the transfer of the closing balance of a Saving Gateway account, and the associated maturity payment, to be transferred into an ISA as a transfer of previous year subscriptions and thus outside the normal annual subscription limits, where it is accompanied by a certificate issued under clause 16 and where the transfer is made within a specified time limit.
Clause 17 Information to be supplied by relevant persons
83. This clause gives the Treasury power to make regulations under which information can be required from relevant persons.
84. Under subsection (1) the regulations may require or authorise officers of HMRC to require a relevant person to provide documents for inspection or to provide information or documents to HMRC.
85. Subsection (2) defines a relevant person as a person who is or has been an approved account provider, a person who has applied to open a Saving Gateway account or a person who holds, or has held, a Saving Gateway account.
86. Subsection (3) provides that regulations may specify how, where and when information or documents should be provided.
Clause 18 Disclosure of information
87. The information that is required to establish eligibility to the Saving Gateway will come from three sources. The DWP in England, Scotland and Wales and the DSD in Northern Ireland hold information relating to entitlement to qualifying benefits. HMRC will already hold information relating to qualifying tax credits.
88. Under section 17(1) of the Commissioners for Revenue and Customs Act 2005 14, any information acquired by HMRC in connection with a function may be used by HMRC in connection with any other of its functions. This will enable HMRC to use tax credit information for purposes relating to the Saving Gateway, as both tax credits and the Saving Gateway are or will be functions of HMRC.
89. Section 121F of the Social Security Administration Act 1992 15 permits information relating to qualifying benefits to be supplied by the Secretary of State and the DSD respectively to HMRC, but such information can only be used for certain specified purposes. The Social Security Administration (Northern Ireland) Act 1992 16 contains similar provisions that are applicable in Northern Ireland.
90. Subsections (1) and (2) amend the Social Security Administration Act 1992 and the Social Security Administration (Northern Ireland) Act 1992 respectively to enable information held by the DWP and the DSD to be supplied to HMRC for the purposes of the Saving Gateway.
Clause 19 Penalties: incorrect information
91. Clauses 19, 20 and 21 make provision in relation to penalties.
92. Clause 19 makes provision in relation to penalties that may be imposed where incorrect information is supplied to HMRC.
93. Under subsection (1) HMRC will have the power to impose a penalty of £300 on anyone who deliberately makes an incorrect declaration when applying to open a Saving Gateway account.
94. Subsection (2) permits HMRC to impose a penalty not exceeding £3,000 on a person who deliberately or carelessly makes an incorrect statement or declaration in or in connection with a return made in accordance with regulations made under clause 11 and on a person who deliberately or carelessly provides incorrect information in response to a requirement to provide such information in accordance with regulations made under clause 17.
95. Subsection (3) sets out that where a person provides information to HMRC, later discovers that the information provided was inaccurate and fails to take reasonable steps to inform HMRC, that person will be treated as having acted carelessly. A penalty may be imposed under subsection (2) in such circumstances.
Clause 20 Penalties: failure to submit return etc.
96. Under subsection (1) penalties may be imposed on account providers who fail to submit a return within the time set out in regulations made under clause 11 and on any person who does not provide a document or information within the time set out in regulations made under clause 17.
97. Subsection (2) sets this penalty at no more than £300 for the initial failure. In addition, daily penalties of not more than £60 may be imposed for each day that the failure continues after the first penalty is imposed.
98. Subsection (3) ensures that no penalty will be charged under subsection (1) once the failure has been remedied.
99. Subsection (4) ensures that a person will not be considered to have failed to make a timely claim or failed to provide or make information available on time if they have done so within any additional time offered by HMRC or if they had a reasonable excuse for the delay.
100. Subsection (5) lists matters which are and are not considered to be reasonable excuses for the purposes of subsection (4).
Clause 21 Penalties: non-compliance by account provider
101. This clause sets out the penalties that may be imposed on a provider who fails to comply with requirements imposed by legislation. Under subsection (1) penalties can be imposed on account provider where:
(a) the provider offers or operates an account which purports to be a Saving Gateway account but which does not comply with a requirement imposed by or under clause 4;
(b) the provider fails to pay a maturity payment to an account holder within the period specified in regulations made under clause 8(4);
(c) the provider fails to make a death payment to the personal representatives of a deceased account holder within the period specified in regulations made under clause 4(2)(b);
(d) the provider allows the account holder to exceed the limit on payments into the account imposed by regulations under clause 4(3);
(e) the provider fails to comply with a condition imposed by or under regulations made under clause 5 (approval as an account provider);
(f) the provider opens a purported Saving Gateway account for a person where the application for the account does not contain the declaration to be made by the account holder under clause 6(2)(b) or does not comply with clause 6(2)(c);
(g) the provider fails to open an account for an account holder, in breach of the requirement to do so under clause 6(3);
(h) the provider opens an account for an account holder in breach of a requirement to refuse to open an account under regulations made under clause 6(4);
(i) the provider fails to comply with any other requirement imposed in regulations made under clause 7 (transfer of accounts) or clause 9 (statements).
102. Subsection (2) sets the penalty under subsection (1) as not exceeding the greater of £300 or £1 in respect of each Saving Gateway account affected by the matter, or any of the matters, in respect of which the penalty under subsection (1) is imposed.
103. Subsection (3) provides for a supplementary penalty to be imposed by HMRC where an earlier penalty imposed under subsection (1) was based on an underestimate of the number of accounts affected.
Clause 22 Decisions and notices
104. This clause sets out various procedural matters relating to penalties imposed under clause 19, 20 or 21.
105. Subsection (1) specifies that the decision to impose a penalty is that of the Commissioners.
106. Subsection (2) provides that the time limit within which a decision to impose a penalty can be made is 12 months beginning with the relevant date.
107. Subsection (3) defines what is meant by “the relevant date”.
108. Subsection (4) defines what is meant by “the appeal period” for the purposes of subsection (3)(a), which relates to a decision by the Commissioners to impose a penalty under clause 19(1) on a person who deliberately makes an incorrect declaration under clause 6(2)(b).
109. Subsection (5) states that the Commissioners must give notice of their decision to impose a penalty to the person on whom the penalty is imposed.
110. Subsection (6) allows the Commissioners to use their discretion to reduce a penalty after the notice referred to in subsection (5) has been given.
111. Subsection (7) provides a 30-day time limit from the date on which the penalty notice was issued for the payment of any penalty.
112. Subsection (8) sets out what information must be included within the penalty notice namely the amount, the date of issue and details of the right of appeal.
113. Subsection (9) enables such penalties to be treated as tax charged in an assessment for the purposes of Part 6 of the Taxes Management Act 1970 17. This will enable HMRC to collect these sums in the same way as sums of tax due to HMRC.
Clause 23 Rights of appeal
114. This clause provides the circumstances in which appeals can be made against certain decisions made, or certain actions taken, by HMRC.
115. Subsection (1) provides a right of appeal against a decision made by the Commissioners: not to approve a person as an account provider; to withdraw approval to provide Saving Gateway accounts; not to pay an amount claimed by an account provider under regulations made under clause 11(3); not to issue a notice of eligibility for a Saving Gateway account; and that an account is not a Saving Gateway account.
116. Subsection (2) provides that a person can appeal against a decision, made by the Commissioners under regulations made under clause 12(1), to require a person to account for any sums that have been paid by HMRC in relation to Saving Gateway accounts. This subsection also provides that a person can appeal against a decision, made by the Commissioners under regulations made under clause 14(3), to require a person to account for tax, or an amount in respect of tax, on a payment made by an account provider to, or in relation to, a Saving Gateway account.
117. Subsection (3) provides a right of appeal against the imposition by the Commissioners of any penalty under this Bill.
118. Subsection (4) provides a right of appeal against the amount charged by the Commissioners by way of a penalty under this Bill. This right of appeal applies to all penalties under this Bill, other than the penalty at clause 19(1), where this Bill fixes the amount to be charged at £300. While a tribunal may set aside or confirm the decision to impose a penalty under clause 19(1), it would not be open to a tribunal to reduce or increase the level of this penalty. A tribunal’s powers in relation to appeals against the Commissioners’ decision to impose a penalty are specified in clause 25(3), as described below.
Clause 24 Exercise of rights of appeal
119. This clause sets out the procedure as to how an appeal made under clause 23 should be notified to the Commissioners, and enables the Treasury to make regulations applying administrative provisions of other enactments to appeals relating to Saving Gateway accounts.
Clause 25 Appeals: jurisdiction and powers
120. This clause sets out the jurisdiction and powers of the bodies that will hear appeals made under this Bill.
121. The Tribunals, Courts and Enforcement Act 2007 18 came into force in July 2007, creating two new generic tribunals, the First-tier Tribunal and the Upper Tribunal. The work of each Tribunal is divided into “Chambers”. Each Chamber comprises similar jurisdictions, or jurisdictions which bring together similar types of experts to hear appeals. Each Chamber will operate under rules and procedures tailored to the needs of individual jurisdictions within the Chamber.
122. Appeals in England, Scotland, Wales and Northern Ireland that relate to taxation matters will be heard by the Tax Chamber, which is expected to be operational from 1 April 2009. All other appeals under this Bill in England, Scotland and Wales will be heard by the Social Entitlement Chamber, which commenced operation on 3 November 2008. Non-tax appeals in Northern Ireland will continue to be subject to the regime applicable in Northern Ireland to social entitlement appeals.
123. Subsection (1) sets out which tribunal will hear appeals made under this Bill.
124. Under subsection (1)(a), all tax appeals in the UK, and all social entitlement appeals in England, Scotland and Wales, will be heard by the First-tier or Upper Tribunal, as determined by or under the Tribunal Procedure Rules. These rules are made by the Tribunal Procedure Committee, a body set up by the Tribunals, Courts and Enforcement Act 2007.
125. Subsection (1)(b) provides that non-tax appeals in Northern Ireland will be heard by an appeal tribunal constituted under Chapter 1 of Part 2 of the Social Security (Northern Ireland) Order 1998 19 (“the 1998 Order”).
126. Subsection (2) provides that on a non-penalty related appeal under clause 23(1) or 23(2), the tribunal may confirm or set aside a decision of the Commissioners in its entirety, or otherwise allow an appeal in part.
127. Subsection (3) provides that on a penalty related appeal under clause 23(3) or 23(4), the tribunal may confirm or set aside a decision of the Commissioners to impose a penalty, or in those cases where the penalty amount is not fixed in this Bill, confirm, reduce, or increase its amount as considered appropriate, subject to the permitted maximum.
128. Section 11(2) of the Tribunals, Courts and Enforcement Act 2007 provides for appeals against decisions of the First-tier Tribunal on points of law. Subsection (4) provides that where the First-tier Tribunal has found a person to be liable for a penalty, that person can, in addition to any right of appeal under section 11(2) of the Tribunals, Courts and Enforcement Act 2007, appeal that decision to the Upper Tribunal. On such an appeal the Upper Tribunal has a similar jurisdiction as conferred on the tribunal under subsection (3). This has effect in England, Wales and Scotland. An equivalent provision for Northern Ireland is made in subsection (6).
129. Subsection (5) provides that decisions of an appeal tribunal in Northern Ireland on the Saving Gateway should be treated as if they were made under Articles 13 or 14 of the 1998 Order, for the purposes of Article 15 of that Order. The effect of this provision is that appeals on a point of law against Saving Gateway decisions made by an appeal tribunal in Northern Ireland will be to the Northern Ireland Social Security Commissioner.
130. Subsection (6) replicates the effect of subsection (4) in relation to penalty appeals in Northern Ireland. It provides that where an appeal tribunal in Northern Ireland has found a person to be liable for a penalty, that person can appeal that decision to the Northern Ireland Social Security Commissioner. On such an appeal the Northern Ireland Social Security Commissioner has a similar jurisdiction as conferred on the tribunal under subsection (3).
131. Subsection (7) defines the Northern Ireland Social Security Commissioner for the purposes of this Bill.
Clause 26 Northern Ireland
132. Clause 26 inserts a reference to the Saving Gateway into Schedule 2 of the Northern Ireland Act 1998 20, thus making it an excepted matter for the purposes of the devolution settlement in Northern Ireland (and therefore outside the competence of the Northern Ireland Assembly).
Clause 27 Orders and regulations
133. This clause provides that the power to make an order or regulations under the Bill is exercisable by the Treasury and sets out the Parliamentary procedures that will apply.
134. Any order or regulations must be laid before both Houses of Parliament. There is one exception to this: in accordance with the normal convention concerning tax matters, regulations made under clause 14 will be laid before the House of Commons only.
135. The first exercise of any power to make an order, or to make regulations, under the powers given by the Bill will be subject to the affirmative procedure. The subsequent exercise of those powers will generally be subject to the negative procedure as the powers are considered to be largely administrative and technical in nature.
136. There are five exceptions to this. An order under clause 3(6), which allows the Treasury to amend the list of qualifying benefits or tax credits will always be subject to the affirmative procedure.
137. Regulations made under clause 3(1)(b), prescribing the kind of connection with the United Kingdom that a person must have in order to be an eligible person, regulations made under clause 3(4), which may limit the circumstances in which a person entitled to child tax credit or working tax credit is eligible for a Saving Gateway account, and regulations made under clause 8(1), specifying the rate at which the government contribution is to be paid, will also always be subject to the affirmative procedure.
138. An order under clause 24(5), which allows the Treasury to amend the list of enactments set out in clause 24(3) (provisions of which may be applied by regulations in relation to an appeal under clause 23), will always be subject to the negative procedure.
FINANCIAL EFFECTS OF THE BILL
139. Saving Gateway maturity payments will be funded from the Consolidated Fund. Initial estimates of the expenditure arising in 2012/13 (two years after the first Saving Gateway accounts are opened), based on the Government contributing 50p for every pound saved in Saving Gateway accounts, are £130m, then £110m in 2013/14 and £100m in 2014/15. Costs in 2010/11 and 2011/12 are negligible as the government contributions on accounts opened in 2010 will not be payable until 2012/13. The Government expects the annual cost of its contributions to fall to £60m per year in steady state. The expenditure in early years is higher because of the large number of people who will become eligible to open a Saving Gateway account when the scheme is introduced.
140. Estimated implementation and running costs for the Saving Gateway are detailed below. These are based on implementation in 2010. Expenditure in 2008/09 and 2009/10 includes the development costs of the new IT system. The cost for 2010/11 includes marketing and office costs to manage the initial influx of applications expected. Estimates currently show steady state running costs of £1.6m per annum from 2015/16.
| 2008/09 | 2009/10 | 2010/11 | 2011/12 | 2012/13 |
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| £2.8m | £5.4m | £7.8m | £4.3m | £3.4m |
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