Clause 110
Finance Bill
7:00 pm
Ian Pearson (Economic Secretary, HM Treasury; Dudley South, Labour)
I welcome the Opposition’s overall support for MPPs. As the Committee will be aware, entry to a plan will be wholly voluntary. First, the taxpayer must agree to pay the tax in instalments and HMRC must agree to accept payments in that way. Secondly, instalments paid before the normal date must be balanced by those paid afterwards. I believe that MPPs are an important way in which we can help taxpayers to manage their money.
The hon. Gentleman asked a number of detailed questions. First it is right, as he will appreciate, that the guidance that we published in draft sets out a framework for MPPs and how the HMRC will operate them. Clearly, most of the detail is contained in the guidance, on which we have been consulting, rather than in the Bill. The detail of any particular payment plan will be in the terms and conditions under which HMRC makes it available and the taxpayer chooses to accept. We do not believe that it is necessary for such a level of detail to be in regulations. If a default occurs—obviously, we hope that such cases will be few and far between—the taxpayer would be in breach of the terms of their own plan and would therefore be liable for the consequences of their late payment.
Subsection (7) allows HMRC to relieve the taxpayer from penalties following a failure to make agreed payments, where that is appropriate. It is not an entitlement, but may be offered to taxpayers where they continue to pay by agreed instalments. That will happen where the taxpayer has approached HMRC before the payment date and has either made good the deficient payment within a few days, or arranged time to pay the balance
Independent research commissioned by HMRC and by others shows that direct debit is favoured by many, including most businesses. Although it is HMRC’s preferred method of payment, its officers will not put pressure on taxpayers to pay in that way. Following representations made in the consultation, HMRC will offer MPPs for some of the electronic payment methods, such as standing orders. Assorted information that HMRC would require would include fully completed pay slips showing the correct taxpayer reference, year, and amount of payment.
On statutory rights of appeal, it is not the case that there is a statutory right of appeal. We certainly want to encourage anyone in difficulties to approach HMRC. As I have indicated, where the taxpayer has approached HMRC before the payment date and has either made good the deficient payment within a few days, or set up an arrangement for time to pay the balance, HMRC would want to respond favourably. Of course, all late payment penalties can be appealed in the usual way.
We are confident that HMRC’s systems will be able to cope with implementation. Strong governance will be provided by a dedicated implementation team, overseen by an implementation forum of leading officials and industry figures. HMRC will continue to look at whether it will be appropriate to trial the changes in the course of development, but we believe that MPPs are an important initiative and that is why they have been included in this year’s Finance Bill.