Schedule 2 - Penalties: supplementary
Tax Credits
9:30 am
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
The amendments deal with the manner in which penalties can be imposed on employers. They would require the Inland Revenue and the general commissioners to take into account the employer's size when mitigating, or hearing an appeal against, penalties; they would require the Inland Revenue to allow the employer the opportunity to make written representations before settling penalties; and, finally, they would require a report to be made to Parliament
about consultations with employers on the operation of penalties in respect of the payment of tax credits. I understand why the hon. Member for Hertsmere (Mr. Clappison) has tabled the amendments, but I shall try to explain why they are not necessary.
As regards amendment No. 28, employers can at any time make representations to the Inland Revenue about their circumstances. That position does not change because a penalty may be levied; if anything, the reverse applies. The board would always provide an employer with the opportunity to make representations, whether written or not. It is not necessary for us to prescribe the form in cases where penalties are being considered. Some employers might ring up and give an explanation; others might write. The amendment would not add anything. In any event, the code of practice rather than the Bill is a better way of dealing with the issue.
I now turn to amendments Nos. 29 and 30. As employees will receive their working tax credit through their wage packet, we consider it important to emphasise the link between receiving the credit and working. That applies equally whether someone works for a small or large employer. I know that the hon. Gentleman has raised the issue of the employer's size before, but size should not be a factor that determines the penalty in the rare cases where employers fail to meet their obligations.