Tax Credits: Public consultations

The Tax Credit Act 2002 introduced the current tax credit system, however discussion about the new system started long before that date. We have set out a full history of the consultations, reports and discussions that led to the Tax Credit Act 2002 in our research section.

HMRC consultation on supporting customers who need extra help

In March 2013, HMRC announced that they would be piloting a new system of support for taxpayers and tax credits claimants who need extra help. This new service will replace the existing enquiry centre network which currently serves as HMRC’s face to face service channel. The new service will be piloted for 5 months from June 2013 in the North East of England. Several North East enquiry centres will be closed as a result (the full list can be found in the official HMRC announcement). The consultation document sets out HMRC’s proposals for the new service and asks for responses on how the extra help will work in practice, the impact of the changes, the impact of the new service on the voluntary and community sector as a whole and how help can be given to those who use enquiry centres who don’t need extra support. HMRC state that no final decision will be made until the consultation and pilot have been completed and fully assessed.

HMRC Consults on mandatory revision before appeal in tax credit cases

On 3 July 2012, HMRC published a consultation document called ‘Tax Credits: mandatory revision before appeal’. HMRC sought views on the impacts of changing the tax credits appeals process to mirror the Department for Work and Pensions planned changes to their appeals process which was announced in the Welfare Reform Act 2012 and subject to a consultation between February and May 2012. The aim of the consultation was to look at simplifying the tax credits appeals process by introducing a mandatory consideration of revision before appeal. HMRC anticipated that this would significantly reduce the number of appeals to be heard by the Courts and Tribunal Service and ensure continued alignment and consistency of treatment with the revised DWP appeals legislation and processes which DWP will be introducing. The consultation closed in October 2012. HMRC confirmed at the November 2012 Benefits and Credits Consultation Group meeting that although the proposals in the consultation document would go ahead to mirror DWP changes, given the current delays in the tax credits appeals system they will not be implemented from April 2013 as originally planned. Instead they are likely to go ahead in either October 2013 or April 2014. More information about the DWP processes for Universal Credit can be found in our Transition to Universal Credit section.

Passported Benefits under Universal Credit – review and advice (June 2011)

On 15th June 2011, the Social Security Advisory Committee launched a consultation on passported benefits. SSAC were asked by the Minister for Welfare Reform to undertake an independent review of passported benefits and provide a report on possible approaches to those benefits in Universal Credit. The review was tasked to consider a number of key issues including complexity, cost and work incentives.

The Low Incomes Tax Reform group sent a written response to this consultation on 22 July 2011.

In March 2012, the Committee published their report which looks at the impact of Universal Credit on passported benefits.

National review of tax credit statistics (May 2011)

On 27 May 2011, HMRC launched a formal review of its Tax Credits National and Official Statistics publications. The deadline for reply to the National Statistics Review of Tax Credit Statistics was 31 August 2011.

There were almost 140 responses to the consultation which are summarised in HMRC’s initial report. The report also provides an early response from HMRC. A more detailed report will follow later this year.

IDAS – Identity Authentication Service (Feb 2011)

Under a process called the Identity Authentication Service (IDAS), introduced in 2009, any tax credit claimant who calls the helpline is required to prove their identity by answering security questions. If they cannot answer them correctly, they are required to make an appointment at an enquiry centre for an interview.

HMRC introduced IDAS in Tax Credits without producing an equality impact assessment (EQIA), but after much pressure from the Benefits and Credits Consultation Group (the consultative body of professional and volunteer organisations) HMRC agreed to carry out a belated EQIA and this was published in February 2011. The closing date for comments was 8 May 2011.

Eight responses were received from six external bodies, including a response from the Low Incomes Tax Reform Group.

Following these responses, HMRC published their Final Report and Action Plan for the Identity Authentication Service (IDAS) in July 2011. In this final report, HMRC acknowledged that the full EQIA consultation process should have been completed prior to the IDAS service going live. They also reiterated that it is not accepted HMRC practice to implement changes without showing that they have given due regard to the need to consider the impact on equality first.

The Low Incomes Tax Reform group published an article on 6 August 2011 “HMRC make some amends for breach of equality law”, which gives their reaction to HMRC’s Final Report and Action Plan.

Improving the operation of PAYE: Collecting Real Time Information (Dec 2010)

In November 2010 DWP published a white paper setting out their plans for Universal Credit. Full details of the changes can be found in the future policy section.

Alongside this, HMRC issued a consultation document on real time earnings data on 3 December 2010. The closing date for comments was 28 February 2011.

The Low Incomes Tax Reform group sent a written response to this consultation on 28 February 2011

Following consultation, HMRC confirmed a “Real Time Information pilot to go ahead in 2012”.

Employers and pension providers must use the RTI service from April 2013. All employers will be using the RTI service by October 2013. You can find further details on HMRC’s Website.

21st century welfare (July 2010)

In July 2010, DWP published a consultation called ‘21st century welfare’ which set out proposals for a new welfare system.

The Low Incomes Tax Reform group sent a written response to the consultation on 1 October 2010.

Following this consultation, the Government announced in the Comprehensive Spending Review (October 2010) that Universal Credit would replace some means-tested benefits, including working tax credit and child tax credit, over the coming years.

Tax Credits: improving delivery and choice (May 2008)

In May 2008, the Treasury and HMRC jointly published a discussion paper called ‘Tax Credits: improving delivery and choice’. This paper made several suggestions for reform of the system including consideration of fixed awards and changes to support for childcare.

Many organisations sent written responses, a selection are included below:

New Tax Credits: Supporting families, making work pay and tackling poverty (July 2001)

The first consultation document regarding New Tax Credits was published by HMRC (then the Inland Revenue) in July 2001. The consultation was called ‘New Tax Credits: Supporting families, making work pay and tackling poverty’ and set out how the Government envisaged the new tax credit system would work and asked for responses about the proposals. A regulatory impact assessment was also published in July 2002.

Updated 17 May 2012