The taxman is to raid our bank accounts…
Since the budget, it has been a hot topic of conversation that in the future, HMRC may be allowed to access bank accounts (including ISAs) for the direct recovery of debts. Many people are very worried about this, with the main concern being that "tax officials have a history of making mistakes".
In line with the anti-avoidance measures that we have been hearing so much about recently, George Osborne announced plans to modernise and strengthen the powers available to HMRC when recovering overdue tax liabilities. In principle this is of course a good thing for those of us who pay what we owe; however there are several understandable concerns.
Perhaps the most predictable and understandable of those concerns are the potential for errors and leaving individuals without enough money. These are to be addressed by safeguards which will be put in place for the protection of taxpayers. Namely: the authority will only be used to retrieve significant debts of over £1,000 from those who have sufficient funds to pay; a minimum of £5,000 will be left in the debtors’ overall bank accounts after the debt has been recovered to ensure there is no financial distress; and HMRC will only target those with long term debts who have already received at least four demands for payment. HMRC are also taking extended measures to ensure that errors are not made during the process.
There will be no impact on compliant taxpaying individuals or businesses and it will only be applied to those who have not fulfilled their legal obligations and where more moderate steps have already been taken or are not available.
For more information, view the consultation document here.
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