Clause 3 - Claims

Part of Tax Credits Bill – in a Public Bill Committee at 11:45 am on 15 January 2002.

Alert me about debates like this

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury) 11:45, 15 January 2002

I shall explain the function of the provisions at which the amendments are directed. This is the second debate we have had in this sitting about interaction with European law. Clause 3 provides that a person must be in the United Kingdom to make a claim for tax credits: that is a reasonable requirement. The purpose of tax credits is to support people who live in the UK. Equivalent rules operate for the working families tax credit, the disabled person's tax credit, the children's tax credit, income support and the jobseeker's allowance. Without such rules, anyone living anywhere in the world could claim tax credits, providing that they met the qualifying criteria. That might put a strain on the Exchequer, not to mention the pockets of UK taxpayers: we must have a reasonable limitation. Therefore, a person's entitlement to tax credits will cease from the point at which they leave the UK.

I hope that you will permit me to look slightly ahead, Mr. Hood, because clause 5(3) states that a person's entitlement to tax credits ends if they leave the UK. It makes it clear that an award ends at any time when the person who made the claim can no longer make a claim under clause 3(2). As the hon. Member for Arundel and South Downs pointed out, the two provisions interrelate, because only a person in the UK can make a claim under clause 3, and it follows that the award ends when they leave the country. That is perfectly sensible. The new tax credits will be responsive: awards will change with people's circumstances.

However, it is not the Government's intention that a person's award should end because they go abroad

for a few days or weeks on holiday or because of family illness, whether to a European Union country or elsewhere. As the hon. Member for Northavon suggested, someone may have to return to another country for a period due to family illness but they are to all intents and purposes still resident in the UK, and their family remains here.

The clause allows regulations to be made that set out the circumstances in which a person may be treated as being in the UK. We intend those regulations to allow scope for people to retain their entitlement if they have to go abroad for a short period. An obvious scenario is that of someone who has to return to Pakistan or India because of a parent's illness and who might be out of the country for a slightly longer period. I am sure that hon. Members can think of other examples. The regulations will be designed to make the situation reasonable. To be eligible for tax credits, a person must be resident in the UK, but the regulations will be reasonable and sensible about circumstances in which for some reason in the course of a tax year, they may not be in the UK.

The amendments would enable people anywhere in the EU to claim a tax credit irrespective of whether they lived in the UK. However, only those who were physically present in the UK for all but four weeks of the year would be entitled to any tax credit for that year. With respect to the hon. Member for Arundel and South Downs, the Bill as drafted works in a much clearer, more sensible and straightforward fashion. I accept that he is seeking to probe the limits of the provisions.

I have said that we intend to make regulations to retain entitlement for those who go abroad temporarily. They will also mean that a person is not prevented from making a claim for a tax credit simply because they are temporarily out of the country. I think that that is the reverse of the point made by the hon. Member for Northavon in an intervention.