HC Deb 24 February 1999 vol 326 cc432-4
Mr. Quentin Davies

I beg to move amendment No. 3, in page 5, leave out lines 30 to 39 and insert 'for an officer of the Board to resubmit a case to the Commissioners if, in his view, a material change of circumstances has occurred since an earlier decision was made by the Commissioners; and in any such case it shall be for the Commissioners to determine whether any such change of circumstances which would warrant their setting aside their earlier decision has indeed occurred.'. This is not a technical amendment. Indeed, we take strong exception to the present form of clause 10, which, as it stands, is extraordinary. We debated the issue in Committee, but we did not get satisfactory assurances from the Government and we felt that we had to revisit it on Report. Clause 10 would mean that if there had been an appeal by a national insurance payer—a citizen—to the commissioners, and they had found in his or her favour and against the Revenue, that decision could be arbitrarily set aside by an officer of the board on the ground that circumstances have changed.

It is extraordinary that the two parties to a quasi-judicial process are not treated equally. Far from it, because if the appeal goes against the board, the officer can overrule the commissioners without taking the case back to them. That is completely wrong. The appeal procedure should be a genuine procedure. Under the Government's proposal, the appeal procedure would be bogus and it would be a deception to refer to it as an appeal. It would be a cruel and cynical charade, because the citizen would believe that he had a right of appeal, but, even if he won the appeal before the commissioners, the Revenue could subsequently overturn the decision.

The Bill provides that the decision of the commissioners can be changed in the event of a material change of circumstances". However, that provides no protection, because it is the officer who decides whether there has been such a change of circumstances. Clearly, clause 10 undermines the jurisdiction of the commissioners, who have a right to decide on points of law and points of fact. We cannot have one party to an appeal overruling the commissioners in such a way. That would be arbitrary, tyrannical and bureaucratic government. Amendment No. 3 would make it clear that if the board claimed that there had been a material change in circumstances, it would have to go back to the commissioners and argue the case. That is reasonable. Then, the commissioners could decide whether there had been a material change of circumstances and, if so, whether it warranted a different judgment in that case. That is how any legal procedure should work in a country whose systems are based on the rule of law, as I hope ours always will be.

Ms Hewitt

As the hon. Gentleman said, we also discussed this issue in Committee, and I hope that I can reassure him this time. However, I want to point out that his amendment goes much further than I think—and hope—that he intends. It would mean that the only decisions that could be varied or superseded would be precisely those in which an appeal against the original decision had been determined by the commissioners.

It may help if I explain the difference between varying and superseding a decision that has been made by an officer of the board. Varying a decision involves amending, in some respect, a decision that has been made; superseding a decision means that a decision that has been made covering an open-ended period of time, and which is correct for the period up to the date on which it was made, later on ceases to be correct after there is a change in the relevant circumstances.

I can illustrate that with the example of employment status. When a person is engaged to carry out some work, the question of employment status may arise in relation to income tax or national insurance contributions. The decision on the employment status might be that the person is engaged on terms that make his or her status that of an employee from the date of engagement. If it later transpires that the information on which that decision was based was incorrect or incomplete, the decision could be varied to say that, from the outset, the individual in fact had self-employed status.

However, if the decision was correctly based on the full facts and there was, later on, a change in the terms on which the person was engaged, that decision might cease to be appropriate at that point in time. In that case, the Inland Revenue could make a superseding decision that defined the point in time that the original decision ceased to be applicable and incorporated a fresh decision that was relevant from that point of time onwards.

The Bill provides that an appeal can be made against both the variation of decisions and against superseding decisions. In practice, few decisions will be the subject of an appeal, essentially because the people affected by them will be content with their terms. However, the amendment would prevent decisions from being varied or superseded in any circumstances unless there had been an appeal against the original decision which had been determined by the tax appeal commissioners and followed by a subsequent change of circumstances. That would mean that most decisions could not be varied or superseded even where it was in the contributor's interests that they should be. If we were to require that, all superseding decisions to be made by the commissioners would mean quite unnecessary hearings in cases where the contributor and the Inland Revenue were in full agreement that a change had occurred. That would mean extra costs to the national insurance fund and extra costs and worries to the contributor.

That is why we think that it is better, and fairer, to allow the Inland Revenue official to make the fresh decision and to trouble contributors with an appeal only where they disagree. I stress that there is no question of Inland Revenue officials being able to overturn commissioners' decisions at will. Each superseding decision will carry its own right of appeal, and it would be absurd—and potentially a case of maladministration—for an Inland Revenue official to supersede a decision of the commissioners unless the facts had changed, as the appellant would return to the commissioners who would, no doubt, return their original decision.

I want to reassure the hon. Gentleman that the powers in clause 10 do not give the sweeping power to officials that he fears, but are instead a necessary provision to save time and worry for contributors. I hope that, in the light of these reassurances, the hon. Gentleman will feel able to withdraw the amendment.

Mr. Quentin Davies

I am grateful to the Economic Secretary, who has shown that she is capable of giving a lucid and extensive exegesis of the Bill. She seemed less willing to do so in Committee.

6.15 pm
Mr. Vernon Coaker (Gedling)

That is insulting.

Mr. Davies

On the contrary, I am making a complimentary remark. I see no reason why the hon. Gentleman should object, and we are making some progress as a result of the Economic Secretary's change of attitude.

I hope that the Inland Revenue officials unfortunately charged with the future administration of national insurance will read the explanation that we have just heard whenever they come across difficult cases, and that they will be guided by the limiting interpretation of the Bill's powers.

However, on the basis of what the Economic Secretary has said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Forward to