Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.

Donate to our crowdfunder

Clause 12

– in a Public Bill Committee at 6:45 pm on 3rd February 2009.

Alert me about debates like this

Returns of information to HMRC

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

Photo of George Mudie George Mudie Labour, Leeds East

I rise to ask the Economic Secretary if he will tell the Committee the meaning of subsection (2). When certain benefits were moved from the DWP to HMRC, it was clear that the philosophy, ethos and rules of HMRC differed from those of the DWP. Customers were treated differently in terms of money pulled back, appeals and so on. The subsection seems to say that certain moneys in saving gateway transactions, at some stage, can be regarded as taxable. That strikes a chord of worry with me: it is a continuation of the problems that we have had with HMRC over tax credits and the like. I note that the appeals procedure, which we will come to, relates only to subsection (3), not subsection (2). I want an explanation of what that is about and what it covers. If there is a disagreement over any part of this about sums being pulled back and such, can the Economic Secretary assure me that there will be a proper appeals procedure covering everything?

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury

Subsection (2) enables regulations to be made treating any sums wrongly paid as tax charged in an assessment for the purposes of part VI of the Taxes Management Act 1970. It permits regulations to be made allowing HMRC to collect those sums in the same way that it collects sums of tax due, using the provisions relating to collection and recovery of tax that are contained in part VI of the Taxes Management Act. The power is exercised in paragraph (5) of draft regulation 20. The situation is as my hon. Friend alludes to. He rightly raises the probing question about whether we are applying tax legislation to the recovery of those amounts and why, because they are not tax.

In practice, any sums that are to be recovered by HMRC in relation to saving gateway accounts will be dealt with by the same staff who recover HMRC debts  generally. The application of part VI of the Taxes Management Act allows those staff to make use of the normal collection and recovery powers used to collect tax. The same approach, of treating sums to be recovered for the purposes of part VI of the 1970 Act as though they were tax due, is also used, for example, when recovering sums in relation to child trust funds and tax credits. My hon. Friend rightly makes a number of points about those areas. What we are doing is regarded as quite normal, but obviously we hope that the situations in which the overpayments might arise will be extremely few.

Photo of George Mudie George Mudie Labour, Leeds East

That is a worry. I understand that we have had great trouble with the issue in the Treasury Committee with HMRC. They have caused mayhem and much trauma to people throughout the country. The Economic Secretary’s response is that tax people or collectors—Inland Revenue or whatever they are dressed up as—have no sophistication when it comes to getting the money back. They demand the money back and they want it back in their period, their time, and they do not regard the personal circumstances of the individuals concerned at all. We also found with tax credits that there is no right of appeal. Those are the two things.

I would be very concerned if the Economic Secretary is confirming that an overpayment in this area is going to be dealt with under the tax regulations as I described. Secondly, there will be no appeal against overpayments—that is the important thing. The Economic Secretary and the Department can pull back the money if they wish, if they feel that they have a case, but the customer should at least have the right to go to an appeal on the merits of the case.

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury

The situation as I understand it is that the Bill will give to the Treasury a power to make regulations to recover any overpayments made. Where an overpayment has been made, HMRC would consider the facts and circumstances of a particular case, to assess whether it was appropriate to recover any overpayments made. We are clear that we are dealing with people on low incomes and that we are talking about relatively small sums of money, and I would hope—indeed, expect—that HMRC would be extremely sensitive to such circumstances as we are talking about. What we are doing in subsection (2) is simply applying the normal collection and recovery powers. I know my hon. Friend has issues about how they might be applied in other areas, but it is right for us to have the powers. He correctly asks us to make sure that those powers are used in a sensible and proportionate way, which is what we would want to do.

Question put and agreed to.

Clause 12 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.—(Mr. Blizzard.)

Adjourned till Thursday 5 February at Nine o’clock.