Taxation by any other name . . .

Although introduced and in force from 1 October 2012 the Health & Safety Executive's ("HSE") Fee For Intervention ("FFI") scheme is still unknown to some businesses.

There has been mixed views as to the motivation behind the scheme and whether it is just another means of "taxing" businesses. It is no coincidence that as part of the comprehensive spending review in 2010, it was announced that the Health & Safety Executive's ("HSE") grant was to be reduced by 35% over 4 years from April 2011.

So how is that amount to be recouped?

When a HSE Inspector visits a business and decides that there is or has been a "material breach" of health and safety laws, the business concerned is obliged to pay a fee (the FFI) based on the amount of time that the Inspector spends identifying the "material breach", helping the business to remedy the breach, investigating and, if necessary, taking enforcement action. The rate for the FFI in 2012/2013 is £124.00 per hour. The FFI will cover all time spent on site inspections, taking statements, writing reports and a whole raft of other activities undertaken by HSE Inspectors.

Whether a "material breach" has occurred is a subjective matter for the Inspector, which is often difficult for businesses to accept. The fee is only payable in relation to time spent by a HSE Inspector. No fee is payable in relation to time spent by other authorities that enforce health and safety law (such as local authorities and the police).

The FFI scheme applies to "dutyholders" under the Health & Safety at Work etc. Act 1974. These are employers and self-employed persons who put others (including their employees and the public at risk). FFIs cannot, however, be charged to individuals (such as company directors and managers). This is because Sections 36 and 37 of the Health & Safety at Work etc. Act 1974 which impose liability on individuals do not create a duty but merely indicate circumstances in which an individual can be held criminally responsible for the breaches of the dutyholder company.

There is a means of challenging an Inspector's subjective decision as to whether a "material breach" has occurred. The case will be reviewed by a senior manager and there is also a further appeal route. If the challenge is unsuccessful, the business will not only have to pay the FFI for the original investigation, but will also have to pay for the HSE's time spent dealing with the challenge. This could be costly.

The HSE's view of the FFI is that it is sensible to recover its costs from those businesses that are breaching health and safety rules and placing their employees and sometimes, the public, in danger. The scheme does provide a further incentive for businesses to ensure that they comply with health and safety obligations so as to avoid the scrutiny of the HSE.

Many businesses will take a little more convincing that the FFI is not just an indirect tax.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.