Clause 30 - Failure to comply with requirements

Tax Credits Bill – in a Public Bill Committee at 6:30 pm on 22 January 2002.

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Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 6:30, 22 January 2002

I beg to move amendment No. 71, in page 20, line 28, leave out ''14(2)''.

Photo of Mr Nigel Beard Mr Nigel Beard Labour, Bexleyheath and Crayford

With this it will be convenient to take amendment No. 109, in page 20, line 28, leave out

'or regulations under section 24'.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

Clause 30 introduces yet more penalties, not for incorrect statements but for failure to supply information. Amendment No. 71 would remove from its scope people who are in the process of making a claim. For reasons that we will deal with in a moment, they should not be penalised if they do not supply information that they have been asked for, thereby halting the processing of their claim. That is the significant point.

As the CPAG remarked,

''people have liabilities to pay tax but they do not have liabilities to claim tax credits.''

People can decide whether they wish to claim, see through a claim or withdraw a claim that they have initiated. Under the clause, which includes a reference to section 14(2), they can be penalised a £300 lump sum and another £60 a day for not providing information that would facilitate the progressing of a claim.

If someone decides to withdraw a claim, they would suffer a penalty for not supplying information that would facilitate processing it. For example, they may realise that information of a personal nature that they do not want to disclose, perhaps to a partner, would become known. Indeed, there is no obvious facility for withdrawing a claim; again, applicants would suffer a penalty for not supplying information.

The amendment would remove the penalties, not for people who are receiving or who have received money or who fail to supply information that might reduce the amount of the payment, but for people who have only made an initial claim. They should be able to withdraw the claim or give it up by not supplying information. At present, that appears to incur a penalty, which is not appropriate.

Photo of James Clappison James Clappison Shadow Spokesperson (Treasury) 6:45, 22 January 2002

I shall speak briefly to amendment No. 109, which concerns information that will be sought from employers under regulations in clause 24. Employers are in a different position because, unlike claimants who provide information in support of their claim for tax credits, they will receive no direct benefit. I do not wish to go over old ground again with the Minister and debate indirect benefits for employers. They face prospective penalties and may also face burdensome regulations. We make a plea to the Government to keep the burden of information that is asked of employers to a reasonable minimum. The Government are making substantial powers by regulation to require information of employers. I will not press the amendment, but I moved it in the spirit of keeping the burdens on employers to a minimum.

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

I am grateful for the way in which the hon. Gentleman spoke to the amendment. I assure him

that we will bear in mind the way in which the Revenue relates compliance and burden to employers. We will expect employers to act reasonably and they will face a penalty if they do not. However, I take the point that we should ensure that compliance is not unduly burdensome.

There is no question that the situation is different for people who are not in the business of engaging in fraud or a concerted action by deceit to obtain money. If a person makes an application and chooses to withdraw it in the ordinary circumstances of the case, there would be no question of imposing a penalty. I give the Committee that assurance.

Penalties may arise in a case such as this. If an application is made and the informal approach, which will always be made, is rebuffed, the application would be persisted with and a formal request made under formal powers. If there were still resistance, it is important that the Revenue should be able to invoke powers to require information to be provided within a set deadline. A penalty should be imposed for failure to do that.

There are safeguards against the indiscriminate application of penalty provisions. Penalties cannot be applied if there is a reasonable excuse for failing to provide information. If an application were made in an ordinary way but it were not pursued—that would be the end of the matter—that would appear to be a reasonable excuse. The initial penalty under the provisions is not at the Revenue's discretion because only the commissioners may impose it.

After hearing those reassurances, I hope that the hon. Member for Northavon will not press the amendment to a vote.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

We want to remove clause 14(2) from the scope of clause 30. Clause 14(2) relates to situations in which no public money is paid. It is a preliminary stage. The clause states:

''the Board must decide . . . whether to make an award . . . and . . . if so'',

how much that should be. However, before the board decides, it asks for information. If the person who makes the claim fails to provide that information and the claim does not proceed with any public money payable, I cannot think of circumstances in which we would want clause 30 to apply to clause 14(2). No public money would be handed over unless information were supplied. If it is not handed over, why do we want to penalise people for not supplying the information?

I am grateful for the Minister's reassurance that only the commissioners will impose the penalty. On the assumption that they would not want to use the power, although it is in the Bill, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 30 ordered to stand part of the Bill.