Section 20(2) provides for the Act to come into force on 5 October 1999 except for the transitional provision in section 19(1), which comes into force on the passing of the Act; the provisions relating to the requirement for employers to pay the tax credits which come into force on 6 April 2000; and the provisions relating to the fast-track gateway to DPTC, which come into force on 1 October 2000.

Section 20(3) provides for the Act to extend to Northern Ireland.

Schedules

The Schedules provide the details of the amendments to the social security legislation which are needed to effect the renaming and the transfer of functions.

Schedule 1: Provisions consequential on renaming of benefits

This Schedule provides for the substitution of Working Families' Tax Credit for Family Credit, and Disabled Person's Tax Credit for Disability Working Allowance, and lists the references where this substitution needs to take place.

Schedule 2: Transfer of functions

Part I: Provisions conferring functions transferred to the Treasury lists the references to the functions which are transferring to the Treasury. These functions are those relating to the entitlement and level of the tax credits.

Part II: Provisions conferring functions transferred to officers of the Board lists the references to the functions which are being transferred to an officer of the Board of Inland Revenue. These functions are those of, and related to, making and revising decisions on claims for WFTC/DPTC.

Part III: Provision conferring functions transferred to the Board provides for the transfer to the Board of the remainder of the functions which are to be transferred, which are not referred to in Part I or II. Paragraph 9 in Part III transfers to the Board functions contained in existing subordinate legislation made under the provisions listed in Part I or Part III.

Part IV: Modification of enactments

Paragraph 10 amends s.71 of the Social Security Administration Act 1992, and corresponding provision for Northern Ireland. This section relates to recovery of overpayments of benefits and the amendment provides that amounts of tax credits which are recoverable (as a result of a misrepresentation or failure to disclose) shall be recoverable as if they were tax charged in an assessment. The provisions of Part VI of TMA will apply to them in relation to collection and recovery. They will be recoverable through PAYE codes. They will bear interest, where a penalty has also been charged under section 8(1).

Paragraph 11 provides that s.110 of the Social Security Administration Act 1992 and corresponding Northern Ireland provisions shall not apply. These relate to the appointment and powers of inspectors for duties in relation to benefits.

Paragraph 12 provides that s.111 of the Social Security Administration Act 1992 and corresponding Northern Ireland provisions shall not apply. These relate to obstruction of an inspector in carrying out duties in relation to benefits.

Paragraph 13 provides that ss.111A and 112 of the Social Security Administration Act 1992 and corresponding Northern Ireland provisions shall not apply. These relate to offences for dishonest and fraudulent representations.

Paragraph 14 provides that s.113 of the Social Security Administration Act 1992 and corresponding Northern Ireland provisions shall not apply. These relate to offences in relation to breach of the regulations under the Acts.

Paragraph 15 provides that s.115A of the Social Security Administration Act 1992 and corresponding Northern Ireland provisions shall not apply. These provide for penalties to be imposed as an alternative to prosecution.

Paragraph 16 provides that ss.182A and 182B of the Social Security Administration Act 1992 and corresponding Northern Ireland provisions shall not apply. These relate to the redirection of Social Security post and allow the Secretary of State to require the Post Office to provide information about redirection.

Paragraph 17 amends s.6 of the Child Support Act 1991 (and the corresponding provision for Northern Ireland) to remove the obligation to co-operate in seeking maintenance from an absent parent, and the consequential penalty for refusal in relation to claimants to WFTC.

Paragraph 18 amends the Social Security (Recovery of Benefits) Act 1997 (and the corresponding provision for Northern Ireland) to remove Disability Working Allowance from the list of prescribed benefits. Where compensation is paid for an accident injury or disease and the person receiving the compensation has also received benefits in respect of that same injury accident or disease, the compensator must repay the amount of the relevant benefit. This obligation is removed for DPTC. Paragraph 18(2) provides that where the payments relate to periods beginning before 5 October 1999, the 1997 Act and corresponding Northern Ireland legislation still apply. This allows for old payments of DWA to be recovered.

Paragraph 19 provides that s.27 of the Social Security Act 1998 and the corresponding Northern Ireland legislation do not apply to WFTC/DPTC. This provides for restrictions to be made on the arrears which would fall to be paid where the outcome of an appeal overturns an understanding of the law.

Part V: Consequential provisions - this Part gives details of consequential provisions.

Paragraph 20 -23 - certain references in social security legislation to the Secretary of State or the Department of Health and Social Services for Northern Ireland need to be converted in relation to the tax credits to references to the Treasury, the Board, or officers of the Board because the function in question has been transferred by Section 2(1). The references are converted by paragraphs 20-23.

Paragraph 24 replaces references in s.123(2) of the Social Security Contributions and Benefits Act 1992 to the local offices of the Department of Social Security with references to offices of the Inland Revenue in relation to the obligation to provide copies of the WFTC scheme in local offices. As the scheme will be an Inland Revenue responsibility the responsibility for providing this should be with IR offices.

Paragraph 25 provides that s.175(7) of the Social Security Contributions and Benefits Act 1992 no longer applies to regulations made by the Treasury under Section 2(1). This provides for certain regulations to be made in conjunction with the Treasury, and this is no longer necessary in the case of regulations which are themselves made by the Treasury.

Paragraph 26 states that the provision for adjustment between the National Insurance Fund and the Consolidated Fund shall no longer apply. This is not necessary as WFTC/DPTC will be paid for from tax receipts.

Paragraph 27 provides that the provision requiring Treasury consent for certain instruments does not apply for the orders to be made by the Treasury under Section 2 of the Act.

Paragraphs 28-38 relate to Northern Ireland provisions

Paragraph 28 replaces references to social security offices of the Department of Health and Social Services for Northern Ireland with references to offices of the Board. This is the equivalent provision in Northern Ireland to that in paragraph 24.

Paragraph 29 provides that power to make regulations under the Social Security Contributions and Benefits (Northern Ireland) Act 1992 in relation to WFTC/DPTC is exercisable by statutory instrument rather than by statutory rule, which is the normal procedure for NI orders, but would involve the Assembly. As WFTC/DPTC are excepted matters this is not appropriate.

Paragraph 30 allows that the Treasury may direct that a power transferred to the Board relating to tax credits must be exercised in conjunction with them.

Paragraph 31 makes provision in relation to the Social Security Administration (Northern Ireland) Act 1992 similar to that made for the Social Security Contributions and Benefits (Northern Ireland) Act 1992 by paragraph 29.

Paragraph 32 provides that statutory instruments made under the Administration Act will be subject to negative procedure before both Houses, unless it is specifically subject to affirmative procedure.

Paragraph 33 provides for statutory instruments relating to the up-rating of working families' tax credit or disabled person's tax credit to be by affirmative procedure.

Paragraph 34 is the same provision in relation to Northern Ireland as that in paragraph 26.

Paragraph 35 is the same as paragraph 30 in relation to Northern Ireland.

Paragraph 36 gives the same provisions in relation to making regulations under the Social Security (Northern Ireland) Order 1998 as is provided in paragraph 30.

Paragraph 37 makes the same provision in relation to the Social Security (Northern Ireland) Order 1998 as is provided in paragraph 33. It also provides that the Assembly have no authority for these statutory instruments.

Paragraph 38 is similar to paragraph 32, but applies to statutory instruments under the Social Security (Northern Ireland) Order 1998.

Schedule 3: Rights not to suffer unfair dismissal or other detriment

Paragraph 1(1) provides an employee with the right not to suffer detriment as a result of any act, or failure to act, by his employer done on the ground that (a) the employee has taken action to enforce the rights conferred on him by regulations under section 6(2)(a) or (c) of the Bill; or (b) the employer has incurred a penalty under section 9 or penalty proceedings have been brought against the employer; or (c) the employee is entitled, or will or may in future be entitled, to a tax credit.

Paragraph 1(2) protects the employee from detrimental action whether or not he has the right which he is claiming and whether or not this right has been infringed, as long as his claim to the right is made in good faith.

Paragraph 1(3) disapplies the paragraph in cases where the detrimental action taken against an employee amounts to dismissal because dismissal is dealt with separately in paragraph 3. There is an exception where an employee is dismissed in circumstances where he is employed under a fixed term contract and he has agreed in advance to exclude his right to claim unfair dismissal. In those circumstances the employee can rely upon this paragraph.

Paragraph 2 provides an employee with the right to complain to an Employment Tribunal (or in Northern Ireland to an Industrial Tribunal) to enforce the right not to suffer detriment contained in paragraph 1. A complaint is to be made in the same way as a complaint under section 48 of the Employment Rights Act 1996 (ERA) or Article 71 of the Employment Rights (Northern Ireland) Order 1996. This means that a complaint must be made within three months of the alleged detrimental act (or deliberate failure to act) unless the tribunal considers that it was not reasonably practicable to do so.

Paragraph 3(1) inserts a new section 104B into ERA so as to provide that an employee will be regarded as having been unfairly dismissed if the dismissal arises because (a) the employee has taken action to enforce the rights conferred on him by regulations under section 6(2)(a) or (c) of the Act; or (b) the employer has incurred a penalty under section 9 or penalty proceedings have been brought against the employer; or (c) the employee is entitled, or will or may in future be entitled, to a tax credit.

Paragraph 3(2) inserts a new subsection (7B) into section 105 of ERA which provides that selecting an employee for redundancy on certain grounds amounts to unfair dismissal. The new subsection ensures that selecting an employee for redundancy because he has enforced or attempted to enforce any of the rights referred to in the new section 104B(1) of ERA amounts to unfair dismissal.

Paragraph 3(3) inserts a new subsection (3)(gh) into section 108 of ERA. This means that the right not to be dismissed for enforcing a right under the Bill will be one of the rights set out in section 108(3) which apply from the day the employee starts work. Without this amendment, section 108(1) would mean that the right would not apply until an employee had been continuously employed for two years.

Paragraph 3(4) inserts a new subsection (2)(gh) into section 109 of ERA. This means that the right not to be dismissed for enforcing a right under the Bill will be one of the rights set out in section 109(2) which apply without any age limit. Without this amendment, section 109(1) would mean that the right would not apply to those over their normal age of retirement.

Paragraph 4 serves exactly the same function in relation to employment rights in Northern Ireland as paragraph 3 serves in relation to Great Britain.

Paragraph 5 inserts a new paragraph (fg) into section 21(1) of the Employment Tribunals Act 1996 to enable appeals from the Employment Tribunal to the Employment Appeal Tribunal on question of law in relation to the provisions of the Bill.

Schedule 4: Penalties: Procedure and Appeals

This Schedule deals with procedures for penalties for non-compliance with obligations.

Paragraph 1 provides for the determination of penalties by an officer of the Board except where proceedings have begun in the courts, under paragraph 5. It provides for the officer to make a determination imposing any penalty under section 9. The exceptions are initial penalties for failure to provide information, under section 9(4)(a), which have been imposed by section 9(3)(b) or (c). The latter penalties will be determined by the tax commissioners under paragraph 4. Under paragraph 1 the officer must serve a notice on the person liable, and may exceptionally increase the amount of the penalty if a discovery is made which shows that the amount of the penalty is insufficient. This reproduces the effect of s.100 of TMA for penalties relating to tax credits.

Paragraph 2 provides for a penalty determined under paragraph 1 to be due from the estate of a person who has died; and for a penalty determined under paragraph 1 to be due 30 days from the issue of the notice of the determination. Paragraph 2 also provides for the collection and recovery provisions in TMA (Part VI) to apply to penalties under paragraph 1. Paragraph 2 reproduces the effect of s.100A of TMA.

Paragraph 3 provides for appeals against penalty determinations, reproducing the effect of s.100B of TMA.

Paragraph 3(2) provides that appeals in relation to penalties imposed under the provisions of s.5(1)(h) and (hh) of the Social Security Administration Act 1992 or the corresponding Northern Ireland legislation, or relating to a fraudulent or negligent claim, shall be heard by the unified appeal tribunals set up by the Social Security Act 1998 or the corresponding Northern Ireland legislation.

Paragraph 3(3) provides that for other appeals the provisions of TMA shall apply as if they were appeals against an assessment to tax.

Paragraph 3(4) allows the Commissioners to set aside the determination, confirm it, reduce it, or increase it.

Paragraph 3(5) provides that an appeal from a decision of the Commissioners shall go to the High Court (or Court of Session in Scotland).

Paragraph 4 provides for penalty proceedings before the Commissioners, reproducing the effect of s.100C of TMA.

Paragraph 4(1) provides for an officer of the Board to begin proceedings for an initial penalty under section 9(4)(a) which is imposed by section 9(3)(b) or (c). This is a penalty relating to employers' compliance.

Paragraph 4(2) provides that the proceedings will be before the tax commissioners after information is put to them in writing.

Paragraph 4(3) provides that the collection and recovery provisions in TMA (Part VI) apply for the tax credits. These provisions deal with the collection mechanisms and court proceedings.

Paragraph 4(4) provides that appeal from determination of a penalty under this paragraph will be to the High Court (or Court of Session in Scotland).

Paragraph 4(5) provides that the court may set the determination aside, confirm it, reduce it, or increase it.

Paragraph 5 allows the Board to take proceedings for a penalty in the High Court, where the liability arise from a fraud. This reproduces the effect of s.100D of TMA for the tax credits.

Paragraph 6 allows the Board to mitigate penalties at their discretion. This reproduces the effect of s.102 of TMA for the tax credits.

Paragraph 7 sets time limits for determining a penalty, and reproduces the effect of s.103 of TMA. Where the penalty is for fraudulently or negligently making an incorrect statement, the limit is either six years from the date the penalty was incurred; or three years after the final determination of the entitlement to the tax credit. For any other penalty the limit is six years after the penalty was incurred or began to be incurred.

Paragraph 8 provides for interest to be charged on a penalty, from the date it becomes due and payable. It reproduces the effect of s.103A of TMA for the tax credits.

Schedule 5: Information

Paragraph 1 allows the Board of Inland Revenue to pool the information they hold for the purposes of their functions relating to tax credits, tax, national insurance contributions, statutory sick pay, statutory maternity pay and certain functions under Part III of the Pensions Schemes Act 1993 (and the corresponding Northern Ireland legislation).

Paragraphs 2 and 3 provides for the mandatory exchange of information between the Inland Revenue and the Department of Social Security (and the Department of Health and Social Services for Northern Ireland). The information is that relating to WFTC/DPTC, and social security benefits, child support and war pensions.

Paragraph 4 provides for the supply (one way route) of information by or under the authority of the Board of Inland Revenue to local authorities administering housing benefit or council tax benefit. The information is that relating to WFTC/DPTC and is for use in administering the benefits. Paragraph 4 also restricts the onward transmission of the information supplied by the Inland Revenue unless it is supplied to another authority or person authorised to exercise a function relating to the administration of the benefits or for the purposes of legal proceedings relating to Social Security Acts, or it is supplied back to the Inland Revenue under paragraph 5.

Paragraph 5 provides for the mandatory provision of information by local authorities to the Board of Inland Revenue for their WFTC/DPTC functions. The information concerned is that which is relevant to functions relating to housing benefit or council tax benefit.

Paragraph 6 inserts a reference to the Tax Credits Act into s.122 of the Social Security Administration Act 1992 (and corresponding provision for Northern Ireland in s.116 of the Social Security Administration (Northern Ireland) Act 1992). These provisions have been amended by the Social Security Contributions (Transfer of Functions) Act 1999. This makes it clear that the provisions in ss.122 and 116, which relate to the supply of tax information, are distinct from the provisions described above for the supply of information in relation to tax credits.

Paragraph 7 amends s.110 of the Finance Act 1997 as amended by the Social Security Contributions (Transfer of Functions) Act 1999. Section 110 is a general provision concerning the supply of information to the Board of Inland Revenue and Customs by the Department of Social Security. The amendment is to make it clear that s.110 does not apply to information relating to tax credits or affect the provisions governing the supply of information by the Department of Social Security to the Inland Revenue for functions relating to WFTC/DPTC.

COMMENCEMENT

16.     The Act will come into force on 5 October 1999, except for the transitional provisions in section 17(1) (which come into force at Royal Assent), the provisions relating to the requirement for employers to pay the tax credits (which come into force on 6 April 2000), and the provisions relating to the fast-track gateway to DPTC (which come into force on 1 October 2000).

PASSAGE THROUGH PARLIAMENT

House of Commons

10 December 1998: First Reading (Bill 9)

26 January 1999: Second Reading. Hansard Cols 149-246.

2, 4, 9 and 11 February 1999: Committee Stage. Hansard (Standing Committee D) Cols 1-198.

7 March 1999: Report and Third Reading. Hansard Cols 1141-1230.

House of Lords

18 March 1999: First Reading (HL Bill 39). Hansard Col 830.

12 April 1999: Second Reading. Hansard Cols 506-570.

14 April 1999: Select Committee on Delegated Powers and Deregulation 12th Report (HL Paper 51).

26 April, and 4 May: Committee Stage. Hansard Cols 11-28; 53-81; 550-617; 633-672.

18 May, and 24 May: Report. Hansard Cols 237-290; 713-768.

8 June: Third Reading. Hansard Cols 1303-1323; 1348-1367.

House of Commons

22 June: Consideration of Lords Amendments. Hansard Cols 933-980.

House of Lords

28 June: Consideration of Commons reasons. Hansard Cols 79-97.

30 June: Royal Assent.