Will HMRC be able to reach directly in to bank accounts?

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Duncan Mitchell-InnesHM Revenue & Customs (HMRC) are currently consulting on proposals which would allow them to recover monies due in tax directly from bank accounts. The plans caused serious concern amongst the MPs on the Treasury Select Committee.

Lin Homer, chief executive of HMRC, said that such recovery would only be made in extreme circumstances and would not deprive people of money they needed to live on. However, she inadvertently caused further consternation when she went on to explain that HMRC would be able to ascertain whether a taxpayer was in a position to pay the tax due and still have enough to live on as HMRC would be able to access details of a year’s worth of the person’s transactions and spending history.

Ms Homer did however explain that the issue that HMRC was seeking to address was that of about 17,000 debtors who were deliberately not paying their taxes due, despite having the funds available to do so. She elaborated that debtors trying to ‘game’ the system had worked out that HMRC would send nine warning letters before taking action and would not pursue Court action once the tax was paid. Thus payments are consistently made late and HMRC is used, in its view, as if it is providing an overdraft facility.

Ms Homer also disputed the claim of John Thurso, a liberal Democrat member of the Treasury Select Committee, who claimed that the proposed powers would override the protections enshrined in Magna Carta. Magna Carta sought to protect citizens from unilateral actions by the Monarchy. However, Ms Homer argued that the plans were more akin to the current PAYE system by which employers take tax directly from salaries before employees receive them.

 

For further information, contact duncan.mitchell-innes@twmsolicitors.com

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