HMRC to have the power to raid taxpayer bank accounts
Tucked away in George Osborne’s recent Budget was a new debt recovery measure which will have major ramifications for all UK taxpayers.
With effect from 6 April 2015, the government will provide HMRC with the power to collect tax debts directly from a taxpayer’s bank and building society accounts, subject to certain conditions.
HMRC will focus their new debt recovery measure on taxpayers who owe at least £1,000 and have already been contacted multiple times via the ordinary channels. This measure is designed to mirror provisions which exist in other countries such as the USA, with the Treasury predicting that it could raise as much as £365 million in unpaid taxes over the next 4 years.
However, taxpayers are rightly concerned about the effects of HMRC having the power to dip into their bank accounts at will.
The government assures taxpayers that there will be ‘rigorous safeguards’ in place to ensure that mistakes won’t be made by HMRC when using the measure. In addition, HMRC must leave an aggregate balance of £5,000 across all of a debtor’s bank accounts once the outstanding tax has been recovered.
As more of the detail unfolds, it will be important to get to the bottom of whether these provisions will apply exclusively to persistent defaulters, or whether any taxpayer with a debt of £1,000 or more will be subject to their bank account being raided.
We will also need to understand more about the safeguards and what they extend to, so that HMRC cannot just utilise their powers to collect disputed tax bills which may not ultimately be due. We will be monitoring how the proposed measure progresses and will provide further updates over the coming weeks and months.
If you would like more information or would like to discuss your tax affairs in general, please contact our Tax Partner, Chris Barrington on the details below:
telephone: 01942 292505