Select Committee on Statutory Instruments First Report


Memorandum by Inland Revenue


REGULATIONS 2001 (S.I. 2001/1531)

1. In his letter dated 9 May 2001 the Commons Clerk of the Select Committee on Statutory Instruments requested that a memorandum should be submitted on the following point:

Elaborate upon the reason given in the memorandum of 24 April for the breach of the 21 day rule, and in particular explain why the Regulations could not have been drafted earlier so that they could have been made and laid without breaching that rule.

2. Paragraph 3 of the memorandum of 24 April states that "Owing to the volume of work on other aspects of the Construction Industry Scheme, it has unfortunately not been possible to complete the Regulations in time to prevent a breach of the "21 day rule" in this case".

3. The work in question on other aspects of the Construction Industry Scheme consisted of—

information technology ("IT") and other operational changes to enable the changes to be made by the Regulations to be effected and publicised;

following completion of IT and other operational changes, publicising to sub-contractors in the construction industry the changes to be made by the Regulations;

preparing a Regulatory Impact Assessment ("RIA") relating to the Regulations; and

obtaining the Treasury Minister's agreement with the text of the RIA prior to its publication.

4. Work on the IT and other operational changes commenced in November of last year immediately following the obtaining of Ministerial consent to the work at the time of the pre-Budget announcement. That work was not finally completed until the end of March of this year, so that the letter to sub-contractors who might be expected to benefit from the changes made by the Regulations (which are wholly relieving) was not issued until 2 April. The RIA refers to that letter in the section headed "Publicity" and so could not be finalised until that letter had been issued. The Regulations in turn could not be made and laid before the House of Commons until the RIA, which is referred to in the Explanatory Note to the Regulations, had been finalised.

5. Because of the need to issue the letter to sub-contractors (which not only publicised the changes to be made by the Regulations but also gave practical guidance about when and how to apply for a certificate under the new regulations), and also the need to obtain further information about costs for insertion in the RIA, the submission to the Treasury Minister of the draft RIA was not sent until 6 April. Changes were subsequently requested by the Treasury Minister to the text of the RIA and this factor, combined with the policy administrator concerned being on prolonged sick leave at the time, had the result that the RIA was not agreed by, and consent to the Regulations being made was not obtained from, the Treasury Minister until 23 April. The Regulations were then made on 23 April and laid on 24 April.

6. In hindsight it is considered that the Treasury Minister's consent could have been obtained earlier by submitting both the RIA and the Regulations to the Treasury Minister in draft rather than waiting until the IT and other operational work had been completed. In this way it is probable that the Regulations could have been made and laid by 9 April so as to come into force on 1 May (in accordance with the commitment given in the pre-Budget Press Release in November 2000) without breaching the 21 day rule in this case.

4 June 2001

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