Clause 32 - Supplementary

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

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Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 6:45, 22 January 2002

I beg to move amendment No. 117, in page 21, line 30, leave out 'has effect' and insert—

'shall take effect on the laying by the Board before both Houses of Parliament of a statement explaining—

(a) how it will balance the need to encourage persons entitled to claim a tax credit to do so with the need to control abuse so far as is reasonably practicable,

(b) its criteria for deciding whether a claimant has been fraudulent or negligent, the manner in which it will exercise its discretion in cases of minor error, and its prosecution policy in relation to claims for a tax credit, and

(c) the relationship between these criteria and those relating to income tax and national insurance contributions,

following consultation on a draft of that statement.'.

I am being prompted by hon. Members on both sides of the Committee that a football match is due to start imminently, but I will not allow that to inhibit me from giving the exhaustive analysis of schedule 2 that I had planned.

We have been here before. The board has wide powers to impose penalties under schedule 2 as conferred by clause 32. We sought before to have guidance notes published and we should like the board to set out its approach to the imposition of penalties—the definition of negligence and so on—so that claimants know where they stand.

I will give an example of a grey area. Clause 29, which deals with one set of penalties, explicitly states that if one member of a couple did not know what the other was up to, he or she is not deemed culpable for that. However, that exemption is not explicit in clause 30. Someone is let off the penalties for incorrect statements if they did not know what their partner was up to, but it is not clear whether that applies to the penalties for not complying with requirements.

We seek a consistent statement, in the code of practice produced by the board if not in the Bill, that explains how the board will approach those issues. The penalties are quite serious, especially for the client group under discussion, and people might reasonably expect such a statement to be put in place before the penalty regime is imposed.

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

I hear the hon. Gentleman's argument, but I regret that I am unable to satisfy him on the amendment except to say that the thrust of his arguments will be taken on board. It is important to remember that the proper place to reflect that is not in the Bill, where the requirement is unnecessary, but in the code of practice on compliance. It will be made available in draft for comment, and the hon. Gentleman will have his opportunity to make an impact on the collective consciousness of the Revenue then. With that satisfying prospect in sight, I hope that he will withdraw the amendment.

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

As I said before, my reservation about that strategy and that response from the Minister is that, after my initial profound impact on the consciousness of the Revenue, any subsequent changes that it decides to make without the benefit of my benign impact will be unbeknown to me and to members of the Committee. There is an issue about scrutiny.

On a slightly more serious note, we are talking about quite serious penalties for quite poor people and there are grey areas about neglect and so on. I am concerned that the level of scrutiny will not be all that it might be, but I am grateful that we have had further clarification at least on the draft code of practice for the Revenue. That goes some way to addressing our concerns and we look forward to seeing the draft. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 ordered to stand part of the Bill.

Further consideration adjourned.—[Mr. Sutcliffe.]

Adjourned accordingly at one minute to Seven o'clock till Thursday 24 January at half-past Nine o'clock.