With this it will be convenient to take the following: amendment No. 55, in page 23, line 19, at end insert—
'(1A) The General Commissioners or the Special Commissioners may allow notice of an appeal under section 36 to be given more than thirty days after the date on which notice of the decision was given if it appears reasonable for them to do so.'.
No. 56, in page 23, line 29, leave out from 'notice' to end of line 30.
It may be helpful if I point out that I do not propose to press amendment No. 56 in view of the nature of it, and of the fact that some important issues have yet to be debated and we are running seriously short of time. Perhaps we can deal with the amendment in very short order.
The clause sets out the framework for appeals. Subsection (1) provides that notice of appeal must be given within 30 days of notice of decision. However,
the amendment would allow notice of appeal to be given more than 30 days after a decision if it appeared reasonable to the commissioners to do so. In other words, it would give commissioners the discretion to allow appeals to be brought out of time where that appears sensible. The purpose of the amendment is simply to introduce some flexibility into the system and to avoid the risk of injustice, or of a potential appellant's feeling a sense of injustice. We appreciate the desirability of timely appeals, and members of the Committee will observe the requirement of reasonableness that we have placed on bringing an appeal out of time.
We should also bear in mind, however, that those who bring such appeals will be ordinary members of the public who are finding their way round the tax credit system. The Bill as drafted appears to make no provision for allowing notice to be given out of time, but the matter can be dealt with in short order if it transpires that there is in fact a way for commissioners to allow an appeal to be brought more than 30 days after a decision. I await the Paymaster General's explanation.
I hope that I can deal with this quite quickly. The hon. Gentleman is seeking to allow a period of more than 30 days after the notice of decision is issued, but the amendments are not necessary because the points he raises are already covered, and I shall explain why.
Section 49 of the Taxes Management Act 1970 permits a person to ask the Inland Revenue to accept a late appeal where there is a reasonable excuse for not making it within the time limit. Under that section, the commissioners decide the matter if the Inland Revenue does not agree that the appellant has a reasonable excuse. Section 49 is in part V of the 1970 Act, and will be applied to tax credit appeals by virtue of clause 37(6). Therefore, the rights that the amendments seek to add are already in the Bill and I hope that the hon. Gentleman feels able to withdraw his amendment.
I think that the hon. Gentleman said that he does not want to pursue amendment No. 56, so I need not reply to it. I am tempted to do so as he has spoken for longer than I have this afternoon, but I will not because I know that he wants to move on.
I accept the Paymaster General's explanation. There is no reference in the Bill to a discretion as such, but clause 6 does refer to part V of the Taxes Management Act 1970, within which one could doubtless find the relevant provision buried. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move amendment No. 75, in page 23, line 21, leave out subsections (3) to (7) and insert—
'(3) An appeal under section 36 shall be to an appeal tribunal constituted under Chapter 1 to the Social Security Act 1998, and the provisions of sections 12 to 16 of the Social Security Act 1998 (and Regulations made thereunder) shall apply with like effect to appeals under section 36.'.
This important amendment seeks to ensure that appeals against decisions on tax credits are made to a body akin to a social security appeal tribunal, rather than to the tax commissioners. Again, we have a strange hybrid—a measure that is not really a tax and not really a benefit—and we must decide which way to go. The Bill proposes that appeals be made to tax commissioners, but the most striking point is that the One Parent Families Association, the National Association of Citizens Advice Bureaux and the Child Poverty Action Group have all, independently, expressed concerns to us about that proposal.
I would like to set out several reasons why it concerns us.
The key issue is the suitability of the tax commissioners as the people to go to. There are various reasons for that, which I will touch on briefly. Clearly, we need some scope for minor review. Clause 18 offers some scope for decisions to be re-examined, but it is not clear how a decision that has been made not to make an award at all can be looked at informally. Clause 18, as I understand it, gives powers to re-examine awards that are not quite the right amount. To some extent that mirrors the new social security appeals process, where something can be informally re-examined, without having to go through the paraphernalia of an appeal.
It is not, however, apparent to me how a case can be re-examined when someone has been turned down altogether, and it is clear that something has just been misunderstood or misread, and that minor mistake should be able to be rectified without going through a complex appeals process. Can the Minister clarify how that would happen? Clause 18 does not appear to cover cases in which an award is not in payment.
Are the tax commissioners the right people to deal with that category of appeal? The Minister might say that the Government will change the way in which the tax commissioners work to make it more like the way in which the social security appeals process works. However, everything has to be in place by 2003. We already have a social security appeals structure that is dealing with working families tax credit. I should stress that to the Committee. We have a tax credit, appeals against which are currently dealt with quite properly and effectively by the social security appeals system, and a group of people with experience of the client group, the processes and the system. As the saying goes, if something is not broken, why fix it? If we are to use the tax commissioners' route, will we have to reinvent through them all the good things about the social security appeals process that work for that client group?
The Minister may have studied the Leggatt report. I know someone who has, and I understand that it raised serious concerns about the general operation and effectiveness of tax tribunals. Much of what it said would be doubly worrying for the client group that we are talking about. One point made is that people are often not represented at them. The evidence is that, with social security appeals, being represented or being
present has a big impact on ability to succeed. It might be that it is when people are likely to win that they turn up or have representation, so this might not exactly be cause and effect. But if the custom at tax commissioners' hearings is much less for people to turn up or be represented, there would need to be a change in culture.
There is a fundamental difference between the two tribunals. Social security tribunals have what is called an inquisitorial role. They do not just sit back, listen to the client put the case and then judge it. They try to find out what went on, and ask the relevant questions. When an appeal client does not, perhaps, understand the legal technicalities, he might nevertheless have a valid point to make if probed or prodded in the right direction and asked the right questions. Whereas the social security appeals process has that characteristic, it is not apparent that the tax commissioners do. Clearly, we want them to try and get the right answer, not just form a judgment on the basis of the case presented to them.
I would assert—although I am open to contradiction on this—that, by and large, the tax commissioners are used to dealing with a completely different client group. They usually deal with the better off, and those with complicated tax affairs. Social security appeal tribunals deal with very different people and circumstances, and they already handle the working families tax credit case load. They already know what they are doing.
The next question is which commissioners will people go to? The Bill gives the choice to go to the general commissioners or to the special commissioners. The general commissioners are unpaid volunteers. By contrast with the social security appeals process, if someone chooses one avenue here they can put their case to unpaid volunteers whose decision, if they have ruled on a matter of fact, cannot be appealed against. There are serious worries if folk in the client group that we are talking about put their case to non-specialists, who do not have to be tax experts but who can make rulings. Obviously, that is already part of the tax system, so people might say that it is not a problem because the general commissioners know how the system works. I am not sure, however, that that would be the case with this client group.
Alternatively, people can go to the special commissioners, who are salaried, legally qualified experts. But if people get it wrong, lose, and are deemed to have been unreasonable in going to the special commissioners, they could face costs. NACAB are worried that, potentially, not only the applicant, but the advisors could face costs. Such a situation does not arise in the context of social security appeals.
There is a whole raft of reasons for the amendment. The Minister might say that the commissioners are going to be reinvented so that they work in a similar way to social security tribunals. That would answer most of the concerns, but why bother? Why not just use the existing structure? If that reinvention is not going to happen, many concerns about the commissioners' route remain valid. The Lord Chancellor's Department is reviewing the role of
such tribunals at the moment. It has expressed its reservations about the way in which tax tribunals work. Do we really want to put another large case load down a potentially inappropriate and unsatisfactory route?
I stress the widespread concern about the proposals. I understand the Government's desire for neatness, but I wonder if effectiveness might suffer as a result.
Our amendment No. 106 essentially raises the same point but deals with it in a slightly different and simpler way, by substituting a social security tribunal for general commissioners, but leaving the option to go to the special commissioners. To be brief, the real question is how the Minister proposes to deal with the matter. In a sense, if the whole thing is being transferred to the Revenue, it is somewhat strange not to have an appeals procedure within the Revenue bailiwick. However, as the hon. Member for Northavon pointed out, a precedent has already been established by child tax credit being dealt with by the social security tribunal.
In short, I think that the Minister realises the issues: suitability, knowledge, experience and the fact that it is essentially benefit-type matters that will be raised. How will the Government address the issues raised?
I hope that I can reassure the hon. Member for Northavon and that he will agree to withdraw his amendment. At the heart of both amendments is whether those hearing the appeal have the appropriate experience and knowledge to adjudicate on the issues. I absolutely agree that that is a vital point.
The hon. Gentleman made several other points and I shall deal with them in order. I am, of course, conscious that the Government are undertaking a comprehensive review of the tax appeal system, as Committee members know, following the public consultation exercise. My right hon. and learned Friend the Lord Chancellor, when he launched the consultation, paid tribute to the effective and committed way in which the general commissioners of income tax discharged their public duties and the personal and professional competence that they bring to their work.
The Lord Chancellor also made it clear that he believed it possible to find significant improvements in the current system. Another factor of the review was the need to ensure that we have an effective tax appeal tribunal to hear tax credit appeals. We have discussed the new tax credits and the fact that they will work in a very different way, and it is important that the tax commissioners have sufficient expertise to handle that.
On the ability and expertise of the general commissioners to deal with issues other than tax, I point out that they deal with many issues. Since 1999, the commissioners have successfully taken on the responsibility of national insurance appeals, statutory maternity pay appeals and statutory sick pay appeals, which were all previously dealt with in the social security system. The commissioners received
additional training to enable them to do that and will have similar training in connection with tax credits. Therefore, the Government are correct in wanting the appeals to go to the commissioners.
The hon. Member for Northavon also asked whether the commissioners were inquisitorial. Yes, they are inquisitorial, but not adversarial. They can and do seek clarification from all parties. He also asked—
I am answering all the other points and will then come back to the question of what happens now. The hon. Gentleman may want to intervene at that point.
The hon. Gentleman also asked whether one could appeal the general commissioners on the question of fact. It is possible to challenge their ruling if their findings are so at variance with the facts that it is unreasonable. That is the test.
Before I turn to the facts, I want to deal with basic errors and disputes in the appeal and whether the Inland Revenue would be able to correct mistakes. Basic errors and disputes will not be dealt with only at appeal. A misunderstanding may have arisen of the new tax credits and the way in which the Inland Revenue works. Under statute, the Inland Revenue has a well-established care and management function in tax credits and national insurance, which gives it a sensible amount of management discretion. That is the appropriate use of the word ''discretion''. It does not give the Inland Revenue carte blanche, but it gives it the ability to correct in a responsible way simple, straightforward mistakes. The Inland Revenue's decisions about tax credits during the year will be provisional, as is set out in clauses 14 and 16. It would be pointless to have revisions of a provisional decision.
Clause 20 allows decisions that are subject to official error to be revised in the claimant's favour without the need for an appeal. Even if there is an appeal, that does not mean that the claimant will have to go to the commissioners if they are in agreement with the Inland Revenue about the facts. Part V of the Taxes Management Act, which is applied to tax credit appeals by subsection (6), allows such appeals to be settled by agreement.
To return to the heart of the issue, I had discussions again this morning with my colleagues in the Lord Chancellor's Department. While we have a desire, and it makes sense, to ensure that the tax commissioners hear the appeals, we also recognise that we will need to ensure that they have the appropriate experience to deal with them. The hope is that by 2003 that should be the case, and working families tax credit cases, as the hon. Gentleman pointed out, will go to the social security tribunals. If for some unforeseen reason that principle could not be delivered, we would ensure that the appeals were heard in a suitable way for the type of claim by adjudicators with the appropriate training and experience.
All that depends on the Lord Chancellor's review and recommendations being in place by 2003. I am not
aware that I do not have that latitude under the Bill, but if the principle were not delivered and the Bill did not give me the latitude, I would need to return to the matter.
I understand and accept the principles advanced by the hon. Member for Northavon about the appropriateness of those who hear the appeals, but I do not agree that there is a problem about making the appeals relevant to tax commissioners, as long as they can hear the appeals, and that is subject to the review.
I hope that I have given the hon. Gentleman a strong enough indication that that important point will not be overlooked and that he will therefore seek to withdraw his amendment. It is not necessary, because we shall ensure that the tax commissioners are suitably qualified.
I am grateful to the Minister for going some way to respond to my points. When I sought to intervene earlier on the issue of inquisitorial, perhaps I did not explain clearly what I meant. Will they ask questions? Fine. Will they be proactive? I am glad that the Paymaster General nods in response to that. Being inquisitorial is not just about asking questions and checking; it is about thinking, ''Perhaps there is something that the claimant has not said which, if they had said or had been asked about, would have given us a more complete picture.'' It is a question of going out of their way to find those things instead of simply sitting back and saying—
My understanding is that the answer to the hon. Gentleman's question is yes, the commissioners would do that. He describes it as going out of their way. They will acquaint themselves with the facts to make sure that the case being presented by the claimant covers all the issues. That is what goes on at the moment and we have no desire to curtail that. There would be no reason to.
That is helpful. The Paymaster General said that that is what goes on at the moment, but she can only mean that that is what goes on at the moment in social security appeal tribunals that deal with working families tax credit cases. It is not what goes on in tax commissioners' cases, and they will need a culture shift. Given that the Lord Chancellor is reflecting on all this and will then need to put in place a training process, I am concerned about it.
I am grateful to the Paymaster General for her hint that, should there be any delay, other mechanisms, such as presumably the present system or something similar, would need to be in place to deal with those cases.
The Paymaster General did not address the issue that people will have to choose which set of commissioners to go to. It is not clear to me how, again, the unguided claimant of working families tax credit in a low-paid job, who is perhaps not very comfortable with form-filling and all the rest of it, decides whether to go to the general tax commissioners or the special tax commissioners and appreciates the consequences of doing either. I find that problematic.
The Paymaster General did not address the question of costs, which was raised with me by
NACAB—that those who go to the special commissioners may make themselves liable for costs. That worries me.
The fundamental point is this: if a system works and fits the group, why are we changing it? The Minister is saying ''We will do our best to change the other system, which is not meant for these people, and train those who are dealing with it to make it look more like the one we have that works.'' If the Government can live with the paradox of having tax credits assessed by social security appeal tribunals now and they are still called tax credits, what has changed? Why is it any different? A little streamlining may be taking place, but we are simply merging bits of the benefit system in as well.
Therefore, I remain unhappy about the clause. I am struck by the unanimity of those who deal with the client group that they are not happy that the tax commissioners are to deal with these matters or with the whole process and culture. On that basis I shall seek the Committee's opinion on the amendment.
Question put, That the amendment be made:—
The Committee divided: Ayes 7, Noes 8.
On a point of order, Mr. Beard. As I am somewhat inexperienced in the finer points of Committee procedure, could you clarify the rules governing the time that you allow for hon. Members to return to the Room for a Division.