Clause 31 - Failure by employers to make correct payments

Part of Tax Credits Bill – in a Public Bill Committee at 6:45 pm on 22 January 2002.

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

The clause provides that a penalty of up to £3,000 can be imposed on an employer who fails to make correct payments. Is there not a case for at least giving employers a let-out from liability under the clause when they have a reasonable excuse for the omissions? The opportunity to put forward a reasonable excuse is available under the preceding clause in the case of, for example, an applicant who fails to supply the correct information. However, the same opportunity is not given to an employer. In fairness, is there not a case for doing so? It would certainly be welcomed, especially by small and medium-sized enterprises. We have debated under previous clauses the burdens that the provisions would impose on such businesses.

Clause 31(2) seems to be a stiffening-up of the equivalent provision under the Tax Credits Act 1999, which would appear to be section 9(7). It provides that an employer is liable for a penalty if he

''fraudulently or negligently makes or receives incorrect payments''.

The requirement for the employer's failure to be established as fraudulent or negligent is removed and the employer faces what the Minister will recognise as a regime of strict liability, which is a stiffening-up as far as employers are concerned. Why is that stiffening-up being proposed at a time when concern is being widely expressed about the increasing burdens on employers?