Clause 25 - Liability of officers for sums paid to employers
Tax Credits Bill
4:30 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
I beg to move amendment No. 105, in page 18, line 2, leave out 'or neglect'.
The amendment stands on its common-sense interpretation. The clause puts a liability on culpable officers. Officers could be secretaries and clerks as well as managers and directors, and they would be liable not just for fraud, but neglect. It is not clear what the regulations will do. What does ''liability'' mean under the clause? Does it involve recovering money paid by the Revenue, and does it mean that legal proceedings can be brought?
More important still is the inclusion of the word ''neglect''. No one doubts that people should be pursued for fraud, but neglect is a different matter. First, it is impractical to pursue for neglect as many businesses subcontract their payroll arrangements, so it is not be easy to identify the guilty person when there has been sloppiness. Secondly, ''neglect'' is a loose concept. Thirdly, it is inherently unreasonable for companies to undertake a task for the Revenue when the Government have made it clear that they have no intention of paying the costs thereof. It is inappropriate to pursue people for neglect.
Paragraph 103 to the explanatory notes suggests that in circumstances such as those that I described this morning, in which a company receives funds from
the Revenue to pay the tax credits and then collapses, the clause might be used to pursue the officers—not just senior members of staff, but officers at all levels—for the money that had gone because the company collapsed. An important point is that neither the Confederation of British Industry nor other representative bodies are aware that the clause can be interpreted in that way. The explanatory note suggests that, substantially, that is why it is there. It is wrong that that should be the intent of the Bill.
Fraud is a different matter. Let us suppose that there is a case of neglect. A company may have gone under due to adverse economic circumstances or being overburdened with Government regulations, its staff having done their best in the circumstances and having certainly not committed fraud. Not surprisingly, if people are struggling to save a business, they may be a little sloppy in administering tax credits. As the whole structure of tax credits is so sloppy anyway, it is unreasonable for the Government to have the power to pursue individuals personally—down to the payroll clerks—to recover money from them for neglect.
We want to know the Government's intention and what is meant by paragraph 103 of the explanatory notes. We are earnest in our belief that neglect is not appropriate.