The clause deals with the exemption of benefits consisting of health-screening or medical check-ups. It may help if I set out a little background to the measure.

Two statutory instruments introduced in August 2007 dealt with the taxation and reporting of health screenings and medical check-ups provided by employers to employees. Previously, employers and HMRC had persisted in treating the provision of periodic health screenings and medical check-ups for employees as exempt from tax and reporting requirements. There was no specific provision requiring such benefits to be provided universally in order to be tax and NIC exempt. However, HMRC took the view in 2007 that the practice was based on an understanding or assumption, rather than on strict legality. New regulations provided a significantly narrower exemption for periodic health screenings and medical check-ups.

The changes introduced in August 2007 required any provision of health screenings by an employer to an employee to be made available to all employees and any medical cheek-up to be either made available to all employees or made available to those identified by a health screening as needing such a check-up. Those regulations came into effect on 14 August 2007, but had a retrospective effect covering the 2007-08 tax year. Strong representations were made about that retrospection.  HMRC agreed not to collect any tax for 2007-08 and, in February 2008, that was extended to 2008-09, so we had a period of confusion.

Clause 55 is a revision of the revised proposals of August 2007. After receiving further representations, HMRC announced on 10 December 2008 that it would include legislation in the Finance Bill

“to exempt from tax the provision of yearly health screening and medical check ups” without the proviso that they have to be generally available on similar terms to all employees. That is essentially what is covered by the clause.

The clause is welcome up to a point. It is fair to say that the changes announced in August 2007 were somewhat botched and that there has been a lengthy period of confusion, but concerns remain that clause 55 is still somewhat restrictive. There is a restriction to one health screening or check-up per tax year, but an individual may well require more than one screening or check-up, or a check for more than one potential condition, per year. It is often impractical to ensure that an annual medical that occurs around the start or the end of the tax year is not repeated within that same year, as people can end up having two medicals in one year just by a few days. I should be grateful to know why the Government have not reverted to the position before August 2007. Why is there a restriction of one check up per year? I suspect that the answer may well be cost, but what is the cost? I am sceptical that it is very significant.

The clause will reduce the amount of red tape for employers and employees, so we welcome it as far as it goes; it is clearly an improvement on the uncertainty of the past two years or so. However, I would be grateful to know why the Government have not sought to return to the arrangement that seemed to be working perfectly adequately prior to August 2007.