Tax Credits Act 1999

Main provisions

1 Certain benefits to be known as tax credits

(1) Family credit and disability working allowance shall be known, respectively, as working families' tax credit and disabled person’s tax credit.

(2) Schedule 1 to this Act (which makes provision consequential on subsection (1) above) shall have effect.

2 Transfer of functions relating to tax credits

(1) So far as they relate to working families' tax credit or disabled person’s tax credit—

(a) the functions of the Secretary of State or the Department under the provisions mentioned in Part I of Schedule 2 to this Act shall be functions of the Treasury;

(b) the functions of the Secretary of State or the Department under the provisions mentioned in Part II of that Schedule shall be functions of an officer of the Board; and

(c) subject to subsection (2) below, the functions of the Secretary of State or the Department under the provisions mentioned in Part III of that Schedule shall be functions of the Board.

(2) So far as any functions referred to in subsection (1)(c) above are exercisable in relation to payment periods beginning before the commencement of this section, those functions—

(a) shall not be functions of the Board; but

(b) may be discharged by the Board on behalf of the Secretary of State or the Department.

(3) Part IV of Schedule 2 to this Act (which modifies certain enactments in their application to tax credit) shall have effect.

(4) Part V of that Schedule (which makes provision consequential on subsection (1) above) shall have effect.

3 Transfer of associated property, rights and liabilities etc

(1) Any property, rights and liabilities to which the Secretary of State or the Department is entitled or subject immediately before the commencement of this section in connection with functions transferred to the Treasury by section 2(1) above shall be transferred to the Treasury.

(2) Any property, rights and liabilities to which the Secretary of State or the Department is entitled or subject immediately before the commencement of this section in connection with functions transferred to the Board or an officer of the Board by section 2(1) above shall be transferred to the Board.

(3) The property, rights and liabilities transferred by subsections (1) and (2) above do not include any right or liability in respect of which proceedings are commenced before the commencement of this section.

(4) Her Majesty may by Order in Council make such provision for the transfer to Her Majesty’s Home Civil Service of persons employed in the Northern Ireland Civil Service as appears to Her Majesty to be expedient.

(5) A statutory instrument containing an Order in Council under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.

4 Special provision for certain contracts

(1) This section applies to—

(a) any contract for the supply of goods or services to the Secretary of State or the Department which relates partly to functions transferred to the Board by section 2(1) above (“transferred functions”) and partly to functions retained by the Secretary of State or the Department (“retained functions”); and

(b) any contract for the supply of goods or services to the Secretary of State or the Department which relates only to transferred functions or only to retained functions, but whose terms are wholly or partly determined in accordance with a contract falling within paragraph (a) above.

(2) Section 3 above shall not apply in relation to any contract to which this section applies.

(3) In any contract to which this section applies any term restricting the provision of goods or services under the contract to the Secretary of State or the Department shall be treated as referring also to the Board, in connection with transferred functions.

(4) The reference to the Secretary of State in subsection (3) above includes a reference to the Department of Social Security.

Administration and enforcement

5 General functions of Board

(1) Working families' tax credit and disabled person’s tax credit shall be under the care and management of the Board.

(2) Section 10 of the [1866 c. 39.] Exchequer and Audit Departments Act 1866 (gross revenues to be paid to Exchequer) shall be construed as allowing the Board to deduct payments for or in respect of tax credit before causing the gross revenues of their department to be paid to the accounts mentioned in that section.

(3) For the purposes of the [1890 c. 21.] Inland Revenue Regulation Act 1890, everything that relates to tax credit shall be taken to relate to inland revenue; and the expressions “in relation to inland revenue”, “Collector of Inland Revenue” and “Officer of Inland Revenue” shall be construed accordingly.

(4) The reference in section 4(1) of that Act (appointment of collectors, officers and other persons) to collecting, receiving, managing and accounting for inland revenue shall be taken to include a reference to paying and managing tax credit.

(5) The duties of the Board under section 13 of that Act (Board to keep accounts) shall include a duty to set forth in the accounts mentioned in that section—

(a) the amounts of the several payments made by them of or in respect of tax credit;

(b) the amounts of the expenses of paying and managing tax credit; and

(c) the amounts received by them in respect of tax credit,

distinguishing in each case between amounts relating to working families' tax credit and amounts relating to disabled person’s tax credit.

(6) In any declaration for the purposes of section 6 of the [1970 c. 9.] Taxes Management Act 1970 (declarations on taking office), whether made before or after the commencement of this section, the reference to an offence relating to inland revenue shall be taken to include a reference to an offence relating to tax credit.

(7) Section 163(2) of the [1922 c. 5.] Social Security Administration Act 1992 (sums to be paid out of money provided by Parliament) shall have effect subject to subsection (2) above.

6 Payment of tax credit by employers etc

(1) On the making to any person (“the employee”) of any payment of, or on account of, any income assessable to income tax under Schedule E, any tax credit to which he is entitled shall, subject to and in accordance with regulations made by the Board under this section, be paid by the person making the payment (“the employer”).

(2) The Board shall make regulations with respect to the payment of tax credit by employers, and those regulations may, in particular, include provision—

(a) for requiring employers to make payments of tax credit by reference to notifications of entitlement furnished to them by the Board;

(b) for the production of wages sheets and other documents and records to officers of the Board for the purpose of enabling them to satisfy themselves that tax credit has been and is being paid, in accordance with the regulations, to employees who are entitled to it;

(c) for requiring employers to provide information to employees (in their itemised pay statements or otherwise);

(d) for the funding by the Board of tax credit paid or to be paid by employers (whether by way of set off against income tax or national insurance contributions for which they are accountable to the Board or otherwise);

(e) for the recovery by the Board of any sums overpaid to employers under paragraph (d) above;

(f) for the payment of interest on sums due from or to the Board, and for determining the date from which interest is to be calculated; and

(g) for appeals with respect to matters arising under the regulations which would otherwise not be the subject of an appeal.

(3) Regulations under this section—

(a) may make different provision for different cases or circumstances; and

(b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(4) This section shall come into force on 6th April 2000.

7 Rights of employees not to suffer unfair dismissal or other detriment

Schedule 3 to this Act (rights of employees not to suffer unfair dismissal or other detriment) shall have effect.

8 Powers to obtain information

(1) Section 20 of the Taxes Management Act 1970 [1970 c. 9.] (power to call for documents etc.), and section 20B of that Act (restrictions on powers) so far as relating to section 20, shall apply in relation to an employer’s compliance with regulations under section 6 above as they apply in relation to a person’s tax liability or its amount.

(2) Those sections as they so apply shall have effect as if—

(a) any reference to the taxpayer, a taxpayer or a class of taxpayers were a reference to the employer, an employer or a class of employers;

(b) any reference to any provision of the Taxes Acts were a reference to regulations under section 6 above;

(c) any reference to the proper assessment or collection of tax were a reference to the proper award and payment of tax credit;

(d) the reference in section 20(8) to the taxpayer with whose liability the inspector or the Board is concerned were a reference to the employer with whose compliance with regulations under section 6 above the inspector or the Board is concerned;

(e) the reference in section 20B(2) to an appeal relating to tax were a reference to an appeal relating to compliance with regulations under section 6 above; and

(f) the reference in section 20B(6) to reasonable ground for believing that tax has, or may have been, lost to the Crown owing to the fraud of the taxpayer were a reference to reasonable ground for believing that tax credit has, or may have been, incorrectly paid owing to the fraud of the employer.

9 Penalties for fraud etc. and failures to comply

(1) Where a person fraudulently or negligently makes any incorrect statement or declaration in connection with a claim for tax credit, he shall be liable to a penalty not exceeding the amount of the difference specified in subsection (2) below.

(2) The difference is that between—

(a) the amount of tax credit to which the claimant is or was entitled in the payment period to which the claim relates; and

(b) the amount of tax credit to which he would have been so entitled if the statement or declaration had been correct.

(3) Where a person—

(a) fails to furnish any information or evidence in accordance with regulations under section 5(1)(h) or (hh) of the Administration Act so far as relating to tax credit;

(b) fails to produce any document or record, or to provide any information, in accordance with regulations under section 6 above; or

(c) fails to deliver any document or furnish any particulars in accordance with the provisions applied by section 8(1) above,

he shall be liable, subject to section 10 below, to the penalties mentioned in subsection (4) below.

(4) The penalties are—

(a) a penalty not exceeding £300; and

(b) if the failure continues after a penalty is imposed under paragraph (a) above, a further penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which the penalty under that paragraph was imposed (but excluding any day for which a penalty under this paragraph has already been imposed).

(5) Where a person fraudulently or negligently—

(a) furnishes any incorrect information or evidence of a kind mentioned in regulations under section 5(1)(h) or (hh) of the Administration Act so far as relating to tax credit;

(b) produces any incorrect document or record, or provides any incorrect information, of a kind mentioned in regulations under section 6 above; or

(c) delivers any incorrect document or furnishes any incorrect particulars of a kind mentioned in the provisions applied by section 8(1) above,

he shall be liable to a penalty not exceeding £3,000.

(6) Where, in the case of any employee—

(a) an employer refuses or repeatedly fails to make payments of tax credit in accordance with regulations under section 6 above; and

(b) the Board cancels the notification of entitlement with a view to the payments being made by officers of the Board,

the employer shall be liable to a penalty not exceeding £3,000.

(7) Where, in the case of any employee, an employer fraudulently or negligently—

(a) makes or receives incorrect payments in a tax year in pursuance of regulations under section 6 above; or

(b) delivers an incorrect return of payments made or received by him in that year in pursuance of such regulations,

he shall be liable, subject to section 10 below, to a penalty not exceeding £3,000; but no such penalty shall be imposed in respect of any incorrect payments in respect of which a penalty has been imposed under subsection (6) above.

(8) In this section “the Administration Act” means the [1992 c. 5.] Social Security Administration Act 1992 or the [1992 c. 8.] Social Security Administration (Northern Ireland) Act 1992.

10 Penalties: supplementary

(1) No penalty shall be imposed—

(a) under subsection (4) of section 9 above in respect of a failure within subsection (3)(a) or (c) of that section; or

(b) under subsection (4)(b) of that section in respect of a failure within subsection (3)(b) of that section,

at any time after the failure has been remedied.

(2) A penalty under section 9(7) above shall not be imposed before the end of the tax year in question; and no more than one such penalty may be imposed (by reference to any one employee) in relation to any tax year.

(3) Section 118(2) of the [1970 c. 9.] Taxes Management Act 1970 (extra time for compliance etc.) shall apply for the purposes of section 9(3) and (6) above as it applies for the purposes of that Act.

(4) Schedule 4 to this Act (penalties: procedure and appeals) shall have effect.

11 Liability of company directors etc

(1) Sections 121C and 121D of the Social Security Administration Act 1992 (liability of directors etc. for company’s contributions), and sections 115B and 115C of the Social Security Administration (Northern Ireland) Act 1992 (corresponding provision for Northern Ireland), shall apply in relation to amounts—

(a) which the Board have paid or credited to a body corporate for the purpose of funding tax credit; and

(b) which the body is liable, and has failed, to repay,

as they apply in relation to national insurance contributions which a body corporate is liable, and has failed, to pay.

(2) Those sections as they so apply shall have effect as if—

(a) any reference to Secretary of State or the Department were a reference to an officer of the Board;

(b) any reference to an appeal tribunal constituted under Chapter I of Part I of the [1998 c. 14.Social Security Act] 1998 or Chapter I of Part II of the [S.I. 1998/1506 (N.I.10).] Social Security (Northern Ireland) Order 1998 were a reference to the Special Commissioners;

(c) the reference in sections 121C(1)(a) and 115B(1)(a) to the time prescribed for the purpose there mentioned were a reference to the time prescribed for that purpose by regulations made by the Board; and

(d) the definitions of “appeal tribunal” in sections 121D(6) and 115C(6) were omitted.

(3) Regulations under subsection (2)(c) above shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

12 Disclosure of information

(1) Section 182 of the [1989 c. 26.] Finance Act 1989 (disclosure of information) shall be amended in accordance with subsections (2) to (5) below.

(2) In subsection (1)—

(a) after “tax functions” there shall be inserted “, tax credit functions”; and

(b) after paragraph (a) there shall be inserted—

“(aa) to working families' tax credit or disabled person’s tax credit in respect of any identifiable person,”.

(3) After subsection (2) there shall be inserted—

“(2AA) In this section “tax credit functions” means the functions relating to working families' tax credit or disabled person’s tax credit—

(a) of the Board and their officers,

(b) of any person carrying out the administrative work of the General Commissioners or the Special Commissioners, and

(c) of any other person providing, or employed in the provision of, services to any person mentioned in paragraph (a) or (b) above.”

(4) In subsection (4)—

(a) in paragraph (b), after “tax functions” there shall be inserted “, tax credit functions”; and

(b) in paragraph (c), after “tax functions” there shall be inserted “, tax credit functions” and after sub-paragraph (i) there shall be inserted—

“(ia) to working families' tax credit or disabled person’s tax credit in respect of any identifiable person,”.

(5) In subsection (5)(b), after “tax or duty” there shall be inserted “, to working families' tax credit or disabled person’s tax credit”.

(6) Schedule 5 to this Act (use and exchange of information) shall have effect.

13 Documents and forms

Documents and forms relating to payment periods beginning before the commencement of this section may be used on and after that date even though they contain references to family credit or disability working allowance.

Miscellaneous and supplemental

14 Persons qualifying for disabled person’s tax credit

(1) Subject to subsection (6) below, section 129 of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 (disabled person’s tax credit) and section 128 of the [1992 c. 7.] Social Security Contributions and Benefits (Northern Ireland) Act 1992 (equivalent provision for Northern Ireland) shall be amended in accordance with subsections (2) to (5) below.

(2) In subsection (1), for “or (2A)” there shall be substituted “, (2A) or (2C)”.

(3) In subsection (2)(a), for “56 days” there shall be substituted “182 days”.

(4) After subsection (2B) there shall be inserted the following subsections—

“(2C) A person qualifies under this subsection if—

(a) the condition mentioned in subsection (2D) below is satisfied;

(b) a medical practitioner (within the meaning of the Administration Act) certifies, not more than 14 days before the date when the claim for disabled person’s tax credit is made—

(i) that in his opinion the person will continue to have the disability in question for a period of at least six months; or

(ii) that in his opinion the person will continue to have that disability for the remainder of his life; and

(c) the level of the person’s expected earnings is lower, by at least the required amount, than it would have been if he had not had the disability.

(2D) The condition is that there are 140 qualifying days, the last falling within the period of 56 days immediately preceding the date when the claim for disabled person’s tax credit is made, which are days in respect of which—

(a) statutory sick pay has been payable to the person;

(b) the lower rate of short-term incapacity benefit has been payable to him;

(c) income support has been payable to him on grounds of incapacity; or

(d) earnings have been credited to him under regulations made under section 22(5) above.

(2E) For the purposes of subsections (2C) and (2D) above—

(a) the required amount, in relation to a person’s expected earnings, is—

(i) 20 per cent of what those earnings would have been if he had not had the disability; or

(ii) if the amount given by sub-paragraph (i) above is less than the prescribed amount, the prescribed amount;

(b) qualifying days are days forming part of a single period of incapacity for work within the meaning of Part XI of this Act; and

(c) income support is payable to a person on grounds of incapacity if and only if he satisfies the condition in section 124(1)(e) above by virtue of being a person who—

(i) is, or is treated as, incapable of work for any purposes of this Act; or

(ii) is treated as capable of work by virtue of regulations under section 171E below.

(2F) Sections 3 and 112 above shall apply as if this section were included in Parts I to V of this Act.”

(5) In subsection (8), after “allowance” there shall be substituted “, or the level of a person’s expected earnings,”.

(6) In section 128(2E)(c) of the [1992 c. 7.] Social Security Contributions and Benefits (Northern Ireland) Act 1992, as inserted by subsection (4) above, for “124(1)(e)” there shall be substituted “123(1)(e)” and for “171E” there shall be substituted “167E”.

(7) In section 11(3)(b) of the [1992 c. 5.] Social Security Administration Act 1992 (repeat claims), for the words from “he” to “that paragraph” there shall be substituted—

“(i) he qualified under subsection (2) of section 129 of the Contributions and Benefits Act by virtue of paragraph (a) of that subsection, or of there being payable to him a benefit under an enactment having effect in Northern Ireland and corresponding to a benefit mentioned in that paragraph; or

(ii) he qualified under subsection (2C) of that section or of section 128 of the Northern Ireland Contributions and Benefits Act,”.

(8) In section 9(3)(b) of the [1992 c. 8.] Social Security Administration (Northern Ireland) Act 1992 (corresponding provision for Northern Ireland), for the words from “he” to “that paragraph” there shall be substituted—

“(i) he qualified under subsection (2) of section 128 of the Contributions and Benefits Act by virtue of paragraph (a) of that subsection, or of there being payable to him a benefit under an enactment having effect in Great Britain and corresponding to a benefit mentioned in that paragraph; or

(ii) he qualified under subsection (2C) of that section or of section 129 of the Great Britain Contributions and Benefits Act,”.

(9) This section, except subsection (3) above (and subsection (1) above so far as relating to that subsection), applies to claims made, or treated as made, on or after 1st October 2000.

15 New category of child care providers for tax credit purposes

(1) The Secretary of State may by regulations make a scheme for establishing a new category of persons whose charges for providing child care are to be taken into account for the purpose of determining—

(a) the appropriate maximum working families' tax credit for the purposes of section 128(5) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 or section 127(5) of [1992 c. 7.] the Social Security Contributions and Benefits (Northern Ireland) Act 1992; or

(b) the appropriate maximum disabled person’s tax credit for the purposes of section 129(8) of the Social Security Contributions and Benefits Act 1992 or section 128(8) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

(2) A scheme so made shall—

(a) provide that a person shall not fall within the new category unless he is approved by an accredited organisation in accordance with such criteria as may be determined by or under the scheme;

(b) authorise the making of grants or loans to, and the charging of reasonable fees by, accredited organisations; and

(c) include such other provisions as the Secretary of State considers necessary or expedient.

(3) In subsection (2) above “accredited”, in relation to an organisation, means accredited by the Secretary of State in accordance with such criteria as may be determined by or under the scheme.

(4) Regulations under this section—

(a) may make different provision for different cases or circumstances or for different areas;

(b) may make such incidental, supplemental, consequential and transitional provision as appears to the Secretary of State to be necessary or expedient; and

(c) shall be made by statutory instrument which, subject to subsection (5) below, shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(5) A draft of the first regulations to be made under this section shall be laid before each House of Parliament and those regulations shall not be made unless the draft has been approved by a resolution of each House.

16 Northern Ireland

(1) Working families' tax credit and disabled person’s tax credit shall be excepted matters for the purposes of the [1998 c. 47.] Northern Ireland Act 1998.

(2) For the purposes of that Act, a provision of—

(a) any Act of the Northern Ireland Assembly; or

(b) any Bill for such an Act,

which amends or repeals a provision to which subsection (3) below applies shall not be treated as dealing with working families' tax credit or disabled person’s tax credit if the amendment or repeal affects rights conferred by Schedule 3 to this Act and other employment rights in the same way.

(3) This subsection applies to the provisions of the [S.I. 1996/1919 (N.I.16).] Employment Rights (Northern Ireland) Order 1996 which are amended or applied by Schedule 3 to this Act.

17 Financial provisions

(1) There shall be paid out of money provided by Parliament—

(a) any expenses incurred by the Board or the Secretary of State in consequence of this Act; and

(b) any increase attributable to this Act in the sums payable out of money so provided under any other Act.

(2) There shall be paid into the Consolidated Fund any increase attributable to this Act in the sums payable into that Fund under any other Act.

18 Interpretation

In this Act, except where the context otherwise requires—

• “appeal tribunal” means an appeal tribunal constituted under Chapter I of Part I of the [1998 c. 14.] Social Security Act 1998 or Chapter I of Part II of the [S.I. 1998/1506 (N.I.10).] Social Security (Northern Ireland) Order 1998;

• “the Board” means the Commissioners of Inland Revenue;

• “the Department” means the Department of Health and Social Services for Northern Ireland;

• “employer” and “employee” shall be construed in accordance with section 6 above;

• “General Commissioners” and “Special Commissioners” have the same meanings as in the [1970 c. 9.] Taxes Management Act 1970;

• “payment period” means a period for which amounts are payable to a person by virtue of—

  (a)

  section 128(3) of the [1992 c. 4.] Social Security Contributions and Benefits Act 1992 (family credit) or section 129(6) of that Act (disability working allowance); or

  (b)

  section 127(3) or 128(6) of the [1992 c. 7.] Social Security Contributions and Benefits (Northern Ireland) Act 1992 (corresponding provision for Northern Ireland);

• “tax credit” means working families' tax credit or disabled person’s tax credit;

• “tax year” means any period of a year beginning on 6th April.

19 Transitional provision, savings and repeals

(1) Any function falling within subsection (1)(a) or (c) of section 2 above which is a power to make subordinate legislation may be exercised by the Treasury or, as the case may be, the Board at any time after the passing of this Act if the subordinate legislation made in the exercise of the power comes into force after the commencement of that section.

(2) Nothing in section 2 above affects the validity of anything done by or in relation to the Secretary of State or the Department before the commencement of that section; and anything which at that date is in the process of being done by or in relation to the Secretary of State or the Department may—

(a) if it relates to functions transferred by subsection (1) of section 2 above to the Treasury, be continued by or in relation to the Treasury;

(b) if it relates to functions transferred by that subsection to the Board or an officer of the Board, be continued by the Board or, as the case may be, an officer of the Board.

(3) Any authority, appointment, decision, determination, approval, consent or direction given or made or other thing done, or having effect as if given, made or done, by the Secretary of State or the Department in connection with functions transferred by subsection (1) of section 2 above shall have effect as if given, made or done by the Treasury or, as the case requires, the Board or an officer of the Board in so far as that is required for continuing its effect after the commencement of that section.

(4) The enactments specified in Schedule 6 to this Act are repealed to the extent specified in the third column of that Schedule.

20 Short title, commencement and extent

(1) This Act may be cited as the Tax Credits Act 1999.

(2) This Act, except—

(a) this section;

(b) section 6;

(c) subsections (2) and (4) to (9) of section 14 (and subsection (1) of that section, except so far as relating to subsection (3)); and

(d) subsection (1) of section 19,

shall come into force on 5th October 1999.

(3) This Act extends to Northern Ireland.