Clause 8

Finance (No. 2) Bill – in a Public Bill Committee at 5:45 pm on 19th October 2010.

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Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 5:45 pm, 19th October 2010

I beg to move amendment 5, in clause 8, page 9, line 31, at end add—

The amendment moves us on to a slightly different, and perhaps more accessible, part of the regime operated by Her Majesty’s Revenue and Customs. In clause 8, Members will see a series of simple powers to allow HMRC to create an online version of a form that taxpayers fill in to report tax deducted on interest, perhaps from deposits or from savings accounts. That is an entirely reasonable and worthwhile change, and I am surprised that primary legislation is required simply to allow the production of an online version of a form that, I gather, currently requires a convoluted paper-based application and then 14 days for a form to be returned for completion.

In the general sense, therefore, we believe that the new online return of income tax deducted form—CT61—is a good improvement, and will certainly ensure better compliance with tax law. We very much welcome the provision, particularly given that it will be made through the affirmative procedure in the regulation that is introduced. That is always something that I would welcome on this side of the Committee—[Interruption.] I am sure that the sedentary intervention by my right hon. Friend the Member for Delyn could not be recorded, and I did not hear what he said.

The amendment simply seeks to add, at the end of the proposed new subsection, the requirement that the regulation under the proposed new section also improve

“accessibility and convenience for the taxpayer.”

The amendment is necessary because the simple act of placing a tax form online often does not necessarily do much for its intelligibility or accessibility. I am sure that if members of the Committee have ever endeavoured to fill in their own self-assessment tax forms, or had dealings with HMRC in a personal capacity or on behalf of their constituents, they will have metaphorically torn their hair out at the complexity. Filling in the forms can sometimes feel like wading through treacle.

On this side of the Committee, we believe that far greater efforts need to be made to improve convenience and accessibility for taxpayers, not only because that is the right thing to do, given that taxpayers are residents in our constituencies, but because it is in the self-interest of the Treasury. The more compliance and the greater the understanding of the rules, the more likely it is that people will pay accurate taxes.

Photo of Richard Harrington Richard Harrington Conservative, Watford

Although what the hon. Gentleman says is logical—we should all want to make things easy for the taxpayer—surely it is only rational that the CT61 be the same in written form and on the internet; otherwise, it would not be fair to people who complete the form by hand.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I completely agree with the hon. Gentleman’s entirely sensible point. Given, however, that the Bill is the only opportunity for us to amend the existing provision, we felt it important that Parliament make a clear and formal statement that we believe the balance needs to be shifted more in favour of the taxpayer, rather than simply having systems designed around the convenience of HMRC officials.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

The hon. Gentleman might recall that the previous Government’s history on tax forms, particularly those for tax credits, was amazingly complex. Does this represent a change of position by the Opposition? Does he agree that the previous Government did not get it right when it came to simplicity, accessibility and convenience of tax forms?

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I certainly think that we could always do better in terms of accessibility, language use and the ability to assimilate what tax rules apply to us as individuals, but that is a separate issue from whether we should have tax credits. The hon. Gentleman’s party looks set, possibly tomorrow, to hack away at the entitlement to tax credits that many of our constituents may have, which would be a great shame. Whether those tax credits are accessible depends on whether the Government fund them and allow them in the first place. We cannot put the cart before the horse. In all types of management we could do better. For that reason I felt that it was important to table this amendment.

Photo of Alison McGovern Alison McGovern Labour, Wirral South

During the Second Reading debate, I made some remarks on the Floor of the House about how important it is that we as parliamentarians respect what those who work for Her Majesty’s Revenue and Customs do and that we value their service. I repeat that today. Does my hon. Friend agree that a further reason for the amendment is that it could reduce some of the difficult cases that we all see in surgery, where there is confusion or difficulty of communication between HMRC and the tax paying public? It might assist not only our constituents and members of the public, but those working for HMRC in getting the right information at the right time.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I imagine that it can be frustrating for HMRC staff to find themselves having to answer simple questions borne out of the complexity of the forms and the time lags it takes to send out paper-based arrangements, and so forth, when they are also receiving phone calls from companies, entrepreneurs or ordinary members of  the public who have perfectly reasonable inquiries to make. The amendment is, as I have said, a welcome step in its own regard.

I want to ask the Exchequer Secretary whether he would take this opportunity to discuss the accessibility and intelligibility of tax forms more generally. Certainly many of my elderly, retired constituents, who may well be in receipt of much of their income through savings that they have accrued over the years and find themselves returning declarations about interest deducted at source, will be even less able to access readily the meaning behind some of the complex terminology in the current CT61 form, as well as in other forms.

Has the Exchequer Secretary thought about consulting the Plain English Campaign on the design of those forms? Can he say that if unnecessary acronyms, gobbledegook and jargon can be avoided, he will make sure that they are avoided, while at every opportunity trying to explain arrangements in layman’s terms?

Will the Exchequer Secretary answer a question specifically on the whole set of downloadable forms in terms of the wider self-assessment arrangements? I have had constituents who have noticed that when they want to fill in their self-assessment forms, they are sent a batch through the post and then have to go online to find the relevant forms to download. That can be a “hunt the thimble” exercise. Can he assure me that the web version of the arrangement will have a facility for the taxpayer to find the tax office address to which they must submit the CT61 form? It may be that the online version allows a one-click return of the form so that people do not have to print it out and go through that rigmarole. I hope that that will be possible.

Photo of Richard Harrington Richard Harrington Conservative, Watford

I apologise, Mr Caton, because I forgot to say how honoured I am to be serving on this Committee, particularly under your chairmanship. However, that was not the point that I asked the hon. Gentleman to give way for.

Irrespective of the merits of making things simpler online, which few people would disagree with, the CT61 is not a good example. From memory, I think that it is quite a simple form, so it is not the right time to have an amendment on this particular clause. Perhaps a general measure could be included somewhere else. I am not sure of the Minister’s view on that, but I think that to include such a provision here would be most inappropriate.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

The hon. Gentleman was doing so well in a cross-party, bipartisan—tripartisan—way; I do not know what the phrase might be. The deduction of tax from interest has complexities, not necessarily about tax from individuals’ savings. Such complexities might involve whether the amounts are in yearly or monthly terms, or whether they concern special recipients, gilt interest, or foreign debts. Some companies have deductions at an interest level that is paid gross, and there are differences in how eurobonds are treated. It would be far better to spend a bit of time designing the online form, hopefully with a one-click solution.

Far be it from me to raise the acronym of IPSA in this Committee, but hon. Members will be more familiar than many of our constituents with the ridiculous  arrangement of going to the lengths of filling in an online form, pressing the button to submit it, and then—perplexingly—having to print out paper copies and submit duplicates. Such an arrangement requires an entirely unproductive effort on the part of the customer, the client and the consumer. In this case, I would not want an atrocious arrangement such as that to be suffered by our constituents when they deal with HMRC.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I am glad that the proposal has some support and I should be grateful if the Minister kindly reflected on the amendment.

Photo of David Gauke David Gauke The Exchequer Secretary

As we have heard, amendment 5 would add a requirement that any regulations made under the power provided in clause 8 must have regard to accessibility and convenience to the taxpayer. I am sure that the Committee is united in wanting to ensure that tax forms are as accessible and convenient as possible. It is important that HMRC faces a great deal of focus on that.

HMRC has carried out a lot of work on customer segmentation and it is important that the customer segmentation that it has identified as being willing and able is as big a part of the population as possible. There are many who are willing, but not necessarily able to comply as they would like to. HMRC must engage with such people and ensure that the payment of taxes when they are due is as accurate, accessible and convenient as possible. Both sides will agree with that and we can work as a bipartisan-tripartisan Committee of national unity on that matter.

That said, we believe that the amendment is unnecessary and perhaps it is worth mentioning how clause 8 will apply. It is concerned with procedures under which an individual or another non-corporate person, such as a trustee, deducts tax from interest and similar payments by them. Typically, that will occur when such a person pays yearly interest to a lender resident outside the UK.

The clause is not concerned with procedures such as those under which taxpayers report interest received by them; for example, from bank and building society savings accounts. Such payments are regulated by the tax deduction scheme for interest—TDSI, if I may use an acronym. I can confirm that the power has nothing at all to do with such interest, for which there are entirely separate statutory provisions. Nor does it have anything to do with the PAYE system.

The aim of the clause is to provide a regulation-making power for payment of interest, rather than receipt of interest. The current procedures can be difficult for taxpayers to use. For example, at present, the procedures state that the taxpayer must send an account of payment to HMRC without delay, without specifying what “without delay” means, or in what form the account must be sent.

With the new regulation-making power in place, it will be possible to modernise the old procedures. For example, it will be possible to provide a bespoke form, and consideration can be given to aligning the procedures with the equivalent rules that apply to companies, for which there are long-established regulation-making powers.

Any regulations made under the power will be subject to consultation and an impact assessment. They will also be subject to further parliamentary scrutiny. As the hon. Member for Nottingham East pointed out, they are to be made by affirmative procedure. He welcomed that, as is traditional from those sitting on the Opposition side of the Committee.

It is precisely because we are mindful of the need to have regard to the convenience of the taxpayer that the regulation-making power is needed. Without it, it would not be possible to improve the current procedures in this area, provide certainty for taxpayers or reduce compliance burdens.

The requirement on HMRC to have regard to accessibility and the convenience of taxpayers is something with which we can all concur. The hon. Gentleman suggests a wider look at online forms. The power in the clause is limited to forms that apply where income tax is deducted at source. Review of new or amended forms will, of course, be undertaken at the relevant time, when we deal with those points.

The hon. Gentleman raises a fair point about the importance of convenience and accessibility, but adding such words to the Bill, particularly given that they are not defined, would not add anything useful to the clause, so I hope that he will agree to withdraw the amendment. However, he is right to highlight the need for forms produced by HMRC to be as accessible and convenient as possible, and I think he particularly united the Committee when he highlighted an instance where that does not always happen.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 6:00 pm, 19th October 2010

The Minister’s iron grip on public policy is such that his utterances about seeking greater accessibility and convenience for the taxpayer will immediately be picked up on by his myriad officials in the room, and I am confident that they will act on them without undue delay—I forget the phrase he used, but without hesitation or any unnecessary time elapsing.

The point that the Minister makes about the taxpayers to whom the clause relates suggests that this is a much narrower set of provisions than I had perhaps realised. In that respect, I am more than happy to withdraw the amendment, but my point is an important one. We should always be vigilant about the fact that it is our constituents who have to navigate these systems, and that we have a duty to make it as simple and burden-free as possible for them to do so. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.