House of Lords - Explanatory Note
Social Security Contributions (Transfer Of Functions, Etc.) Bill [H.L.] [H.L.] - continued          House of Lords

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Clause 17

172.     Clause 17 introduces Schedule 6. This provides for the detailed amendment of existing legislation relating to decision-making and appeals (the TMA, CBA, the SSAA, the Pension Schemes Act 1993, the Employment Rights Act 1996 and the SSA). In particular, it provides for requests for Inland Revenue decisions on NICs which are necessary to make benefit decisions or settle benefit appeals.

Schedule 6: Decision making and appeals

Taxes Management Act 1970

173.     Paragraphs 1 to 3 amend the TMA to give the tax appeal Commissioners jurisdiction over appeals against decisions under Part II of this Bill.

Social Security Contributions and Benefits Act 1992 (CBA)

174.     Paragraphs 4 to 8 amend the Social Security Contributions and Benefits Act 1992 to include this Bill's appeal procedures in the legislation which may be modified for special cases - for example, the contributions treatment of servicemen, mariners and those living abroad.

175.     Paragraphs 9 and 10 amend CBA to provide that interest and penalties shall not run where a decision affecting the interest or penalty liability has yet to be made.

Social Security Administration Act 1992 (SSAA)

176.     Paragraphs 11 and 13 make consequential amendments to sections 117 and 166 SSAA to reflect the new arrangements for appeals.

177.     Paragraphs 12, 14 and 15 amend the SSAA to do three things. First, paragraph 12 introduces a new section 117A. This parallels the present section 117. Section 117 provides that decisions by DSS shall be treated as final for court proceedings, for example for enforcement of NICs debts. The new section 117A similarly provides for finality in such court proceedings of decisions taken by the Inland Revenue on transferred matters. Where a decision relevant to those proceedings has yet to be taken, the matter will be referred to an officer of the Inland Revenue for a decision. Where an appeal is outstanding against a decision, the court proceedings will be stayed until the appeal has been resolved. Second, paragraph 14 provides that this Bill's appeals legislation may be modified by bilateral contributions and benefits treaties with other countries. Third, paragraph 15 provides for payment of travelling expenses to people required to attend an interview, including one in connection with an appeal. This provision parallels DSS's ability to pay expenses under section 180, SSAA.

Pensions Schemes Act 1993

178.     Paragraphs 16 and 17 amend the Pensions Schemes Act 1993 to provide for decisions to be made by the Inland Revenue rather than by DSS; and provide for a pensions equivalent to the new section 117A, SSA 1992 material on court proceedings. Employment Rights Act 1996

179.     Paragraph 18 amends section 215 of the Employment Rights Act 1996 to provide for appeals about overseas employment issues to go down the tax appeal route.

Social Security Act 1998

180.     Paragraphs 19 to 30 amend the SSA to do eleven things. Paragraph 19 makes clear that decisions on transferred matters can only go down the tax appeal route (apart from pensions matters).

181.     Paragraph 20 repeals a reference to DSS variations of decisions on directors' liability, since those decisions pass to the Inland Revenue.

182.     Paragraph 21 provides a power for DSS to refer contributions issues to the Inland Revenue for resolution. This may involve an initial opinion or a formal appealable decision. And DSS may continue to process other issues while the contributions issue is being resolved.

183.     Paragraph 22 revises section 12(2), SSA 1998 to reflect the transfer of statutory sick pay and statutory maternity pay appeals to the tax appeal Commissioners.

184.     Paragraph 23 repeals references to procedural issues connected to matters transferred to the tax appeal Commissioners by this Bill.

185.     Paragraphs 24 and 25 remove the current ability of DSS or an appeal tribunal to require SSP or SMP claimants to take a medical.

186.     Paragraph 26 provides powers for benefit appeal tribunals to refer to the Inland Revenue contributions issues relevant to determining a benefit appeal. Where this happens, DSS may be required to revise their earlier decision.

187.     Paragraph 27 makes clear that the rules governing the correction of benefit decisions made in error do not include decisions in respect of transferred functions.

188.     Paragraph 28 clarifies the references to "Commissioners", drawing a distinction between the tax appeal Commissioners and Social Security Commissioners.

189.     Paragraph 29 means the Secretary of State must continue to report to Parliament on decision-making standards in respect of all matters going to a unified appeal tribunal.

190.     Paragraph 30 removes from DSS's decision-making powers the decisions on the functions transferred to the Inland Revenue.

Clause 18

191.     This defines who are the "tax appeal Commissioners".


Clause 19: payments under section 42A(3) Pension Schemes Act 1993

192.     This clause provides that National Insurance rebates should be funded from the NIF. However the legislation provides for age-related rebates to contracted-out money purchase schemes to be paid out of money provided by Parliament. This clause changes section 177 of the Pensions Schemes Act and section 172 of the Pension Schemes (Northern Ireland) Act (the sections which cover the general financing arrangements for those Acts) to allow money purchase rebates to be funded from the NIF.

193.     Subsection (1) provides for National Insurance rebates for contracted-out occupational money purchase pension schemes made by Inland Revenue to be funded from the NIF, and for any recoveries to be paid into that Fund.

194.     Subsection (2) makes a corresponding provision in the Northern Ireland legislation.

195.     Subsection (3) allows for the NIF to reimburse the consolidated fund the monies that the Secretary of State estimates it has paid out in respect of such rebates in the current tax year.

196.     Subsection (4) makes a corresponding provision in the Northern Ireland legislation.

197.     Subsection (5) provides that until the date of operational transfer, any rebates made will be made by the Secretary of State; and up until that date the reference to the Inland Revenue in subsection (1) shall have effect as if it was a reference to Secretary of State.

Clause 20: Property, rights and liabilities

198.     This clause deals with the transfer of property, rights and liabilities of the Secretary of State for Social Security to the Inland Revenue and the Treasury under the provisions of this Bill.

199.     Subsections (1) and (2) deal with the transfer of property, rights and liabilities to the Inland Revenue or the Treasury when a transfer provision is commenced by Order.

200.     Subsection (3) replicates a standard provision in Orders in Council under the Ministers of the Crown Act 1975. It clarifies property ownership following transfers of functions so that if the Inland Revenue or Treasury wish to dispose of property transferred to them under this Bill, a certificate issued to say this shall be conclusive evidence that this property has been transferred. This provision is unlikely to be used since the vast majority of DSS property is now held under contract with private suppliers. However, these provisions provide a back-up in any case of disputed ownership.

Clause 21: Contracts

201.     The Contributions Agency currently receives goods and services under a wide range of contracts. Under clause 20 contracts relating wholly to functions transferred become contracts with the Inland Revenue. However, the Contributions Agency also receives goods and services under contracts which also provide for the supply of goods or services to other parts of the DSS, such as the Benefits Agency. So in these cases the contract relates partly to functions transferred and partly to functions to remain in the DSS. Examples would be some of the contracts providing computer hardware and software (run by the Information Technology Services Agency on behalf of the DSS), office services to buildings where there is joint ownership by Benefits Agency and Contributions Agency staff, and so on. Clause 21 provides for continuity in the supply of goods or services under these contracts.

202.     Subsection (1) of clause 21 defines this group of contracts and subsection (2) disapplies the general provisions for the transfer of property, rights and liabilities in clause 20. Subsections (3) to (5) then provide two patterns for treatment of these contracts. The first, in subsection (3), provides that the contract, in so far as it relates to transferred functions, should be treated as providing goods and services also to the Inland Revenue. This means that the Contributions Agency, as part of the Inland Revenue, will continue to be able to receive goods and services under current contracts, although the contract will continue to be with and managed by the DSS. The Inland Revenue will not be able to use this provision to receive any goods and services under the contract for purposes other than functions transferred to it by this Bill.

203     Subsections (4) and (5) then provide for an alternative option. In some cases of contracts within this group it may be more appropriate for the contract to be transferred to the Inland Revenue, in particular where the Contributions Agency receives the majority of the benefits under the contract. Subsection (4) provides an Order-making power by which specific contracts, or groups of contracts, can be treated as exceptions to the rule in subsection (3). The exception, set out in subsection (5) is that the contract is transferred to the Inland Revenue but that DSS can continue to receive goods and services under the contract.

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Prepared: 27 november 1998