Clause 110
Finance Bill
7:00 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
A moment ago the Minister referred to representations received from the Low Incomes Tax Reform Group during the passage of the Bill. I rise to raise points from that group on managed payment plans.
Clause 110 is welcome, but I have a few questions about its details. The clause gives HMRC the ability to set out further requirements for managed payment plans in regulations. However, it appears that much of the detail will be set out in non-statutory guidance, a draft of which has been published and is on the HMRC website.
In the original consultation document, HMRC proposed to limit MPPs to payment by direct debit and to online filers. Following representations from the Low Incomes Tax Reform Group, HMRC offered the following points of reassurance in its consultation response, both of which are vital for low income taxpayers to take advantage of MPPs. First, HMRC said that it was:
“exploring other methods of payment for MPPs (ie not limiting them to direct debit) and have agreed to accept standing orders.”
Secondly, HMRC said:
“Paper tax return filers will be allowed to set up MPPs.”
The draft guidance appears to cover both these points. It confirms that HMRC will accept both standing orders and direct debit, but suggests that direct debit is preferred, one of the requirements being to:
“Make payment by Direct Debit or Standing Order. HMRC will need some assurance that payments will be made at a precise time and be posted to the correct record, and this is best achieved through Direct Debit.”
Can the Minister give some indication of what information will be sought from those people who use standing orders? The LITRG’s concern is that such people will be pressured into agreeing to a direct debit. It would be helpful if the Minister outlined what HMRC’s policy will be in those circumstances.
Another concern that the LITRG has mentioned to us is that paper filers will also fare worse than those filing online. Again, the LITRG quotes from the draft guidance, which says:
“Those who cannot file online, or do not wish to do so, will still be able to set up a payment plan by filing a paper return but will have to calculate their self-assessment themselves.”
As paper filers tend to be older people, some of whom may be lacking the technological sophistication to file online, or those on low incomes who cannot readily afford access to the internet, there is a concern that that guidance may be somewhat unfair. The regulations or perhaps even the guidance itself, should require HMRC to provide those people with help in making their calculations, on request. I would be grateful if the Minister responded on that point.
There is also the question of penalties in the event of failure to maintain a payment plan. In the event of a taxpayer failing to keep up agreed payments, subsections (6) and (7) of clause 110 allow HMRC to give notice to the taxpayer that he is relieved from penalties that would otherwise arise. However, that safeguard appears to operate at HMRC’s discretion, so that it would be reliant on the guidance and individual officers applying that guidance in practice. The LITRG argues that there should be a statutory right of appeal if HMRC refuses to give such a notice. If there is no such right, the taxpayer would have no recourse against HMRC if it exercised its discretion wrongfully, except by way of judicial review, which is no real remedy, as the Minister will know, because it is well beyond the means of the majority of individual taxpayers and certainly beyond the means of most of the taxpayers that we are talking about. Again, I would be grateful for the Minister’s comments.
Finally the LITRG has highlighted to us that Budget note 88 tells us that MPPs will not be introduced before April 2011, because changes are needed to HMRC’s systems. I seek some reassurance from the Minister that HMRC’s systems will be able to cope, given the increased pressures on its finances. Also, has any consideration been given to trialling the new scheme prior to widespread and national implementation in 2011?