§ Mr. Aspinwallasked the Secretary of State for Social Services what administrative tolerances are applied by his 465W Department in connection with the collection and recording of national insurance contributions which may affect legal entitlements.
§ Mrs. ChalkerThe report " Legal Entitlements and Administrative Practices ", published on 17 December 1979, sets out in general terms what the law requires of Departments handling cash and other entitlements of individual member of the public or corporate bodies. The Department has been reviewing its procedures in the light of that report, and the use of tolerances has been agreed in the following situations.
Nearly eight million of the deduction documents which are sent to the Department each year by employees bear insufficient details to enable the contributions recorded on the documents to be allocated to the individual records of employees. No action is taken to allocate those contributions which cannot confer any benefit entitlement. Computer techniques enable the correct records to be identified in a proportion of the other cases, but where this is unsuccessful further action to identify the record is taken only where the employee's contributions shown on the document exceed a sum equivalent to the lower earnings limited for class 1 liability (currently £23). A file is kept of all contributions which cannot be allocated in case information comes to hand later which enables this to be done.
A tolerance is applied where it comes to the Department's notice that contributions have been over or underpaid in a previous year. The Department now sends an invitation to the individual contributor to apply for a refund, or seeks to recover the underpayment, only where the amount exceeds £10. In some cases where an employer has made several mistakes these are looked at together; in these cases the £10 tolerance is applied to the net debt between the Department and the employer. The employer signs an undertaking to refund all overpayments by employees, and in future the DHSS will write to inform employees who have overpaid more than £10 that they should expect a refund from their employer.
It is proposed that checks on contracted-out employers should disregard a discrepancy between the amount 466W of a contributions equivalent premium paid by an employer and his subsequent end-of-year returns, provided the discrepancy does not exceed the amount of one week's maximum contracted-out rate contribution.