Appendix 8
S.I. 2012/867: memorandum from Her Majesty's Revenue
and Customs
Social Security (Contributions) (Re-rating)
Consequential Amendment Regulations 2012 (S.I. 2012/867)
1.In its letter to HM Treasury dated 16 May 2012,
the Joint Committee has requested a memorandum to be submitted
on the following point-
Explain why paragraph 3.2 of the Explanatory Memorandum
states that the timing of the Social Security (Contributions)
(Re-rating) Order 2012 meant that it was not possible for the
Regulations to be laid in compliance with the 21-day rule given
that that Order was made on 12 March.
2. The timing of the Social Security (Contributions)
(Re-rating) Consequential Amendment Regulations 2012 (the
"Regulations") is dependent on the approval of the Social
Security (Contributions) (Re-rating) Order 2012 (the "Order")
by both Houses of Parliament.
3. Under section 142 of the Social Security Administration
Act 1992, the Order cannot
be laid before Parliament until a copy of a report by the Government
Actuary is laid before Parliament on the effect which, in that
Actuary's opinion, the making of the Order would have on the National
Insurance Fund. The Order was laid before Parliament (together
with that report) at the end of January. The approvals took place
on Wednesday, 29 February in the House of Commons and Wednesday,
7 March 2012 in the House of Lords. The Order was made on Monday,
12 March 2012.
4,The Regulations were then to be made by the Treasury
but required the prior concurrence of both the Department for
Social Development in Northern Ireland and the Secretary of State
for the Department for Work and Pensions. As the Committee will
appreciate, the requirement in the legislation for such concurrence
translates in practice into a requirement for the same original
hard copy of the Regulations to be signed in a variety of geographical
locations and such a process must be done consecutively, which
takes time.
5.The Regulations were first signed on Wednesday,
14 March 2012 by a senior officer of the Department for Social
Development in Northern Ireland. The original signed hard copy
of the Regulations then needed to be physically transported from
the Department's office in Northern Ireland to the offices of
HMRC in London. The hard copy of the Regulations arrived back
at HMRC's London office on Friday, 16 March 2012.
6.The hard copy of the Regulations was hand delivered
to the offices of the Department for Work and Pensions on Friday,
16 March 2012. The Minister of State for the Department for Work
and Pensions then signed the Regulations on Saturday, 17 March
2012.
7. On Monday, 19 March 2012, the hard copy of the
Regulations was collected from the offices of the Department for
Work and Pensions and hand delivered to the Treasury. That same
day two of the Lords Commissioners of Her Majesty's Treasury made
the Regulations, which were laid before Parliament the following
day (Tuesday 20 March 2012).
8. Given the immediacy of National Insurance liability,
the amendment needed to take effect from the beginning of the
2012-13 tax year (i.e. 6 April 2012) and accordingly it was not
possible in the circumstances to allow 21 days to elapse between
the laying of the instrument and its coming into force.
9. It is very much regretted that this Statutory
Instrument was in breach of the rule requiring laying of an instrument
21 days before its provisions take effect. In the light of our
experiences on this occasion, we will aim to lay the relevant
Re-rating Order earlier next year.
10. We would like to make a further observation,
which we hope may mitigate the effects of the breaching of the
21 day rule in this case. The amendment in the Regulations is
designed to mirror a change made by the Order. The Order increased
the rate of Class 2 National Insurance contributions ("NICs")
from £2.50 to £2.65. These Regulations provide for a
similar increase of 15p in respect of the special rate payable
by share fishermen (from £3.15 to £3.30 per week). Therefore,
we would note that the fact of the increase of 15p in the rate
of Class 2 NICs had already been debated and approved by both
the House of Commons and House of Lords. Notwithstanding that
the substance of this matter had already been approved by both
Houses, there was then 16 days between the laying of the Regulations
and their coming into force lest further issues needed to be raised,
although we do, of course, very much regret that it was not possible
to allow the full 21 days to apply.
HM Revenue and Customs
22 May 2012
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