Overview
15.The Act is in three Parts.
16.Part I of the Act provides for the transfer of both operational and policy functions from the Secretary of State for Social Security to the Inland Revenue and the Treasury on one or more appointed days. It also deals with the exercise of those operational functions by the Revenue post-transfer.
17.Section 1 introduces Schedules 1 and 2. Schedule 1 transfers to the Inland Revenue the day-to-day operational functions currently discharged by the CA on behalf of the Secretary of State. These functions, in relation to contributions, SSP, SMP and contracting-out matters, will be exercised by the Inland Revenue from the day appointed for the operational transfer. Schedule 1 amends the provisions of Acts which confer such functions on the Secretary of State, and also other provisions which make consequential references to his exercise of those functions. Functions conferred on the Secretary of State by the subordinate legislation listed in Schedule 2 are also transferred to the Inland Revenue. In most cases, Schedule 1 substitutes "Inland Revenue" for "Secretary of State" in the relevant provisions, and makes related amendments.
18.Section 2 introduces Schedule 3 which transfers contributions policy – such as the level and scope of the contributions charge - to the Treasury or the Inland Revenue as appropriate. These functions consist mainly of the exercise of powers to make subordinate legislation in relation to contributions, and the control and management of the NIF. They will be transferred from a date appointed by a commencement order under section 28.
19.Existing social security law contains extensive powers to make regulations. Where these powers relate wholly to contributions they will be transferred to the Treasury or to the Inland Revenue. However, in a number of cases a regulation-making power affects the operation of the contributory benefits system, which will remain the responsibility of the Secretary of State. Also, in the case of matters such as SSP and SMP and contracted-out pension schemes, policy responsibility (and therefore the powers to make subordinate legislation) will remain with the Secretary of State. In these cases the Act makes provision for the regulations to be made by the Inland Revenue or the Treasury with the concurrence of the Secretary of State or vice versa. This is designed to provide a safeguard against unintended operational consequences, or effects on benefit entitlements, of regulations.
20.Section 3 brings contributions under the care and management of the Inland Revenue and places the Inland Revenue under a duty to collect contributions. It amends legislation which governs the role and functions of the Inland Revenue and the powers and duties of its officers.
21.Section 4 introduces Schedule 4 which is concerned with methods of enforcing the recovery of unpaid contributions. It enables summary proceedings to be taken in magistrates’ courts in the same way as for tax debts. Schedule 4 also permits authorised officers of the Board who are not lawyers to appear in proceedings in the county courts (in England, Wales and Northern Ireland) and in the sheriff court in Scotland.
22.Section 5 introduces Schedule 5. This amends certain powers of enforcement relating to contributions, SSP and SMP for Inland Revenue officers to exercise alongside their existing powers of enforcement in relation to tax.
23.Section 6 introduces Schedule 6 which amends existing social security and tax legislation, setting out the powers to exchange contributions information following the transfer. Existing flows of information will be protected without creating new, additional exchanges of information.
24.Section 7 allows the Inland Revenue to pool, internally, information obtained in connection with functions transferred by this Act with the information from its tax functions.
25.Part II of the Act introduces new arrangements for decisions and appeals relating to contributions, SSP, SMP and contracting-out matters. Decisions about these matters are to be made by the Inland Revenue, with a right of appeal to the tax appeal Commissioners, except in relation to contracting-out, where decisions will be appealable to the unified appeal tribunals to be set up under the SSA. See in particular section 16.
26.Section 8 specifies the decisions to be made by an officer of the Inland Revenue.
27.Sections 9 and 10 enable the Inland Revenue to make regulations in connection with the decision-making process and to provide for decisions to be varied or superseded in certain circumstances.
28.Section 11 provides for rights of appeal to the tax appeal Commissioners against decisions made under section 8 or by virtue of section 10.
29.Section 12 provides for the manner in which an appeal is to be brought, and for the circumstances in which an appeal is to be dealt with by the Special Commissioners rather than the General Commissioners.
30.Section 13 provides for regulations to be made by the Inland Revenue in relation to appeals to the tax appeal Commissioners, and for the application, with appropriate modifications, of provisions of the Taxes Management Act 1970 (TMA) and regulations under it, relating to such appeals.
31.Section 14 enables the Inland Revenue to make provision in regulations about a person's right to SSP or SMP or his/her liability for contributions pending, or in consequence of, a decision made by one of its officers, or the determination of an appeal.
32.Section 15 enables the Secretary of State to make transitional provisions in connection with decisions, and appeals, for the period between the day appointed for the coming into force of section 8 and the coming into force – possibly less than a year later - of Part I of SSA (which provides for new arrangements for decision-making and appeals about social security matters).
33.Section 16 makes provision for the Inland Revenue, instead of the Secretary of State, to make decisions about matters arising in connection with the contracting-out arrangements under the Pension Schemes Act 1993 (PSA), and related matters. However, Part I of the SSA (once it is in force) is in all other respects to apply to such decisions in the same way as if they had been made by the Secretary of State under that Act.
34.Section 17 allows the Inland Revenue to make decisions as agents of the Secretary of State in relation to “home responsibilities protection” and “credits”, both of which affect a person’s contributory record and hence benefit entitlement.
35.Section 18 introduces Schedule 7 which contains amendments - principally of the TMA, the Social Security Contributions and Benefits Act 1992 (CBA), the Social Security Administration Act 1992 (SSAA 1992) and the SSA - in connection with the new arrangements for decisions and appeals provided for in Part II of this Act. Some of these amendments will be brought into force after the day appointed for the operational transfer, so as to fit with the progressive entry into force of the SSA provisions.
36.Section 19 contains definitions in connection with the tax appeal Commissioners.
37.Part III of the Act deals with miscellaneous and supplemental issues.
38.Section 20 provides for National Insurance rebates for contracted-out occupational money purchase pension schemes to be funded from the NIF, and for any rebate-associated recoveries to be paid into that Fund. It also provides for the NIF to reimburse the Consolidated Fund for the monies it has paid out in respect of such rebates in the current financial year. Corresponding changes are also made to the Northern Ireland legislation.
39.Section 21 provides for property, rights and liabilities associated with functions being transferred by the Act to be transferred from the Secretary of State to the recipient of the functions in question.
40.Section 22 makes provision for the transfer of rights and liabilities under contracts which relate partly to functions transferred to the Inland Revenue and partly to functions retained by the Secretary of State.
41.Section 23 enables any future transfers of functions relating to certain contributions, the NIF, SSP, SMP and contracted-out pensions matters between the Secretary of State and the Inland Revenue to be made by Order in Council.
42.Section 24 allows the transfer by Order in Council to the Treasury or, as the case may be, the Inland Revenue of any functions relating to Northern Ireland which correspond to the functions in relation to Great Britain transferred by virtue of sections 1 and 2 of this Act. There is also provision for the transfer to the Secretary of State of certain functions relating to Northern Ireland and for the onward transfer of some of these functions to the Treasury or the Inland Revenue. These provisions are drafted to accommodate any restructuring and renaming of Northern Ireland Departments that may happen before an Order is made under this section. An Order may also make appropriate consequential or contractual modifications.
43.Section 25 provides that orders and regulations under the Act are to be made by statutory instrument. These may make different provision for different circumstances. It also provides that Orders in Council and regulations under the Act are to be subject to the negative resolution procedure.
44.Section 26 introduces Schedule 8 (which provides for savings and transitional arrangements) and Schedules 9 and 10 (which provide respectively for consequential amendments and repeals).
45.Section 27 defines “the Board” and “contributions”.
46.Section 28 sets out the short title of the Act, provides for the commencement of its provisions and specifies which provisions of the Act extend to Northern Ireland.
