§ Lord Avebury
asked Her Majesty's Government:
Further to the Written Answer by Lord Williams of Mostyn on 30 March (WA 9), whether they will explain the discrepancy between this Answer that "visiting ministers who receive payments for fees and expenses are to be treated as office holders within the Prison Service and must be subjected to Income Tax Class 1 National Insurance contributions", a letter from the Director-General of HM Prison Service, dated 31 May, saying that "…visiting ministers are to be treated as employees for tax purposes and as such the Prison Service must make the necessary tax deductions" and Prison Service Instruction 17/1998, which provides that "there is no tax or Class 1 National Insurance" in five sets of circumstances, including where the payments are made directly to a registered charity; and whether they will cause the Inland Revenue to repay any amounts incorrectly deducted in the past in these circumstances. [HL2270]
§ Lord Williams of Mostyn
The earlier reply stated the general position on visiting ministers who receive payments for fees and expenses, which is that they are to be treated as office holders within the Prison Service and are subject to Income Tax and Class 1 National Insurance contributions. There are certain limited exceptions to this, which is why the noble Lord was invited to write to the Director-General of the Prison Service if he was aware of any particular cases where there was doubt over the applicability of this action in any particular case. I was unaware at that time that such a letter had already been sent to the Director-General.
The Director-General's letter of 31 March restated the general position based on the guidance then in force. This has since been clarified by Prison Service Instruction No. 17/1988, issued on 9 April, a copy of which is available in the Library. This lists, in paragraph 38WA 14, certain circumstances where the liability to tax and National Insurance contributions does not apply. The Director-General's letter explained that no clear documentation had been received by the prisons concerned that the payments in question were being made to a registered charity. The Director-General will write again to the noble Lord on this matter.