terminally-ill people have begun receiving letters warning them their benefits could be cut in April even though Parliament has yet to approve the changes

The changes will be retrospective

Thousands of terminally-ill people have begun receiving letters warning them their benefits could be cut in April even though Parliament has yet to approve the changes.

Under proposals being scrutinised in the Lords, Contributory Employment Support Allowance (CESA) will be time-limited to 12 months from April 2012.

The changes will be retrospective.

So people on CESA for 12 months or more when the rule comes into force will have their benefit cut immediately. Earlier this week, delegates at the Liberal Democrat conference in Birmingham passed a motion calling on their MPs to oppose the "arbitrary" time limit, contained in the Welfare Bill, and the plans are likely to face stiff opposition in the Lords.

'No win situation'

Neil Coyle, of the Disability Alliance, said that while it is uncertain whether the rule will be passed, it is premature for the Department for Work and Pensions to warn recipients of the changes.

"The letters are now being sent at a cost of £2.7m, including letters to people who unaffected by the change but who will experience considerable anxiety," he said.

"The government has time to change plans before terminally-ill people and their families have this avoidable and quite nasty cut imposed."

The Department of Work and Pensions admits it is conceivable the legislation may not be approved but says it is better to warn people early. "It would be completely wrong not to alert people well in advance that there is a possibility that their benefit entitlement may change," a spokesman said.

Jenny Willott, Lib Dem backbench spokesman on welfare, says it is a "no-win situation for the DWP".

"If they don't pre-judge the situation they could end up with thousands of people losing their benefits with little notice," she said.

Ms Willott says Lib Dem peers are working on the "issues to be ironed out" in the bill. Terminally-ill people with less than six months to live will not be affected by the changes.

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HMRC say UK tax gap narrows to £35bn

HM Revenue and Customs (HMRC)

The amount of tax that went uncollected in 2009-10 was estimated to be £35bn, HM Revenue and Customs (HMRC) has said.

This was £4bn less than the previous year and the lowest since 2004-05, the figures show.

The tax authority said the key reason for the drop was the reduction in VAT from 17.5% to 15% from December 2008 to the end of 2009.

In total, 7.9% of all tax went uncollected in 2009-10, compared with 8.1% the previous year.

VAT remained the tax recording the biggest shortfall, with £11.4bn uncollected. That meant 13.8% of the total amount of VAT due was not collected in 2009-10.

The next largest loss was £5.8bn of income tax due to inaccurate self-assessment returns.

 

Moonlighters

The annual amounts of income tax lost to deliberate evasion remained at the same, relatively small, level as the previous year.

Of the £14.5bn of direct taxes - income tax, national insurance and capital gains tax - not collected, £1.3bn was attributed to "ghosts", who are people who fail to declare their taxable income.

Some £1.8bn was attributed to moonlighters, who are people who fail to declare income from a second job.

Businesses failed to hand over an estimated £4.8bn in corporation tax, the HMRC estimates show.

The least effective tax was on hand-rolled tobacco, where 46% of all the tax (£600m) went uncollected owing to smuggling.

 

Evaders 'challenged'

HMRC's estimate of uncollected tax is based on evidence they uncover from cases they pursue, as well as spotting gaps in businesses' books during regular checks. In the 2010 Spending Review, the government handed HMRC £917m in funding to tackle the tax gap, with a target to raise an extra £7bn a year by 2014-15.

"Although these numbers show continued progress by HMRC in reducing the tax gap, there is no room for complacency," said Exchequer Secretary to the Treasury, David Gauke.

"Just in the last few weeks we have challenged offshore tax evaders, closed tax avoidance loopholes and created a new HMRC unit to ensure that the wealthier members of society pay their way.

"We will continue to take action to prevent a minority of rule breakers dodging their responsibility to pay the right tax at the right time."

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