HMRC – New Powers

In the March Budget HMRC were given powers to take money from bank accounts on debtors who owe more than £1000 in taxation,  but both a tax reform group and ACCA feel that this could lead to an abuse of power.  In the Budget papers it said that the change would bring the UK in line with many other tax authorities.

Head of Taxation at ACCA, Chas Roy-Chowdhury  argued that these countries’ tax collection system should not be role models and that the taxman has a record of making mistakes.  Roy-Chowdhury, explained that a company which has had its accounts raided could find itself in a position where it is unable to pay staff wages.

Low Income Tax Reform group chairman, Mr Anthony Thomas said “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 public service body.  It is not the same as seizing physical goods, it is depriving the debtor of the very means to live.”

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

An HMRC spokesperson said there would be safeguards and it has been announced that money will only be seized once the debtor has been contacted several times and a minimum of £5,000 must be left in an account.

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

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

Usually in a bankruptcy or an administration the taxman is one of the last to be paid as an unsecured creditor, however, they could supersede all creditors and be paid first leaving HMRC in danger of superseding insolvency law.