Saving Gateway Accounts Bill

My Lords, in moving Amendment 11, I shall also speak to Amendment 12. Both amendments relate to Clause 12 of the Bill, which deals with HMRC’s powers in relation to the recovery of amounts that have been incorrectly paid. As usual with this Bill, all is to be specified in regulations. Amendment 11 deals with the position of account holders. It is common ground between these Benches and the Government that HMRC must have powers that allow it to protect the public finances. My amendment would ensure that the full range of HMRC powers is modified when HMRC is dealing with the consequences of one of its own errors or mistakes. It would limit the power of recovery in such a case only where the account holder materially contributed to the error or mistake. The wording in Amendment 11 is taken from the guidance to which HMRC works in the case of tax credits. For ordinary taxpayers, the HMRC can throw the full weight of its powers, which are increasing with every Finance Act, at a taxpayer who ends up underpaying even through no fault of his own. When the tax credit scheme was introduced with such disastrous effect by HMRC, it initially responded in its customary heavy-handed way. HMRC was set up to collect taxes and has none of the culture that is necessary for dealing with benefit recipients, which is what most tax credit money in fact involves. One of the outcomes of the outcry over the way in which HMRC dealt with the problem of billions of pounds of overpayments was the guidance that severely limits the ability to recover overpaid tax where this is due to HMRC’s error or mistake. It is this that I am trying to replicate for the saving gateway accounts. Much has been written and researched about the lack of financial capability across a large swathe of the population. The Government are taking some action on this, but it will remain the fact that the poorest in our society, including those on the benefits or tax credits that will passport them to the saving gateway scheme, have limited or no financial education, experience or even literacy. What is blindingly obvious in financial terms to those who sit in your Lordships’ House, even those without financial credentials, is quite likely to be incomprehensible, or at least confusing, to those on benefits. When HMRC makes a mistake in a saving gateway account, it cannot be presumed that the beneficiary of that mistake ought to have spotted and responded to it. HMRC should not be allowed to throw the book at such people. This softening of HMRC’s powers is, in my view, the right thing to do, even if it results in some loss of public money. In any individual case the loss of public money is likely to be small. It is HMRC that should be penalised, through loss of bonuses and the like, not the saving gateway account holder. In Grand Committee, the Minister seemed unconcerned at the plight of these benefit recipients getting on the wrong side of an HMRC error or mistake. I hope that the Minister has had a chance to reflect further on that. Amendment 12 deals with account providers. The regulations deal with overpayments but, as I pointed out in Grand Committee, the wording of the draft regulations seemed to imply that HMRC could pursue an account provider that had assets even if the provider had already paid money over to the account holder. Furthermore, the draft regulations provide for joint and several liability. That seems to give HMRC carte blanche to pursue the deepest pocket available, which is inevitably that of the account provider, whatever the detail of the recovery rules set out in Regulation 20. My amendment would ensure that HMRC cannot proceed against an account provider if in good faith the money has already been paid over to the account holder or someone else entitled to the money. I understand that the Treasury has looked again at the regulations in this regard and that some changes are being proposed, and I look forward to the Minister setting that out for the record. I beg to move.