The clause deals with the exemption of benefits consisting of health-screening or medical check-ups. It may help if I set out a little background to the measure.
Two statutory instruments introduced in August 2007 dealt with the taxation and reporting of health screenings and medical check-ups provided by employers to employees. Previously, employers and HMRC had persisted in treating the provision of periodic health screenings and medical check-ups for employees as exempt from tax and reporting requirements. There was no specific provision requiring such benefits to be provided universally in order to be tax and NIC exempt. However, HMRC took the view in 2007 that the practice was based on an understanding or assumption, rather than on strict legality. New regulations provided a significantly narrower exemption for periodic health screenings and medical check-ups.
The changes introduced in August 2007 required any provision of health screenings by an employer to an employee to be made available to all employees and any medical cheek-up to be either made available to all employees or made available to those identified by a health screening as needing such a check-up. Those regulations came into effect on 14 August 2007, but had a retrospective effect covering the 2007-08 tax year. Strong representations were made about that retrospection. HMRC agreed not to collect any tax for 2007-08 and, in February 2008, that was extended to 2008-09, so we had a period of confusion.
Clause 55 is a revision of the revised proposals of August 2007. After receiving further representations, HMRC announced on 10 December 2008 that it would include legislation in the Finance Bill
to exempt from tax the provision of yearly health screening and medical check ups without the proviso that they have to be generally available on similar terms to all employees. That is essentially what is covered by the clause.
The clause is welcome up to a point. It is fair to say that the changes announced in August 2007 were somewhat botched and that there has been a lengthy period of confusion, but concerns remain that clause 55 is still somewhat restrictive. There is a restriction to one health screening or check-up per tax year, but an individual may well require more than one screening or check-up, or a check for more than one potential condition, per year. It is often impractical to ensure that an annual medical that occurs around the start or the end of the tax year is not repeated within that same year, as people can end up having two medicals in one year just by a few days. I should be grateful to know why the Government have not reverted to the position before August 2007. Why is there a restriction of one check up per year? I suspect that the answer may well be cost, but what is the cost? I am sceptical that it is very significant.
The clause will reduce the amount of red tape for employers and employees, so we welcome it as far as it goes; it is clearly an improvement on the uncertainty of the past two years or so. However, I would be grateful to know why the Government have not sought to return to the arrangement that seemed to be working perfectly adequately prior to August 2007.
My family would be intensely surprised to hear me speak to this clause and encourage people to have more than one medical per year. New Speakers are reluctantly dragged to the Chair; I am more than reluctantly dragged to a medical. In the years in which I was a partner at Ernst & Young, an annual medical was required for insurance purposes, but my interpretation of annual was always somewhat loose. I understand that the medical profession have a term for thatwhite coat syndromewhich, in my case, I attributed to the obvious mental scarring that occurred when I shared student accommodation with too many medics.
During the course of my experience with a regime that required annual medicals, it was impossible to schedule them on a strictly annual basis. It is not a question of a couple of days; it is often impossible, with a large work force and the way in which a medical schedule is taken up and booked far in advance by a doctor, to fit a medical in within even a couple of weeks or a month of the annual date. There were many occasions when a second medical occurred within the same tax year. Also, although I never had to endure it, colleagues of mine had to return during the year, either for further check-ups as a result of their original medical, or for medicals for additional reasons. For the reasons advocated by my hon. Friend, the rules need to be further relaxed, although I assume that I will not have to be subjected to more medicals than I need.
I will not take much time, because I know that Members want to pursue the Bill as rapidly as possible, but I want some clarification from the Minister, because I would be worried if I thought that we were taking a step back.
There are employees in this country who work in hazardous conditions, which might require the employer to work with them and their trade union to ensure that they have one medical check a year. I seek assurance from the Minister that there is no way we are going to stop or financially impede the opportunity to take that check, depending upon the type of work the employee undertakes. I would of course like all employees in any company to be treated equally, and if an employer wants to undertake an annual medical check, all their employees should be treated the same, but for individuals working in hazardous conditions, we should ensure that we will put nothing in the way of checks occurring more frequently than once a year.
In Devonport, we have a dockyard. There are frequent reports of nuclear leaks, which are exceptional, but were a leak to happen, each employee would clearly need a full and thorough health check, which might be in addition to one they have already had, so I share my hon. Friends concerns.
I understand totally that the employees in such areas carry dosimeters all the time, and when those meters change colour the employee must have a medical check, irrespective of when they last had one, but there are many areas in industry across the country where those conditions can arise, and I would not like the ability to have annual checks to be put back. I would like the Minister to make that totally clear.
I will start by reassuring my hon. Friends the Members for Tamworth and for Plymouth, Devonport that the provisions we are debating are completely without prejudice to the relevant health and safety legislation, which of course require workers to undergo the necessary medical testing and treatment, in so far as their personal health is affected by conditions at work. That is the crucial difference, so I hope that that reassures them.
Responding to the points made on more frequent medical checks, it has never been our intention that medical treatment should be exempted from tax when provided by a company. That is no different to any other type of private medical treatment. An individual may go for a check-up in which a problem is identified that is then treated via the company, but we have no desire to treat that check-up as a benefit in kind. We therefore provide a generous taxation position; I do not know whether the Opposition would want to do so.
Before the regulations were introduced in 2007, the guidance, as has been mentioned, referred to periodic medical check-ups. That was based on the understanding that, when an employer provides employees with medical check-ups, they are commonly at longer intervals than once a yearperhaps reflecting the fact that the hon. Member for Henley is not alone in his aversion to check-ups. It is certainly our understanding that routine check-ups, rather than treatment, tend in practice to take place less frequently than once a year, which is absolutely fine as far as the regulations are concerned.
The regulations were introduced in 2007 because we needed to ensure there was a clear legislative basis for what was otherwise simply an understanding on the part of HMRC. We are changing them now precisely because of the representations we have received and simply because we want to get the provisions right. There were some anomalies that, to be honest, HMRC had not identified. The example that makes the point most clearly is that the 2007 regulations stated that precisely the same check-ups needed to be made available to all classes of people, and since some of the check-ups are for gender-related cancer, it immediately became apparent that it was absurd to require that the whole work force should be tested for testicular or breast cancer, regardless of gender. It soon became clear that something needed to be sorted out, so the clause aims simply to regularise that position.
Given that swine flu is back in the news today, one potential issue is that employers might want to instigate checks and make them available to their employees in an attempt to respond to it, particularly in the autumn when there are likely to be concerns about swine flu again. In clause 55, it appears that an additional check in the course of the year would be taxable. I understand why it is not addressed in the legislation, but would the Treasury be willing to reconsider if concerns about swine flu increased and such checks became widely available?
We are not planning to look at this again. A company wishing to undertake swine flu checks on its entire staff would do so for both humane and business continuity reasons. It is ultimately a commercial decision for the company. There are intense efforts across Government to ensure, through the national health service, an appropriate response to any future swine flu pandemic, and that will proceed as normal, regardless of where people work.