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Date of publication OrganizationMeeting annual file and number 09-03-2020 13:17 House of Representatives General 2019-202031066 no. 574

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31 066 Tax Administration

No. 574 LETTER FROM THE SECRETARY OF STATE FOR FINANCE

To the President of the House of Representatives of States General The Hague, December 17, 2019Your House has its Rules of Procedure on Thursday, December 12, 2019. (Acts II 2019/20, no. 36, item 14) asked questions about the files received by parents concerning the cessation of childcare benefits. With this letter, I offer you the answers to these Parliamentary questions and take the opportunity to also address a number of commitments resulting from the debate about the solution for parents in the CAF 11 case on December 4. (Acts II 2019/20, No. 32, items 3 and 6). In this letter, I will inform your House successively about the following topics:

  • I.Pay out CAF 11 parents before the end of 2019
  • II.End of the all-or-nothing approach by determining proportionately
  • III.Explanation of information from MT surcharges reports
  • IV.Parliamentary questions, parent files, childcare benefits (attached)1
  • V.Looking to the future
  • VI.Summarizing all actions at a glance

I. Payout CAF 11 parents before the end of 2019

Over the past period, I have done everything in my power to compensate the affected parents in the CAF 11 case as quickly and fully as possible and to pay out most of them before the end of 2019. In total, around 90% of parents receive a letter with a calculation today. More than 200 parents will receive an amount of up to €20,000, more than 70 parents will receive an amount above that with the maximum amount of €66,000. The amount is based on the advice of the Advisory Committee on Implementation of Allowances. However, this does not yet include any costs for legal assistance and possible damage as a result of selling assets. However, for the compensation of the CAF 11 parents, it is certain that this is the amount they are in any case entitled to. This amount consists of the first four elements of the compensation scheme of the Advisory Committee on the Implementation of Allowances: amount of corrective decisions, Surcharges, a fixed amount of material and immaterial damage and compensation for the collection costs charged. Parents who have questions regarding this letter and the calculations it contains can request a personal interview. A separate telephone number is also available for this, which is included in the letter to the parents. At the beginning of 2020, the affected parents will then receive the final compensation decision, which includes all elements. They can still object to that at that time. The parents will also receive a letter from me. I write in it that the amount of money can never make up for everything and that, unfortunately, there is no way I can remove the injustice that has been done to them and the feeling of helplessness that they have been living with for so long. I am very aware of that. For a small number of parents who do not receive compensation, their situation has been independently assessed by the committee of independent experts, in accordance with the recommendations of the Advisory Committee on Implementation of Benefits. The Advisory Committee has ruled that in these cases, there is clearly no right to childcare allowance or that there has been no response even after repeated requests (over all three payment years). This committee was recently established and consists of Mr. Cees Schaap, Mrs. Diana van Hout and Mr. Rens Pieterse. The institutional decree is attached2. These parents also receive a letter from me. If parents have questions about the amount of the compensation, they are invited to provide a personal explanation of the calculation. In line with the motion by member Omtzigt c.s., Surcharges will promote that parents can exercise their rights easily and without opposition.3 The concrete details of this are currently being worked out and your House will receive a letter about this in the new year. Parents who are not currently receiving compensation are also first given the opportunity to receive a personal explanation of the negative advance announcement. For these parents, too, the final decision will follow at the beginning of 2020, which can be objected to. The objection is also assessed by an independent objections advisory committee, which was also promised in my letter to your House of 15 November (Parliamentary Paper). 31 066, no. 538) .With this letter, I also send your House the letters as they were sent to the parents4. This concerns a letter from Allowances and a letter from me, for both parents who receive compensation and who do not receive compensation.

II. End of all-or-nothing approach by determining proportionately

I previously informed your chamber that, together with the Secretary of State for Social Affairs and Employment, I want to end the all-or-nothing approach and switch to a system where the right to childcare allowance is proportionally determined. The report of the Advisory Committee on Implementation of Allowances and recent statements by the Council of State also endorse this importance. By extension, your House adopted the motion by member Snels et al. during the plenary debate on 4 December this year.5 In this motion, your House asks the government to respond to the two rulings of the Administrative Justice Department of the Council of State of 23 October 2019 before the Christmas recess. The two rulings of 23 October mean a change in case law. The first ruling is in line with the proportional approach that I want to take with the Secretary of State for Social Affairs and Employment to the childcare allowance. The Council of State has thereby indicated that, within the applicable legal framework, allowances has the discretion to calculate the right to childcare allowance differently than determining this right to nil when partially paying the costs of childcare. In doing so, a consideration must be made between all relevant interests within the framework of the applicable legislation. In practice, the ruling of the Council of State means that Allowances will be able to determine the amount of the right to childcare allowance proportionally. The Council of State has ordered Allowances to implement the rulings within 26 weeks. Surcharges will determine the right to childcare allowance proportionally. This is laid down in the attached policy decision6 which, after entry into force, has retroactive effect to October 23, 2019. This decision specifies how Surcharges determine the childcare allowance when a parent has not paid the costs of childcare in full over a calculation year. The calculation example below shows that this has significant consequences. In the example, instead of a total debt of €9,500, there is a maximum recovery of €450.

Calculation example

The assumption is a family with an assessment income of €35,000 with a right to childcare allowance of 90% of the (maximum) hourly rate. For the calculation example, it was assumed that the costs for childcare total €10,000. The parents received an advance childcare allowance of €9,000 (90% of 10,000). The childcare organization has invoiced €10,000, of which €9,500 was paid by the parents, so that a residual debt to the childcare organization of €500 is still outstanding. The tax authorities therefore set the right to childcare allowance at €8,550 (90% of €9,500). The attached draft policy decision further details the calculation example (Available via External link: www.tweedekamer.nl). (Proportional) establish old working methods new proposal Assessment income parents 35,000, —35,000, —Percentage of childcare allowance entitlement 90% 90% Invoice amount for childcare (actual costs) 10,000, —10,000, —Part of the invoice that has been paid 9,500, —9,500, —Allowance received 9,000, —9,000, —Established right to childcare allowance 08.550, —Maximum recovery 9,000, —450, —

The second ruling by the Council of State means that Surcharges must weigh the interests involved in the recovery decision and can, under special circumstances, waive recovery or moderate the amount to be recovered. The Council of State has ordered Surcharges to implement the rulings within 26 weeks. This ruling does not only affect the childcare allowance, but applies to all income-related regulations that fall under the Awir. I have instructed the tax authorities to apply the Council of State's wider interpretation of the law in practice. The tax authorities do this in consultation with the allowance departments (ministries of Social Affairs and Employment, Health, Welfare and Sport and Internal Affairs and Kingdom Relations). Early next year, I will inform your House in more detail about how this ruling is being implemented. In addition, I also pay attention to the question of how to deal with old cases.

III. Explanation of information from MT Surcharges reports

During the debate on CAF 11 on 4 December last, Ms Leijten asked for the documents referred to in tweets.7 The tweets quoted reports from the MT Toeslagen that are accessible to all employees of the tax authorities via the internal image newspaper. I am sending the two documents requested by Mrs Leijten as attachments.8 more. It's about:

  • 1.Internal working document “distressing cases”: An overview of various examples of possible “distressing cases” from legislation and regulations. This overview was drawn up in line with my letter in June and the subsequent debate to transmit signals from implementation to the policy-responsible ministry in a structured way. As a result, bottlenecks are identified earlier and the policy-responsible ministry can make its assessment. The list will form the basis for discussions with the relevant policy departments. The names of those involved and employees included in the document have been made illegible.
  • 2.Overview of all benefit-related CAF cases: The current overview shows the CAF names, CAF numbers, start years of research, related surcharges and the presence of evaluation reports. The list includes up to 167 surcharge-related CAF cases. For a good understanding of this list, I will also provide you with the used definition of CAF cases, which has also been provided to the State Audit Service. The names that refer to childcare organizations or individual employees have been made illegible.

IV. Parliamentary questions, parental records, childcare benefits

Understandable misunderstanding: parents about requested childcare allowance files.

The request from the parents who requested their own complete individual file for Childcare Allowances in Rotterdam has not been properly processed. By providing the files with large black lacquered documents without giving a good and personal explanation, this has led to a sense of dissatisfaction among the parents about how the files were provided. The files therefore did not meet the expectations set in order to answer the parents' many questions. The intention to provide the parents' files with a personal explanation took shape by means of a standard letter. A truly personal explanation from Surcharges should have taken place when the file was made available. The parents and your House have therefore rightly asked questions about this, which I will elaborate on in the response and in this cover letter. I have indicated that Allowances should talk to the parents to review the file together and answer the questions. Parents have now been contacted by phone to do so.

Contents of files

Your House has asked a number of questions about the composition of the individual parent files concerning the childcare allowance. The first nineteen parental files that have now been completed show that revisions or discontinuations of childcare benefits have had various causes. Some parents involved changes in the income situation or childcare hours that caused the payment advance to be revised downwards at the end of the year, or there was “regular” individual supervision, others were a CAF case and a third category involved a fraud investigation. In the latter two categories, the files consist not only of documents related to the individual situation, but also documents relating to the overall investigation into the childcare organization or the childcare agency. From the tax authorities-wide CAF approach, this sometimes also investigated tax aspects of the organization in question. The questioning parents were not yet part of the CAF investigation. However, the findings from this study were transferred to Allowances, after which research was also carried out with the concerned questioning parents. In the case of a CAF case, in the case of a CAF case, a report of findings per parent was generally drawn up during the review of the supporting documents. The available reports have been provided. The file that has been delivered to the parents can consist of both individual documents and documents that largely relate to others than themselves. This also means that it will have to be assessed on a case-by-case basis whether the institutional bias of suspected fraud, as described by the Advisory Committee on Implementation of Benefits, occurred in these individual cases. For the CAF cases, this is being investigated by the ADR.

Method used when providing documents

The AVG and the AWR were used as the starting point for painting the documents. In these cases, in accordance with my commitment, information was generously provided, within the limits of the Awb (documents related to the case). The files were created under considerable time pressure, which also had to take into account the privacy of third parties. This has been done as carefully as possible. The 19 files used the same procedure as the file that forms part of the Rotterdam District Court's ruling of 12 July 2019. The court has ruled that Toeslagen must provide a questioning parent with the complete file about the investigation at a childcare agency. As explained in my letter dated August 23, Toeslagen would like to comply with the judge's opinion, but also has a responsibility to treat third party data confidentially.9 The question is how the court's ruling relates to the duty of confidentiality. For this reason, only the section concerning the provision of the complete file was appealed to the Council of State so that clarity can be provided for all future proceedings. This clarity is also necessary for the files that parents have requested in Rotterdam. Pending that ruling, a lacquered version was provided in both the Rotterdam file and these 19 files.

Errors in the provision of parents and childminding agency have been reported as a data breach

Despite the method described above, confidential information, such as privacy-sensitive data from third parties, has ended up in a limited number of cases. These should have been painted. Where this is the case, a data breach was reported to the Data Protection Authority (AP) and, where necessary, the data breach was also reported to those involved.

V. Looking to the future

Affected parents from the CAF 11 case will still receive compensation this year. As soon as more is known about the extent to which other parents have been duped, for which the final report of the Advisory Committee on Implementation of Benefits and the ADR report are awaited, I also want to ensure that appropriate compensation takes place for them. This will make a big call on the Allowance Organization. Mr. Donner informed me that he would publish his final report in January 2020. In order to make a careful and rapid recovery possible for all affected parents, I choose to set up a new project organization in addition to the current organization of Allowances. This project organization focuses on the settlement of past cases. Work will also be carried out to transform Allowances into an organization that uses the human touch as a standard. You will soon be informed about the development of this project organization in 2020. In this new project structure, by deploying hundreds of new people, substantially more capacity can be used to settle past cases, without daily activities resulting in it. In addition, a Supplement System must be built that can prevent these types of errors in the future. Together with my colleague from Social Affairs and Employment, I made a start by replacing the all-or-nothing approach with proportionally determining the Childcare Allowance. In accordance with article 3.1 of the Comptability Act 2016, all these measures will focus on the effectiveness and efficiency of the policy.

VI. In summary: all actions at a glance

The following actions are ongoing:

  • 1.Before the end of the year, CAF 11 parents will be compensated as quickly and fully as possible.
  • 2. The parents will be contacted personally and, if desired, a conversation will take place with Surcharges to answer questions. This will also happen with the 150 other file requests. Supervisors within Toeslagen will also participate in these discussions.
  • 3.Setting up a new project organization where, by deploying hundreds of new people, substantially more capacity is deployed to settle past cases, without suffering from daily activities.
  • 4.Transforming Allowances into an implementing organization that uses the human touch as the standard. A good example of this is the abandonment of the all-or-nothing approach by moving to proportional determination.
  • 5. Of course, parents' compensation outside CAF 11 will also be addressed as soon as possible after publication of the final report of the Advisory Committee on Implementation of Benefits and the ADR.

The Secretary of State for Finance, M. Snel

1Available via External link: www.tweedekamer.nl

2Available via External link: www.tweedekamer.nl

3Parliamentary paper 31 066, No. 551.

4Available via External link: www.tweedekamer.nl

5Parliamentary paper 31 066, no. 556.

6Available via External link: www.tweedekamer.nl

7External link: https://twitter.com/RenskeLeijten/status/1202251625588576257 and External link: https://twitter.com/RenskeLeijten/status/1202251412278775811

8Available via External link: www.tweedekamer.nl

9Parliamentary paper 31 066, No. 518.

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Date
24 September 2024
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