Source · Select Committees · Public Accounts Committee
Recommendation 17
17
Accepted
HMRC faces significant challenges identifying individuals affected by missing Home Responsibilities Protection in records.
Recommendation
We asked HMRC what it is doing to correct the National Insurance record so that DWP can in turn make any back payments of State Pension. HMRC explained that it no longer holds the relevant records and that identifying all of the people who may be 25 Committee of Public Accounts, The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefit system, Twenty-Sixth Report of Session 2022–23, HC 44, 9 November 2022 26 DWP ARA 2022–23, page 273 27 Department for Work & Pensions, Annual Report & Accounts 2021–22, HC193, 7 July 2022, pages 234, 291 28 Qq 36–37; DWP ARA 2022–23, pages 122–124 29 Committee of Public Accounts, The Department for Work and Pensions’ Accounts 2021–22 – Fraud and error in the benefit system, Twenty-Sixth Report of Session 2022–23, HC 44, 9 November 2022 30 Q 50 31 DWP ARA 2022–23, page 292 32 DWP ARA 2022–23, page 292 33 Q 22 14 The Department for Work & Pensions Annual Report and Accounts 2022–23 impacted is “a big problem, and quite a challenging one”. It told us it is performing various scans of its IT systems to find a potential cohort of affected people.34 HMRC intends to write to this group, which numbers in the hundreds of thousands, saying it believes they may have been eligible for HRP and invite them to make a claim.35 Where HMRC believes there is a legitimate claim, it will correct the NI record and notify DWP so any back payments of State Pension can be made.36
Government Response Summary
The government agrees to the recommendation, confirming the correction exercise for Home Responsibilities Protection underpayments started in Autumn 2023 and outlining how DWP and HMRC will continue to refine plans and address tax implications, with a target implementation date of Summer 2024.
Government Response
Accepted
HM Government
Accepted
4a. PAC recommendation: DWP should work with HMRC within the next six months to set out a clear plan and timetable for correcting underpayments of State Pension relating to Home Responsibilities Protection and provide clarity on how any tax issues will be dealt with. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2024 4.2 The department provided details of the scope of the exercise and plans to address outstanding work in its 2022-23 Annual Report and Accounts. The 2022-23 Annual Report and Accounts also sets out that there is a degree of uncertainty with the number of people affected and the total amount of pension arrears. The correction exercise began in Autumn 2023. The department will continue to refine its plans and timetable alongside HM Revenue & Customs (HMRC) as the exercise progresses. The department will provide updated details of its plans in its 2023-24 Annual Report and Accounts. 4.3 Income tax will be calculated on the arrears payments of State Pension for the tax year in which the customer was entitled to receive the State Pension, not in the year in which the arrears were paid. HMRC will only collect tax for the year that arrears are paid and the preceding four years. HMRC will not collect income tax on any arrears payments where the individual is deceased, and payment was made after the date of death. HMRC will not raise historical interest charges on the tax due from Self-Assessment customers.