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Lord Freeman: I am much encouraged by the Minister's approach and by his willingness to ensure that sensible amendments are made to the forms and procedures. Indeed, I am so grateful that, while he is on

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the Front Bench and between Divisions and while he is preparing his self-assessment tax form, if he would like some help, perhaps he would have a word with me. With the Committee's agreement, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Higgins had given notice of his intention to move Amendment No. 44:

Page 4, line 17, at end insert ("except in the case of employers who employ fewer than 20 people, in respect of whom it shall come into force on 6th April 2002")

The noble Lord said: I wish to--

Baroness Hollis of Heigham: Perhaps I may seek clarification. We passed Amendment No. 29 which concerned the election for employers with fewer than 10 employees. Amendment No. 44 applies to those employers with fewer than 20 employees. I had thought that by accepting Amendment No. 29 with its pair the alternative pair was made redundant, so to speak. Perhaps the noble Lord can enlighten the Committee. This amendment is not consequential on Amendment No. 29. These are alternative pairings.

Lord Higgins: I take the noble Baroness's point. One amendment concerns fewer than 10 employees. Amendment No. 44 concerns employers with fewer than 20 employees, who would then have until 2002 to prepare. With great respect, when the noble Baroness replied to the earlier debate she did not cover this point. As to the delay in the time, she did not explain why that was a problem.

Baroness Hollis of Heigham: As far as I recall, what I said amounted to about two lines. As we did not think that this burden of responsibility was onerous and as there had been ample consultation--of the 18 months, 16 had been spent on consultation--we did not feel it necessary to extend the period. I did address that point. I can see that the noble Lord might not accept that argument but I certainly did my best to address it, however briefly. Given that the pairings were in terms of Amendment No. 29--fewer than 10 employees--and they were alternatives, and given that the Conservatives came in behind the Liberal Democrat Benches on the matter in order to make those numbers possible, I had assumed that the amendments would not be moved.

[Amendment No. 44 not moved.]

[Amendment No. 45 not moved.]

On Question, Whether Clause 6, as amended, shall stand part of the Bill?

Lord Higgins: We have already covered a good deal of the ground that is covered in Clause 6, particularly with regard to commencement and so on and whether it is indeed the case that employers are likely to be ready to implement the Bill on the date which apparently is to be specified. The commencement provision appears at the end of Clause 6. It seems worthwhile spending a little time examining the contents of this clause in slightly greater detail.

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Effectively, the position is that the Government will make regulations with regard to the payment of tax credit. Somewhat surprisingly, subsection (2)(a) of Clause 6 requires employers,

    "to make payments of tax credit by reference to notifications of entitlement furnished to them by the Board". We discussed this matter in relation to earlier amendments. We were assured by the Government that, contrary to the statutory instrument we discussed earlier, the Inland Revenue will inform employers of the precise amount they are required to pay. Perhaps the noble Lord will clarify one point. He said that the only calculation that an employer will make, arising under the subsection to which I have just referred, is to relate the payment to the number of days worked. Will the noble Lord spell out exactly how he sees a particular employer carrying out that operation? I was not entirely clear about it.

Subsection (2)(b) of Clause 6 refers to,

    "the production of wages sheets and other documents", in regard to payment of the tax credit in accordance with the regulations. That requirement is understandable; namely, that the individual employer should confirm to the Inland Revenue that he has paid the amount involved.

That takes us back to an earlier amendment. I am not quite clear, given that the Inland Revenue will have told an employer precisely how much is to be paid and an itemised pay statement will have been issued by the employer, why the employer needs also to confirm the amount to the board. Perhaps the noble Lord will clarify that point.

Paragraph (d) at the top of page four contains a provision,

    "for the funding by the Board of tax credit paid or to be paid by employers". I am not clear why the words, "paid or", appear at that point. Presumably the board will be funding the credit if it is to be paid, but not if it has already been paid. Or is it the other way about? I am slightly confused by the wording.

Similarly, paragraph (e) refers to,

    "the recovery by the Board of any sums overpaid to employers under paragraph (d)". That is apparently a recovery arrangement. How is that to be done?

Finally, paragraph (f) refers to interest payments due. The noble Lord, Lord Peston, who is no longer in his place, was concerned about the way in which those sums would be calculated. The noble Lord has already said that the provision will be by statutory instrument, specifying the rate. But can he tell us in principle what that rate of interest will be? Will it be a normal commercial rate, the government borrowing rate, or whatever? Those are the outstanding points.

The Earl of Dudley: I believe the noble Lord, Lord McIntosh, will forgive me if, with respect, I say that he was unduly dismissive of the question I raised in relation to Amendment No. 41. There is possibly some doubt as to whether I was right to raise a question

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on parental disputes in relation to that amendment. However, I believe I am in order in raising it on Clause 6 stand part.

Fortunately, the Second Reading debate was not very long, and I have had an opportunity to skim through it. The noble Lord, Lord Goodhart, raised this matter at that stage. He said:

    "What then is the position if this dispute is not resolved? The draft regulations simply state that the claim is to be made by whichever partner the couple agrees should claim".--[Official Report, 12/4/99; col. 524.] What happens if the couple do not agree?

The noble Lord raised a second point regarding parental disputes. He said, again at col. 524:

    "The Inland Revenue memorandum published in March says that if the dispute is not resolved, the Inland Revenue will consider accepting an application submitted by the caring parent without the signature of the working parent". What happens if both parents are working? What if they are working for different employers and are unable to resolve which of them shall receive the tax credit? What criteria do the Board of the Inland Revenue then use in its regulations? It is a simple question, and it was not dealt with at Second Reading. I should be grateful if the noble Lord, Lord McIntosh, or the noble Baroness would answer the point.

7.15 p.m.

Lord McIntosh of Haringey: First, I apologise to the noble Earl, Lord Dudley, for referring to him as Lord Burton when I first rose to reply. I am afraid that my answer is still the same. I shall attempt to give the noble Earl an answer, but basically the issue that he raises is not dealt with in Clause 6. It was dealt with earlier in Committee. The answer is that if both parents are in work, the tax credit can be paid to either, but only through the pay packet. If they agree, the same procedure will apply. That was described in the debate on Amendments Nos. 14, 16, 17 and 18. I recommend that the noble Lord read that debate before Report. If the parents do not agree, the credit will go by default to the mother or the caring partner. I hope that that addresses the major issue raised by the noble Earl.

I have some difficulty with the approach that uses the clause stand part debate to raise issues that have not been raised in specific amendments. I shall do my best to answer. However, if I fail, the noble Earl will have to allow me to write to him. If noble Lords wish to receive answers on specific points, the way to find out is to table amendments, even probing amendments, in order to receive an informed reply rather than having messages coming from the Box at high speed.

The noble Lord's first question related to how the employer does the only calculation that is involved. The employer is told by the Inland Revenue what is the daily rate of tax credit or disabled credit. He multiplies that by the number of calendar days for which he is responsible. That is all he does, and he pays that amount at the end of the period. If it is a weekly period, it is between one and seven; if it is a monthly period, it is between one and 31.

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The second question was why information is called for under Clause 6(2)(b). The documents need to be produced for checking purposes when the Inland Revenue wants to check that amounts have been correctly paid. That seemed to me reasonably clear. I shall have to write to the noble Lord regarding his point about "paid or to be paid".

As to how recovery is carried out, if an employer has been paid too much tax credit, the Inland Revenue will need to recover the amount. The comparable procedures, in reverse, will be those used in respect of employers whose PAYE and NIC payments fall short of their tax credit obligations. It will depend on what procedures an employer has in place. If he has automated credit transfer, it will be a good deal easier than if cheques or drafts have to pass between one and the other. Fundamentally, it will be the same principle as with payments to the Inland Revenue.

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