Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Accepted
No clear delivery plan exists for DWP to complete Home Responsibilities Protection back payments, aiming for 2027-28.
Recommendation
We asked HMRC and DWP when they expect to have a firmer idea of the scale of the issue and the timeframe for making back payments. HMRC told us it intends to send out the letters to potentially affected people over the next 18 months. It added it expects to turn around 80% of responses within 15 working days, correcting the National Insurance record and notifying DWP.42 DWP told us it does not have a clear, formal delivery plan for completing back payments. The provision in DWP’s 2022–23 accounts 34 Qq 51,61 35 Q 52 36 Q 56 37 Qq 53, 54, 62 38 Qq 59–60; DWP ARA 2022–23, pages 293, 376 39 Qq 61, 63–64 40 Q 58; DWP ARA 22–23, pages 274, 293, 374 41 Qq 68–71 42 Qq 55, 65–67 The Department for Work & Pensions Annual Report and Accounts 2022–23 15 assumes a completion date in 2027–28, but DWP told us it hopes to do it quicker than this.43 It suggested that caseworkers with experience remediating previous State Pension underpayments have the right skillset to roll forward onto HRP, which may help speed the process.44
Government Response Summary
The government agrees to the recommendation, stating the correction exercise began in Autumn 2023 and DWP will continue to refine its plans with HMRC, providing updates in its 2023-24 Annual Report and Accounts, along with specific rules for handling income tax on arrears.
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.