Clause 5 - Period of awards
Tax Credits Bill
5:15 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
As hon. Members will be aware, the clause sets out the length of time that tax credit awards will last and what will bring an award to an end. The
arrangements are by no means clear. If, for example, a couple ceased to be entitled to a joint claim, it would come to an end, or vice versa, if an individual became part of a couple. However, a change in circumstances does not necessarily bring a claim to an end, except if the claimant no longer meets the conditions for a tax credit. In other words, if a tiny entitlement remained, the claimant would as a result, as I understand it, continue to receive a larger tax credit.
The second big issue relates to the definition of hours worked. If a claim is permitted before the tax year starts based on the previous tax year, is it based on the hours worked in the previous tax year or on the hours expected to be worked in the ensuing and current tax year?
I appreciate that our amendment may partly defeat the intention of the Bill, because it proposes that claims should not be made in advance before the tax year starts and before people know what their circumstances are. The Liberal amendments follow the existing practice in limiting the time period for claims in advance to six months.
We are concerned that an unclear and complicated system for making claims in advance runs the risk of leading to major problems in recovery if claims are excessive, to substantial legal costs and to the inevitability of moneys going astray and that the provisions of the clause and subsequent related clauses are sufficiently loose to threaten a shambles.
If the Government wish to stick to this system for administrative reasons, other areas must be tightened up, but at least one approach is that suggested by our amendment—to deal with claims on the basis of the year in question and not on estimates which may or may not be favourable and which many people who do not know what their working hours will be, may find difficult to make.