Clause 4 - Claims: supplementary

Part of Tax Credits Bill – in a Public Bill Committee at 4:45 pm on 15th January 2002.

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Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury 4:45 pm, 15th January 2002

The reading of clause 4(1)(h) is assisted when read in conjunction with clause 17. As I deal with the amendment, I will briefly outline how the clause is intended to work. In due course I shall come to the point made by the hon. Member for Northavon.

Clause 17 deals with the finalisation of tax credit awards at the end of the tax year. It would require the Inland Revenue to issue notices to people who have been awarded tax credits setting out the information on which the award has been based. Those people will be able either to confirm that the information is correct or to provide up-to-date details of their income and circumstances. The Revenue will use that information to make a final decision as to claimant's entitlement for the year just ended. That is dealt with under clause 17, which we shall discuss more fully in due course.

Where appropriate, the Revenue will use that information to renew people's awards for the year ahead without them having to do anything further. Co-ordinating the process of renewing claims with that of finalising awards will ensure that claimants are not subject to multiple requests for the same information. There will be a single information-gathering exercise each year, which will keep the burden on claimants to a minimum and ensure that claimants with an entitlement to tax credits can see their payments continue without interruption. For some families, significant changes in their income and circumstances from one year to the next may have little or no effect on the tax credits to which they are entitled. We

therefore intend automatically to renew the awards to those families each year, which will be less burdensome for them. That will be similar to the way in which claims to income tax relief such as the children's tax credit continue in many cases without a new claim being required every year.

The Inland Revenue will write to those families setting out the information that it holds about them, and explaining that it intends to renew their award. The claimant will have an opportunity to update the information if it is wrong, and under clause 17 they will be required to do so. If that information is correct, there will be no need for the claimant to contact the Revenue, which will simply renew their award.

Strictly speaking, clause 3 provides that when an award runs out at the end of the tax year, a new claim is needed to trigger entitlement for the following year. It will therefore be possible to renew awards automatically only if a new claim can be deemed to have been made each year, and regulations under clause 4(1)(h) will allow that to happen. The point of deeming the claim is that that allows the award to continue automatically. The hon. Member for Arundel and South Downs and other hon. Members have pointed out the importance of ensuring that the new tax credit system minimises the burdens on those claiming the credit, and of streamlining the system so that families are able to get the support to which they are entitled with the minimum of hassle.