Clause 41 deals with penalties in cases where “careless or deliberate” errors are made. Amendment 13 is a probing amendment to ask the Government how they intend to define and measure carelessness. The consultation response set out scenarios where HMRC will be able to charge penalties, all of which are covered. In one scenario,
“parents carelessly or dishonestly make false declarations at registration and/or…reconfirmation.”
A person who makes such an inaccurate declaration under the clause will be liable to pay a penalty if the inaccuracy is “careless or deliberate”. We clearly understand and fully support the need for penalties in cases of deliberate dishonesty, but it is more difficult to understand the reasoning behind the need to penalise those making careless mistakes. Indeed, we struggle to understand how we can actually define a careless mistake.
What exactly does the Minister mean by “carelessness” in this case? How will she evaluate whether somebody has failed to take the “reasonable care” described in subsection (2)? What constitutes failure to take reasonable care? Some of those points were of particular concern when we still had the three-month period for the self-employed—I reiterate our thanks to the Minister for her response, as we are now looking at a one-year period for the tax return for the self-employed—but they are still an issue for those who are not self-employed and who are just using the top-up scheme ordinarily.
How does the Minister define carelessness and how will she evaluate whether somebody has acted carelessly? If someone has—or is deemed to have—acted carelessly, when will a penalty be communicated to them? Will they have any right of recourse if it was a careless mistake? This is a good opportunity for her to clarify some of those points. because it seems in the explanatory notes and the consultation there is still a grey area. Our probing amendment gives her an opportunity to clarify the position.
Amendment 13 would remove the penalty for careless errors made in declarations of eligibility for the scheme. Amendment 14 is partly a consequential amendment. As the hon. Lady has said, amendment 13 is a probing amendment, so there is a great opportunity to clarify the position. I am happy to put on record some examples to illustrate how the penalty might apply as well as examples of careless and deliberate error. An error is careless if the parent did not know that the information they provided was wrong, but they would have known if they had made the checks; if they had sat down and made conscientious checks. The error occurred because they did not make the full checks that they should have made. If they had done so, they would find that they had made an error. It is clearly a minor error made as a result of carelessness and not paying attention to the detail when putting the information in.
A good example is completing an online declaration. We have all filled in online forms, so we have experience of them. A parent who has been living with a partner for many years might accidentally tick a box to say that they have no partner. Before they submit their declaration, the system asks them to confirm all the information that they have entered and summarises it back to them, and they declare everything correct even though there is an error in the form. Anyone can mis-enter information accidentally when typing fast; that is inevitable. However, the failure to notice such an obvious mistake would be defined as a careless error.
I thank the Minister for that reply. I understand the circumstances that she describes. To probe further, what alarm or communication mechanism will be visible on the declaration to enable parents to understand the seriousness and consequences of making a careless mistake? She, like me, will know that when we do things on the internet these days, we are all invariably asked to agree to terms and conditions that we do not read but tick anyway. Perhaps people do not take things quite as seriously online. Can she clarify the position so that parents are absolutely clear that such an error will be penalised?
This is about the system and its construction and design. If errors come through after the input of wrong information—even, as I have highlighted, the wrong address or something of that nature—the system will flag it if part of the form does not make sense. Also, on screen, we will absolutely ensure—this comes back to the issue of communication with parents and individuals—that we specify the eligibility criteria for the registration process and what the consequences are of deliberately providing misleading or false information.
This is not about having a system that penalises people who make unforced errors; I know that we are using the term “careless errors”, but they are unforced, undeliberate errors. It is part of the system design. The information associated with the communication around the entire scheme will make it absolutely clear that anyone who deliberately goes out of their way to mislead or claim wrongfully will face severe consequences. That will deter such individuals and hopefully ensure that people provide the right information.
We have covered careless or unintended errors, although that is not the appropriate term, and we must balance that against deliberate errors on declarations made by parents who know that they are providing false information. The system will weed them out. Obviously and rightly, there will be penalties to ensure that that cannot happen. I trust that that answers the hon. Lady’s questions about how potential errors might be treated.