§ Mr. CousinsTo ask the Secretary of State for Social Security (1) on what date the Contributions Agency decided not to pursue arrears of national insurance contributions on allowances paid to Crown employees serving overseas from 1975; and if this decision was approved by Ministers; [35058]
(2) on what date advice was received by her Department that arrears of national insurance contributions on allowances of Crown employees serving overseas should be waived; and by what means this decision has been implemented; [35196]
(3) if he will make a statement on the number of cases and departments involved in respect of the waiving of arrears of national insurance contributions relating to allowances of Crown employees. [35197]
§ Mr. DenhamRegulations (SI 1997/820) came into force on 6 April 1997, amending regulations 19(1) (payments to be disregarded) of the Contributions736W Regulations 1979 by adding a new disregard in respect of allowances which are not taxable income by virtue of Section 319 of the Income and Taxes Act 1988 and similar allowances paid to those in the service of Commonwealth War Graves Commission and the British Council.
In a written answer to the hon. Member for South Dorset (Mr. Bruce), 18 March 1997, Official Report, column 572, the previous Government announced their decision to make this and other changes. This brought the treatment of overseas allowances for crown servants under national insurance legislation into line with their tax treatment, which had remained unchanged since 1943, and into line with the understanding of the legislation the Government had held previously. Ministers of the day decided that the Contributions Agency should not pursue arrears.
From the information available from the Departments concerned it is not possible to establish the number of cases involved. In the course of assisting the National 737W Audit Office with its Report on the National Insurance Fund Account 1996–97 (HC 465) the Department, from the information available to it about the amounts paid in the form of these allowances, estimated that arrears of £530 million had not been collected over the period since 1975. The large majority of such payments had been made to service personnel and members of the foreign service by the Ministry of Defence and the Foreign and Commonwealth Office. The collection of arrears would have involved a considerable administrative cost and produced no additional Government revenue.