Clause 25 - Liability of officers for sums paid to employers
Tax Credits Bill
4:45 pm
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
I take great exception to the notion that the provision, which is designed to address a real need on the part of our fellow citizens, is unwanted by businesses. There is no evidence to support that proposition. Responsible business people are concerned to ensure that the needs that the measure seeks to deal with are addressed. The measure is in the interests of social cohesion and good business and is welcomed by responsible business people. I do not accept that there is anything inimical to business interests in what we propose. The reverse is true.
The danger of the amendment is that the deliberately dishonest would be able to hide behind the cloak of negligence, making it more difficult to counter such abuse. There is nothing new in the clause. Opposition Members would have come across such a clause on numerous occasions in the course of their service in the House when debating those who exploit limited liability companies. It is sad but true that some people—mercifully only a few—are unscrupulous and do not hesitate to exploit that particular status.
There is nothing new in the potential application of the clause to cases in which there has been negligence on the part of company officers. The Inland Revenue already has such powers in relation to the working families tax credit, the disabled person's tax credit and national insurance contributions, which go back many years. The amendment would be a backwards step in tackling such behaviour.
In an uncharacteristic display of party political rancour, the hon. Member for Arundel and South Downs suggested that, as a result of excessive regulation by this Administration, more businesses are going under—the implication being that fewer went under during the previous Conservative Government. As the hon. Gentleman knows, the reverse is true. In the four or five years since Labour came to power in 1997, many more businesses have been created than under the previous Conservative Government and their stewardship of the economy. Those businesses have also tended to last longer. In his heart, the hon. Gentleman knows that such a suggestion and his claim that the clause will be damaging to business is not supported by the facts.
Nevertheless, the hon. Gentleman raises a serious point about insolvency and I am happy to deal with that. By the nature of our system of enterprise, there will, quite properly, be some companies that genuinely fail. Directors of such companies will be unaffected by the provision. The power will be used only in cases in which directors have engineered the insolvency of their
own companies to avoid paying the working tax credits for which they received funding. Such individuals are unlikely to suffer personally, as I hope the hon. Gentleman accepts.