Tax Credits Bill

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Mr. Flight: I beg to move amendment No. 7, in page 3, line 4, at end insert—

    '(5A) Entitlement to a tax credit is dependent upon being lawfully in the United Kingdom; the Board shall have access to any information held in any form by any other Government Department for the purpose of satisfying itself whether a tax credit is properly payable under the provisions of this subsection.'.

The amendment is one of several that we drew up to help the authorities in their investigations. It would provide for the exchange of information among Government Departments for the purposes of checking eligibility. The Bill defines eligibility in detail, but the process of checking it will not be easy. Access to other Departments' records would be of use to the Inland Revenue for making checks or for sampling for accuracy. The amendment is designed to add clarification and to probe the Government's intentions.

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Dawn Primarolo: The amendment proposes that entitlement to tax credit should be conditional on the claimant being lawfully in the United Kingdom. The Committee will be reassured to hear that the Government do not intend to make tax credits available to people who are here unlawfully. However, it is not necessary to amend the Bill to achieve that result.

The Bill already allows regulations to be made excluding persons subject to immigration control from entitlement to both the working tax credit and the child tax credit. This is a complicated area. It depends on the status of the person subject to immigration control. The hon. Member for Arundel and South Downs is no doubt aware that a person requiring leave to enter or remain in the United Kingdom but who does not have it—that is, a person here unlawfully—falls within the category of persons subject to immigration control. That is made clear in section 115(9) of the Immigration and Asylum Act 1999, to which clause 38 refers.

The first limb of the proposed new section is not necessary. It has been covered. It is cross-referenced in immigration law and there is provision for regulations to specify. The second limb would give the board access to information held for any purpose by other Government Departments to enable it to establish whether a person should be excluded from entitlement on the grounds of being in the United Kingdom unlawfully. I hazard a guess that I would not get an amendment that would give the Inland Revenue such wide powers to access information in any Government Department in the interests of deciding entitlement through the House of Commons let alone the House of Lords. The hon. Gentleman is familiar with the important balance that we strike in the tax system on taxpayer confidentiality, the existence of information gateways and their tight control. It was the subject of discussion on a recent Bill, which completed its passage just before Christmas. The issue of where the Revenue should have powers was hotly contested.

I assure the hon. Gentleman that the Government share his concern that the Revenue should have the information it requires to make correct decisions about a claimant's entitlement. I am not convinced that we need such vast powers to do so. It is not the Inland Revenue's role to police the immigration laws. Its role is to ensure that the rules for entitlement to tax credits are met. As I mentioned, those rules will include rules on entitlement for those subject to immigration control. The provision is in clause 38.

For the new tax credits, the procedure will be the same as for the working families tax credit, where the Revenue determines entitlement without direct access to the information held by the Home Office. I have decided that a regulatory power is necessary here because discussions are taking place at the Home Office about immigration and asylum and methods for ensuring that someone is here legally and therefore receives their legal entitlement. It is not a sensible approach to include provisions that may change and may necessitate a return to primary legislation. The regulations will replicate the interaction that occurs now on the working families tax credit.

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I am grateful to Opposition Members for tabling the amendment, which raises an important point. I am sure, however, that the hon. Member for Arundel and South Downs will agree that it is not the Committee's role to make the Inland Revenue responsible for all Government policy, including immigration controls. We need to follow the immigration policy laid down in legislation. The information gateways proposed by the hon. Gentleman are much wider than we need and would concern all citizens in this country. Nevertheless, he raises an important point to which I am sure that he will return: ensuring that only those who are eligible will receive the tax credits. I hope that he accepts that the cross-reference to the immigration laws and status give us the necessary powers.

Mr. Flight: In simple terms, under the powers proposed in the regulations, can the Inland Revenue check with the immigration department if it suspects that a claim is from someone who is not lawfully resident in the UK?

Dawn Primarolo: One issue that might be considered, along with immigration controls, is whether an individual who has entered the country has applied for and been allocated a national insurance number.

I think that we would not ask the Home Office directly, but the tax department can use its information to cross-check whether a person exists and other checks may be made elsewhere in the tax system to reinforce that. We are prohibited from disclosing taxpayers' information to the Home Office, but there are ways of cross-referencing. The Inland Revenue has the same problem as other Departments: someone who is here illegally will not be in the system and the Home Office will not know about them either. Information gateways to the Home Office will therefore not resolve the illegality issue. The only question is whether such people were subject to immigration controls; there are other ways of checking an individual's documentation.

On that basis, we can deal with the matters raised by the hon. Gentleman without extending the Inland Revenue's powers, which would probably frighten the living daylights out of honest taxpayers, who would worry about whether we were disclosing information. On reflection, he may wish to ask leave to withdraw the amendment, as it is unnecessary.

Mr. Flight: I thank the Minister for her response. I would not wish to extend powers more than is justified and therefore to reduce privacy. The Minister has answered the probing question underlying my proposal. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 ordered to stand part of the Bill.

Clause 4

Claims: supplementary

Mr. Flight: I beg to move amendment No. 8, in clause 4, page 3, line 10, after 'manner', insert

    'before an official of the Board who is satisfied that all facts necessary to establish the claim have been made out'.

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The Chairman: With this we may take amendment No. 13, in clause 4, page 3, line 23, at end insert

    'provided that such person has appeared before an official of the Board, who is satisfied as to the identity of such person and of the claimant and that the such person acts genuinely for the claimant.'.

Mr. Flight: The amendment, which would require a claimant or someone acting for him to meet an official to provide information to establish the claim, is a helpful, anti-fraud measure, as the rules and complexity even of child tax credits are considerable. It is unrealistic to believe that many people will easily be able to understand the forms, no matter how well they are devised. The Government cannot be wholly happy with the take-up even of the existing child tax credit. The amendment would help people to find out what they are entitled to claim and assist those who need it. In the context of some pretty tortuous arrangements for claims based on this year's or last year's income and whether hours worked relate to this year or last year, the amendments would also afford an opportunity upfront to iron out a lot of issues. People could be helped and advised about what they are entitled to and the Revenue would have an opportunity to ask questions. Obviously, it might discover from an interview that a claim is not justified.

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I appreciate that there would be an administrative-time cost. Interviews would have to be conducted locally, which would presumably involve Revenue staff and so on. However, the interview model that the Government introduced in a number of areas has been quite successful, and the model of people going to the DWP to find out what they are entitled to is well established. Therefore, there is logic behind these two parallel amendments, which would make the system work better, help individuals and provide a mechanism to reduce fraud.

Dawn Primarolo: Amendments Nos. 8 and 13 concern the consideration of claims by the Inland Revenue. Amendment No. 8 would introduce the requirement that a claim be made

    ''before an official of the Board who is satisfied that all facts necessary to establish the claim have been made out''.

Amendment No. 13 would have two effects. First, it would require any person acting for another in making a claim for a tax credit to appear in person before an official of the board. Secondly, it would require that official to satisfy himself as to the identity of that person and the claimant and to be sure that the person was acting genuinely for the claimant.

I shall deal first with the requirement for the Inland Revenue to give proper consideration to the claims that it receives and to satisfy itself that they are valid. It is unnecessary to amend the Bill in that regard. Clause 14 makes it clear that, on a claim for a tax credit, the board—in practice, a Revenue staff member—is required to take a decision about whether to make an award. It is therefore incumbent on the Revenue to consider each claim that is made. I assure the Committee that the Revenue will need to satisfy itself before paying a credit as to the identity of the claimant and any person acting on their behalf and that the relationship between the two is genuine. The

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Bill does not need to be amended to ensure that that occurs.

More generally, the board's statutory responsibility for the proper administration of tax credits is covered in clause 2. Clause 4(1)(a) enables regulations to require that claims be made in a prescribed manner. I assure the Committee that the prescribed manner will be such that the facts necessary to establish a claim must be provided. If they are not, the claim will not be valid and no award will be made. Nothing more is needed in the Bill.

The amendments can be read as requiring claimants and appointees to attend personal interviews with an official of the board. I am sure that the proposal is well intentioned, but it is also, if hon. Members will forgive me for saying so, slightly misguided. Such a requirement would be completely impractical; we are talking about 6 million applications. We do not require everyone who wants to claim a tax relief to appear in person before a staff member so that they can ascertain whether they are entitled to it. Why do we need different treatments within a system that already works perfectly well? It would be completely impractical, and not just for Inland Revenue. Think of the problems involved for the people trying to make a claim. When we are supposed to be moving to e-commerce and interaction to ensure easy access, the official Opposition want everybody to trudge into a tax office in person to ascertain the right to access.

 
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