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MPs express concern over HMRC’s bank account powers 9 May 2014

Plans for HMRC to settle unpaid tax bills by raiding the bank accounts of people who owe it money have been criticised by MPs.

In the Budget, Chancellor George Osborne outlined plans to give HMRC the power to recover tax debts from anyone who owes more than £1,000 in tax or in tax credits.

The Treasury Committee has voiced concerns about the new powers, saying HMRC’s past performance of failing to accurately calculate tax bills did not inspire confidence.

Committee warns: “This policy is highly dependent on HMRC’s ability to accurately determine which taxpayers owe money and what amounts they owe – an ability not always demonstrated in the past. Incorrectly collecting money will result in serious detriment to taxpayers.”

Committee chairman, Andrew Tyrie MP, said: “Some taxpayers may find money taken from their accounts that later should be paid back. That would be unacceptable.”

To be able to seize money from accounts, HMRC currently needs a court order. The Committee says the new powers will destabilise the current system of checks and balances and HMRC would act as its own “judge and jury”.

HMRC insists it will not take the money unless the person has at least £5,000 left across all their bank accounts, including savings accounts, ISAs and joint accounts, after the debt has been paid. It said it will neither create nor increase overdrafts.

As a further safeguard, the Revenue says it will freeze the amount owed in the debtor’s accounts for 14 days to allow them time to pay before the money is seized.

When contacted by Payroll World, HMRC confirmed that taxes owed by businesses and partnerships (for example, unpaid corporation tax and PAYE tax) will also be subject to the new powers.

 

 

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