Continuing our mission to keep you updated with the latest from HM Revenue and Customs, we’ve discovered that they will be given powers to access bank accounts, but, thank goodness, not to empty them.

It’s been in the news again recently and many businesses are seriously concerned.

New powers allowing HMRC to raid bank accounts to collect tax debts would be “seriously draconian”, an accountancy body says.

The plans would allow the tax authority to seize assets from anyone who owes more than just £1,000 in tax or tax credits. This is not a huge amount to owe them.


The ACCA accountancy body has criticised the proposal saying that HMRC had a record of making mistakes. But a spokesman for the tax authority said that safeguards would be put in place.


The new system was announced in the Budget by Chancellor George Osborne and will now be the subject of consultation with the industry. Under the proposals, HMRC would be able to seize money from bank accounts, but only after they had contacted the debtor several times.



Is this an abuse of power?


The tax authority would not be allowed to completely empty the bank accounts. They must leave a minimum of £5,000 in the account.


“This brings the UK in line with many other tax authorities which already have the power to recover debts directly from an individual’s account, such as France and the US,” the Budget documents explain.


However, Chas Roy-Chowdhury, head of taxation at the ACCA, said that these countries’ tax collection systems should not be regarded as role models. He added that the seizure of assets could have a knock-on effect. If businesses’ accounts were raided, they could find there was not enough to pay staff, for example.


A spokesman for HMRC said that safeguards would be put in place to ensure that honest taxpayers were not targeted, although details were not yet available.


“Most people pay their taxes on time, but a minority do not and some refuse to engage with us at all. It is wrong that this should hand an advantage to those who simply dodge their obligations, and is unfair on the vast majority who pay their taxes in full and on time,” he said.


“We will shortly be consulting on a new measure with appropriate safeguards to help level the playing field, and tackle those who have the means to pay but are choosing not to. These are people who have, on average, over ?20,000 in their accounts but are refusing to pay their debts.

“This will only affect a tiny number of debtors whom we have contacted a minimum of four times to ask for payment.”


He added that those affected would always have the right to appeal against any move. However, the plans have also been questioned by the Low Incomes Tax Reform Group, which said that this rode roughshod over the need of many people in debt to prioritise payments.


“To let HMRC raid their bank accounts without safeguards or recourse to the courts – or with inadequate safeguards – would be to flout the rule of law in a manner unworthy of a public service body. It is not the same as seizing physical goods, it is depriving the debtor of the very means to live,” said the group’s chairman, Anthony Thomas.


“Given the way HMRC continually fail to deal with taxpayers properly or fairly this provision is hugely worrying. To introduce such draconian measures without proper safeguards could well lead to an abuse of power.


“Besides, it would allow HMRC to steal a march on other creditors in the event of a bankruptcy, something which was abandoned long ago with the abolition of Crown preference in bankruptcy proceedings.”


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