National Insurance Contributions Bill

New Section 4C(3) allows for consequential changes in respect of backdated class 1 liability introduced under the powers in new Section 4B(2). It allows for changes to primary and secondary legislation. Amendments Nos. 8 and 9, if accepted, would mean that while we could introduce a backdated class 1 national insurance liability to reflect retrospective tax provisions, we could not make any necessary modifications to the national insurance collection machinery to ensure that the new class 1 national insurance liabilities are accounted for and collected. It would also not be possible to make any necessary changes to the contributory benefits and statutory payments legislation to ensure that payments treated as earnings count for contributory benefit purposes and statutory payment purposes. New Section 4C(3) is necessary to ensure that, where the Government decide to mirror for national insurance purposes retrospective tax measures, they have sufficient scope to allow for the payments treated as earnings to count for benefit purposes and statutory payments. The powers in new Section 4C(3) are constrained by new Section 4C(2) to the purposes specified. Without new Section 4C(3) contributors may be adversely affected, which is inconsistent with the objective of the Bill. The Government have indicated that these payments brought into liability are to be treated as if they had been earnings at the time they were made. Amendments Nos. 25 and 30 seek to remove new Section 10ZC(4). In the case of class 1A contributions, backdated tax changes will have the effect of automatically creating a backdated class 1A liability independently of the Bill. This amendment would lead to a situation where it would not be possible to amend existing accounting and collection machinery to ensure that any backdated class 1A liabilities that arise where retrospective tax measures are introduced can be collected. It would also prevent coherent provisions being made to allow for adjustments in the way that class 1A liability is apportioned in retrospective periods. The removal of Section 10ZC would mean that one could not ensure that modifications to regulations would be made to allow consequential adjustments in relation to class 1A liability arising from a retrospective tax charge—for example, dealing with the new due dates and clarifying that interest does not run in retrospective periods. In the case of both class 1 and class 1A national insurance, we cannot anticipate every possible avoidance scheme. These powers to make consequential changes enable maximum flexibility to ensure that the retrospective national insurance liability can be collected. We also need to ensure that, where necessary, backdated liability counts for benefit entitlement and statutory payments. These sections allow for that. Finally, I draw the attention of noble Lords to the report of the Delegated Powers and Regulatory Reform Committee, which stated:"““We consider that the powers in the bill are sufficiently circumscribed and are appropriate””." I hope now that the noble Baroness will withdraw the amendment and that that has explained the importance of these provisions.