Clause 94

Finance Bill – in a Public Bill Committee at 6:30 pm on 5th June 2007.

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Payment by cheque

Question proposed, That the clause stand part of the Bill.

Photo of Mark Francois Mark Francois Shadow Paymaster General

The clause essentially gives commissioners of HMRC the power to produce orders so that when payments are made by cheque, the payment is

“treated as made when the cheque clears” rather than when it is received, as at present. The measure replaces the current position under section 70A of the Taxes Management Act 1970.

We appreciate what the Government are trying to achieve, but it raises potential problems. For instance, what happens when HMRC receives and subsequently loses a cheque? What happens when it receives a cheque but then experiences a delay in clearing it? I have asked Ministers whether they have performance indicators for the receipt of post from taxpayers. I received an answer from the Paymaster General on 5 March that probably bears repetition. She stated:

“HMRC does not record performance indicators for the receipt, opening or acknowledgement of taxpayers correspondence...Through a sampling exercise, HMRC determines and records the percentage of correspondence answered correctly and completely at 15 and  40 working days after receipt of the correspondence in the Department. Validated results are only available annually.”—[Official Report, 5 March 2007; Vol. 457, c. 1676W.]

Will the Financial Secretary tell us the latest annual results? I ask that question in the context of an article in The Daily Telegraph on 8 May that was headlined, “Tax offices ‘have 1.5m mail backlog’”. It said that

“according to the Public and Commercial Services Union”,

the reorganisation currently under way within HMRC, which was referred to earlier, has left

“some store rooms...‘packed with mail’”.

In the same article, Blair Gibbs, who is campaigns director of the TaxPayers Alliance, was quoted as saying that:

“‘They tolerate no delay on our part, but thousands of taxpayers face anxiety and doubt while HMRC routinely takes weeks and sometimes months to reply to their letters and settle cases...Ultimately, this backlog is a product of our hugely complex tax system and a slow, bureaucratic culture in central government.’”

Will the Financial Secretary give us an assurance that no taxpayer will be penalised as a result of HMRC losing cheques or failing to present them for payment in a timely manner?

Photo of John Healey John Healey The Financial Secretary to the Treasury

The hon. Gentleman’s questions about cheque handling are not specific to the clause. No doubt he will hand his file of correspondence with the Paymaster General and his cuttings and press releases from the TaxPayers Alliance to his hon. Friend the Member for South-West Hertfordshire. The clause is designed to remove the cash-flow advantage to businesses that pay by cheque. I think that hon. Members appreciate that it is a modest, useful, supporting measure in the drive to encourage more taxpayers to file online. There is a wide range of acceptable payment methods, including BACS, CHAPS, bank giro and direct debit, many of which are cheaper, more efficient and easier than cheques and therefore save money for the taxpayers who use them. I hope that the provision will be a useful additional measure that enhances our ability fully to put into effect Lord Carter’s recommendations.

Question put and agreed to.

Clause 94 ordered to stand part of the Bill.

Clauses 95 and 96 ordered to stand part of the Bill.