§ Mr. BarkerTo ask the Secretary of State for Defence on what grounds his Department dismissed the issue of retired officers or their widows who have continued to pay tax incorrectly on retired pay awarded since 1952 on the grounds of disability attributable to or aggravated by service in 1997. [31462]
496W
§ Dr. MoonieAs I explained in my statement in the House on 23 January 2002,Official Report, columns 891–902, with regard to tax exemption of Army attributable pensions, the error was uncovered by a retired Army pensioner, Major Perry. Our records show that Major Perry first raised the taxation of his service invaliding pension in December 1997. He then went through two stages of appeal at higher levels and at each his arguments were rejected. It was only when he made a further approach that the error was recognised. The issue turned on whether only Service Attributable Pensions were tax exempt or whether, as in Major Perry's case, Service Invaliding Pensions should also be exempt. At the initial appeal stages, the position with regard to the law was misinterpreted and the difference in practice between the Army on the one hand, and the Royal Navy and Royal Air Force on the other, had not become apparent. It was only in 1998 that the correct legal position was recognised and action to remedy the error put in hand. The point at issue was not straightforward. The error should, however, have been recognised when Major Perry first raised his concerns and I can only reiterate our apology to him and those other Army pensioners or their spouses affected.
§ Mr. BarkerTo ask the Secretary of State for Defence (1) if he will make a statement on the investigations his Department has undertaken to ascertain the reasons for incorrect calculation of taxation under the relevant legislation of retired pay awarded to Army officers since 1952 on the grounds of disability attributable to or aggravated by service; [31463]
(2) what steps his Department is taking to identify retired officers and their widows who have continued to pay tax incorrectly on retired pay awarded since 1952 on the grounds of disability attributable to or aggravated by service; and if he will commission an independent inquiry on this issue. [31465]
§ Dr. MoonieThe Ministry of Defence has already reviewed the files of retired Army personnel and Army widows who had been in receipt of an invaliding pension; this involved some 20,000 files. When we identified the error in 1998, we provided information to ex-service and war widows' associations, who responded positively to our request to advertise the error to their members. We do not believe that there are many service personnel or their widows or widowers who have not been identified. None the less, we are keen to ensure that none has been missed. We have therefore provided details to help individuals identify if they might be affected on the MOD website. We intend to undertake national publicity shortly and we will use our service journals and other material which has a wide veterans' readership to ensure maximum coverage of this issue.
I do not intend to commission an independent inquiry on this matter.
The original error which allowed the taxation of Army attributable service invaliding pensions occurred in the early 1950s. At this distance, we would not expect all the relevant files to have been preserved and the Army personnel concerned will have retired and in many cases be deceased. Given the major changes to the way in which pensions are administered, over the period, I would also not expect there to be lessons of current relevance. I have, however, asked officials to assess whether there are any other pensions areas which may be similarly affected.