|Tax Credits Bill
Mr. Flight: I thank the Minister for his response and in particular for clarifying, at least for me, that the Government initially intend there to be a three-month time limit. That addresses the main issue that we were raising. What everyone wants to avoid is the development of a lucrative trade for clever lawyers specialising in back-claiming for long periods, long after that support was needed for the people concerned, who have survived notwithstanding.
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Making claims in advance arises later in the Bill, especially under clause 7, and will need a fair degree of probing. However, I thank the Minister for his explanation of what ''earlier'' is intended to mean in the context of clause 4(1)(b). On the basis that, essentially, three months' backdating will be the limit, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Flight: I beg to move amendment No. 12, in page 3, line 20, leave out paragraph (e).
This is also in the main a probing amendment to ask why there is a provision for a claim to be made after a person has died. That is not the same issue as where children have died, which is addressed in clause 51. Some child tax credit claims will continue or potentially increase if one spouse has died. Would it not be better to hasten the process of the claim being made by the surviving spouse or partner? The intent may be to refer to claims that people are not entitled to and qualified for because they are dead, but that are still being paid after death for administrative reasons. There is a principle that money should be spent on the living in need rather than on what amounts to an administrative issue. The real question is: why is that provision included?
Mr. Boateng: Were we to leave out clause 4(1)(e) we would leave out a provision that allows a claim to be made or proceeded with in the name of a person who has died. We want to include that measure. It is important in our view to allow up to three months for a claim to be made. Couples will be required to make joint claims. If a couple did not claim the tax credits to which they were entitled immediately, they would normally be able to make a claim within the following three months and have the award backdated to the point at which they started to qualify.
Clause 3(2) requires that such a claim be made jointly but, clearly, it could not be if in the interim one party of the couple died. If a claim were made while both partners were living, that should not disqualify the other partner from the benefit that would otherwise have accrued. Without the Bill's provision, the surviving partner would find themselves denied tax credits for which they would otherwise be eligible. That would not be just, particularly at the difficult time when there are real needs in a family because of the end of a partnership through the death of a partner. The amendment would deny a partner the opportunity of gaining the benefit that should accrue to them by virtue of their partnership. That is probably not the intention of Opposition Members, so I hope that they will withdraw the amendment.
Mr. Flight: I thank the Minister for his response. Whether the enforced making of joint claims, particularly in relation to children, accords with human rights law arises later in the Bill. A number of people in the charity sector are keen to ensure that that is the case. On the assumption that it is the case, I understand the reason for the provision. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
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The Chairman: Before we proceed, I note that there will have been debate on no less than five groups of amendments to the clause. I am therefore minded, unless I sense strong objection, to move the clause stand part without debate. The next amendment gives opportunity for wide-ranging contributions, and I will be tolerant of that.
Mr. Flight: I beg to move amendment No. 14, in page 3, line 28, leave out paragraph (h).
This is again a probing amendment. Why is the phrase
included? It appears to be a woolly, catch-all addition, which again widens scope for wasted administrative costs and fraud. As we have said, the rules should be clear and there should be a requirement to stick to them. In essence, why is the paragraph included?
Mr. Webb: Taking notice of your suggestion, Mr. O'Hara, I have a broader point that addresses clause 4(1)(g), but which could arise under paragraph (h). Where a claim is treated as being made by one member of a couple, there could be conflict between the two members about who makes the claim. What happens when dispute occurs between them? That may be covered in regulations, but can the Minister indicate whether the board will make a decision or ruling in such circumstances? The clause addresses claims that can be made by one member of a couple or another, but they may have conflicting reasons for wanting to be the claimant. Perhaps the Minister could give us a steer as to what the regulation may say.
Mr. Boateng: The reading of clause 4(1)(h) is assisted when read in conjunction with clause 17. As I deal with the amendment, I will briefly outline how the clause is intended to work. In due course I shall come to the point made by the hon. Member for Northavon.
Clause 17 deals with the finalisation of tax credit awards at the end of the tax year. It would require the Inland Revenue to issue notices to people who have been awarded tax credits setting out the information on which the award has been based. Those people will be able either to confirm that the information is correct or to provide up-to-date details of their income and circumstances. The Revenue will use that information to make a final decision as to claimant's entitlement for the year just ended. That is dealt with under clause 17, which we shall discuss more fully in due course.
Where appropriate, the Revenue will use that information to renew people's awards for the year ahead without them having to do anything further. Co-ordinating the process of renewing claims with that of finalising awards will ensure that claimants are not subject to multiple requests for the same information. There will be a single information-gathering exercise each year, which will keep the burden on claimants to a minimum and ensure that claimants with an entitlement to tax credits can see their payments continue without interruption. For some families, significant changes in their income and circumstances from one year to the next may have little or no effect on the tax credits to which they are entitled. We
Column Number: 45therefore intend automatically to renew the awards to those families each year, which will be less burdensome for them. That will be similar to the way in which claims to income tax relief such as the children's tax credit continue in many cases without a new claim being required every year.
The Inland Revenue will write to those families setting out the information that it holds about them, and explaining that it intends to renew their award. The claimant will have an opportunity to update the information if it is wrong, and under clause 17 they will be required to do so. If that information is correct, there will be no need for the claimant to contact the Revenue, which will simply renew their award.
Strictly speaking, clause 3 provides that when an award runs out at the end of the tax year, a new claim is needed to trigger entitlement for the following year. It will therefore be possible to renew awards automatically only if a new claim can be deemed to have been made each year, and regulations under clause 4(1)(h) will allow that to happen. The point of deeming the claim is that that allows the award to continue automatically. The hon. Member for Arundel and South Downs and other hon. Members have pointed out the importance of ensuring that the new tax credit system minimises the burdens on those claiming the credit, and of streamlining the system so that families are able to get the support to which they are entitled with the minimum of hassle.
Mr. James Clappison (Hertsmere): The Minister has provided a series of helpful explanations, which were needed, of the provisions in the Bill. Can we take it that in the course of renewals claimants will be kept fully informed as to what is going on and what is expected of them?
Mr. Boateng: Claimants will be given the information required as and when it is necessary to inform them following any change in their circumstances. They do not want a barrage of correspondence. It is, however, important that they are aware of their entitlements and responsibilities, and the guidelines will make that clear. We must ensure that the Revenue is able to gather information to ensure that awards of tax credits are correct, and the Bill gives the Revenue all the powers that it needs to do that job. Where it is possible to keep awards running on the correct footing without asking claimants to fill in additional forms or to submit new claims, it must be right to do that. If the award is changed, and this has a direct bearing on the point made by the hon. Member for Hertsmere (Mr. Clappison), they must be told why.
I turn to the point made by the hon. Member for Northavon. Clause 3 makes it clear that couples will be required to make a joint claim for the tax credit. That means that we require them both to sign the initial application form. For many couples, however, entitlement to tax credits will run on relatively unchanged from year to year. For those couples, it is important to keep red tape to a minimum when it comes to renewing their claim at the beginning of each new tax year. In some cases, we plan to allow a claim to be renewed by one partner on behalf of the couple,
Column Number: 46which is allowed for in subsection (1)(g). In those cases, the Inland Revenue would contact both partners to ensure that they were both aware of the basis on which the award had been renewed.
If a dispute arose about circumstances, the Inland Revenue would ultimately have to take a view. If it needed further information, it could seek it, and it would have to tell both couples its view. In those circumstances, it is vital that both couples should have the opportunity to make representations. Similarly both couples would have to know, and be able to determine, why a particular decision or course of action has been arrived at.
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