Direct Payments - even more joining up please

Published on 26 November 2008

The Department of Health (DH) proposes to give local authorities the power to extend direct payments to those who lack the capacity to consent to their receipt. In responding to this consultation, LITRG has again highlighted the need for HMRC, DH and the local authorities to consider how the recipients of the direct payments will comply with the statutory obligations, particularly payroll, that go with employing a carer.

As previous news items have shown, LITRG is supportive of the role of the Government’s Independent Living strategy, Direct Payments and Individual Budgets in giving recipients more control over their lives and provision of their care needs. But employing carers brings obligations such as operating PAYE and NIC; and lack of joined up thinking between government departments on how the recipients of payments are to discharge these burdens threatens to undermine the benefits to be gained.

We have welcomed the positive steps taken by HMRC to resolve the issues, but no workable solution has yet been found. In our response to the DH we have indicated how widening the scope of potential recipients has created more issues which the current tax system is poorly equipped to cope with.

For someone who lacks mental capacity to be able to receive direct payments, a ‘suitable’ person must be found who will take on the responsibility of managing the payments on behalf of that person.

This raises a number of questions:

  • What will be the relationship between the ‘suitable’ person and HMRC in operating the payroll?
  • The Mental Capacity Act 2005 indicates that anyone acting on behalf of a person with fluctuating capacity should allow that person to take back control of their affairs when judged to be in a position to do so. Who would HMRC regard as the ‘employer’ in situations such as this and how would they deal with changes in those administering the payroll?
  • What assurance can be given that guidance will be available to the ‘suitable’ person to ensure that they fully understand the responsibilities they would be taking on?
  • What support will there be for those administering payroll from local authorities, HMRC and other relevant government agencies to ensure that all ‘employer’ regulations and procedures are understood and complied with?

As we said in our January 2008 report :

‘LITRG wants individual budgets to flourish without the bureaucracy of a tax system that was never designed to cope with the “accidental employers” that are created by direct payments’.

Accordingly we again urge those involved to start talking.

Contact: Jan Tish (Tel: 0844 579 6700 Fax 0844 579 6701)


To open the file click below:
Direct Payments Regulations Consultation - LITRG response