The failure of the Presbyterian Mutual Society - Treasury Contents

Written evidence submitted by HM Treasury


Does HMRC have a policy on how to treat taxpayers who cannot meet tax bills because of the administration of PMS?

  HMRC takes a sympathetic approach to both individuals and businesses having genuine short term difficulties in paying the tax they owe. This applies just as much to those difficulties which are associated with the administration of the Presbyterian Mutual Society as it does to those whose difficulties arise from any other cause.

  There is clearly considerable complexity in the position of those involved in PMS, deriving from the nature of the society's status, the manner in which insolvency legislation works and differences between compensation arrangements in NI and the UK. However, their standing with regard to their tax liabilities is the same as for anyone in temporary financial difficulties, which is that HMRC is committed to working with those who contact them about problems in making tax payments

Is Government considering the desirability of a resolution/insolvency regime which takes account of the principles on which mutual societies are based?

  The Banking Act 2009 provides special resolution and insolvency arrangements for all types of UK institution which have a Financial Services and Markets Act (FSMA) permission to accept deposits.

  The Act includes provisions for extending the Special Resolution Regime (SRR) stabilisation tools to building societies, and adapting them to reflect the different legal framework of building societies. The Act also includes a power to extend the resolution and insolvency arrangements to credit unions in the future, should this be considered appropriate.

When does the Treasury intend to bring forward legislation on credit unions in Northern Ireland?

  In advance of legislation to implement proposed changes to current policy, it is required that appropriate consultation must precede any legislative change.The Treasury and the Department of Enterprise, Trade and Investment (DETI) in Northern Ireland, are currently finalising a joint consultation document covering the relevant issues in relation to credit unions in Northern Ireland.It is intended that this will be published shortly.

  However in the recent debate on amendments to the Financial Services Bill, the view was expressed that since all parties agreed that the proposed changes to the legislative framework are in the best interests of all, the anticipated consultation process appeared to be unnecessary. In response, the Economic Secretary to the Treasury indicated that the Government would consider bringing forward the legislative change were it to receive a formal notification from the Northern Ireland Executive, clearly backed by the Assembly, to the effect that it did not feel there was a need to consult and if agreement could be reached with the FSA on the level of detail needed to be enable the change to be made with confidence that the other elements could be accommodated.

  The Treasury is therefore currently investigating urgently with both Northern Ireland and with the FSA how the changes that all parties regard as urgent and essential can most effectively be brought about.However, this course may present its own legal challenges, as well as operational difficulties for the FSA, if full and proper consideration is not focused on the timing of implementation of appropriate legislation.

1 February 2010

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