Institutes join forces against direct debt recovery

Parliament TV

Parliamentary hearings on the 2014 Finance Bill saw early skirmishes on the big fight looming in next year’s legislation, when HMRC could get powers to dip directly into taxpayers’ bank accounts to recover debts.

In his Budget speech in March, the Chancellor promised, “We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries.”

All that followed was a brief paragraph (2.203) in the Budget document explaining, “The direct recovery of debts will focus on debtors who owe at least £1,000 and have been contacted multiple times by HMRC to pay. A minimum aggregate balance of £5,000 will be left across all accounts, including ISAs, after the debt is recovered.”

A consultation proposals was promised “shortly after Budget 2014”

AccountingWEB members were apprehensive about the proposed measureEchoing concerns raised by other members of the risk that HMRC might misuse the process and try to collect liabilities that where not lawfully due, DMGBus commented: “A debtor can, via due legal process, serve a garnishee order on a creditor's bank or a creditor’s debtor. This is not new, rarely seen in practice and it seems now to be new to HMRC.”

Tax bodies have also been voicing their concern, most noticeably at an evidence hearing on the Finance Act with the Treasury select committee on 8 April (also available on Parliament.tv).

The committee sought the views of Frank Haskew from the ICAEW Tax Faculty and the CIOT’s Patrick Stevens on whether the government’s approach to tax policy-making was working, particularly around the area of retrospective legislation.

But then Tory MP Jesse Norman turned his attention to the tax experts’ concerns about HMRC  powers to remove cash from people’s accounts. “Could one of you explain why it is such an animating point for you?” he asked...

Continued...

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Comments
johnjenkins's picture

Wow, I've not really    2 thanks

johnjenkins | | Permalink

been following this, but 2 things spring to mind. Firstly HMRC are not preferential creditors so it would seem either that any other creditor should have similar powers to get debts paid or it's illegal. Secondly, larger concerns would simply "move" money to different accounts at strategic times, and smaller concerns would more or less "move" to cash based business. The problem is not the paying of the bill it is the accuracy of the bill. How many times do debt collectors chase corp tax when CIS hasn't been repaid. Whatever HMRC say we all know what will happen. They will take money first then you have to give them a good reason why it shouldn't have been taken and if they don't like the reason tough titty.

Why is it that most taxpayers have confidence in Customs but not the Revenue? Simple Customs do not abuse their massive power, Revenue abuse and twist even the tiniest bit of power and have the affront to demand more.

johnjenkins's picture

I have since

johnjenkins | | Permalink

made further investigations and although HMRC are going through the "motions" they know they haven't got a cat in hells chance of getting this passed. Another fanciful idea that someone dreamt up whilst twiddling their thumbs.

Think

The Black Knight | | Permalink

Think we just need to vote out of Europe.

 

Think

The Black Knight | | Permalink

The Black Knight wrote:

Think we just need to vote out of Europe.

England used to be about fairness and the the rule of law.

Now it's about oppression because they failed to uphold the law.

Its not just quasi law and attitudes on tax either, all of it has gone completely bonkers.

 

Can anyone remember when    2 thanks

mikefleming3028 | | Permalink

Can anyone remember when Schedule 36 was proposed to take the place of   Section 20 TMA 1970 and other misc  bits of similar legislation? You may recall all kinds of assurances were given that such notices would only be issued in rare instances and only where the "customer" was not cooperating in the production of documents or information. As an ex HMRC Inspector of some years service I can say that I never saw a section 20 notice and with 27 years in private practice under my belt and having dealt with more than my fair share of HMRC investigations I likewise was never in receipt of such a notice either.

Enter Schedule 36 stage left and within 12 months every body and his auntie at HMRC were issuing these notices  like confetti. Call me a cynic but I believe that anyone who thinks that HMRC / Treasury  assurances are worth relying on in such matters should have their head examined. Lets hope common sense prevails and this proposal gets shunted up a  siding never to be seen again.

raybackler's picture

HMRC are not preferential creditors

raybackler | | Permalink

This is an important point made by johnjenkins and when tax is unpaid it is usually because the taxpayer is short of funds.  I can imagine a liquidation caused by HMRC taking a payment in preference to other creditors would raise eyebrows with an insolvency practitioner.

I also think that HMRC have made so many mistakes that the chances of them taking money that is not due is very high.

Direct debt recovery

Montrose | | Permalink

 Yes HMRC do have a problem, but just a few practical questions

1] Joint Bank accounts- say husband and wife?

2] What powers will HMRC require to locate bank accounts?

3] What is to stop recalcitrant non payers, knowing HMRC were likely to DD their accouints, closing them and opening another?

A comment on Black Knight's anti-Europe rant- what has UK's membership of the EU got to do with this? Indeed one strong argument against these proposals is the Human Rights aspect of the independence of the judiciary from the executive powers. Historically for example that prevented HMRC retrospectiuvely imposing penalties on undeclared income or gains of deceased taxpayers.

Tax refunds owing to taxpayers

taxbakbristol | | Permalink

I often wonder just how much money is awaiting HMRC refunds! We all know they are incapable of instituting a bog standard system to pay back CIS refunds to Limited Companies but how many other refunds are sitting there waiting for a taxpayer to " claim them".......then how much tax  is unclaimed by tax payers who are unaware that they are paying to much tax...

...lets sort this out first  HMRCustoms.

I am horrified to see clients who have missed out on reclaiming overpayments because they were unaware that they could and then ran out of time..........

Lets sort this out next HM R& Customs

Then what about sorting out the abysmal service that agents and taxpayers get ..

Lets sort this out then HM R& Customs....

Raiding peoples bank accounts............Ye Gods......................the lunatics are running the asylum

Who dreams these stupid schemes up. DM & Banking no doubt .That's why they NEVER answer any letters querying their mistakes!

johnjenkins's picture

It's a pity

johnjenkins | | Permalink

we couldn't have a vote of "no confidence" about HMRC just like they do in parliament when the government of the day get it all wrong.

Message to DC. Scrap HMRC. Let Customs look after our borders. Let Collectors look after investigations and collections, then leave the rest to us. Yes we would scrap CGT, IHT, CIS and IR35 etc. We are also very aware what it costs to run this country and that has to be paid for by Income and purchase tax.

Oh yes BK, nearly forgot, lets get the hell out of the EU circus.

Client money

leon0001 | | Permalink

What will happen if HMRC are chasing a disputed amount from a firm of solicitors, accountants or chartered surveyors. Will the officer  or third party collection agent understand the concept of client's money or will they try to dip into the firm's client bank account? 

Of course, if they never made mistakes or tried to collect tax where they already held sufficient funds, I wouldn't be so concerned. Unfortunately, recent experiences do not give me any confidence that HMRC can be trusted to administer such provisions.

Its not just HMR & C that needs tearing down

Roland St Clere... | | Permalink

But the whole apparatus of this corrupt and rotten state.

johnjenkins's picture

@Roland

johnjenkins | | Permalink

I'm with you. There is not a politician with the guts to do anything. So I guess the lull before the storm.

With the virtual collapse of Capitalism and Communism we have a few trying to cling on to "what used to be"

Putin has seized the initiative with no one to stop him. Just as well Hitler isn't alive.  

Don't worry

The Black Knight | | Permalink

johnjenkins wrote:

Putin has seized the initiative with no one to stop him. Just as well Hitler isn't alive.  

Don't worry the end of the world has been nigh for a long long time.

The killing and greed has never stopped during all this time.

I do wonder why Obama is right and Putin is wrong though.

Problem is Psychopaths thrive on a fast changing environment that's in chaos and that is what they have created. What a surprise.

Revelations! LOL

The Black Knight | | Permalink

Hugh Date wrote:

Roland, I'm partially, also, an Armageddon man..

..but the snag is that after Armageddon has descended, there is absolutely nothing left....

The Angels have been wiped out along with the Devils.....

So I make it my business to encourage the Angels, and I make it my business to relentlessly harass, pursue and get the Devils.

The latter half is more constructively destructive, and it is also great fun, if you have a dark side, as do I. But you find your self pursuing all sorts of targets that you didn't originally expect to find...

 

LOL That's the book of revelations!! with angels and devils! In the Viking version Fenrir the wolf eats Odin and Thor and his mates, a much better story in my opinion.

Armageddon is a very good book by Leon Uris :

about the rebuilding of Germany and what happened in Berlin after the war it also looks at why the German People followed a bunch of Psychopaths.

 

johnjenkins's picture

Unfortunately

johnjenkins | | Permalink

the only thing that has changed in the last 2000 years is technology and our adaption to it. Our mindsets are still the same. Then that is the way of nature. Nature doesn't have a conscience just change - no rights or wrongs. As we are from nature then can we really expect anything else.

johnjenkins's picture

The only way to

johnjenkins | | Permalink

catch, eliminate a true psychopath is to be one yourself. They have an objective and you cannot reason with them, basically nature in human form.

There maybe some people who use certain issues to create the same effect but they will always have a "back door".

How many German "psychopaths" escaped?

may be

The Black Knight | | Permalink

johnjenkins wrote:

catch, eliminate a true psychopath is to be one yourself. They have an objective and you cannot reason with them, basically nature in human form.

There maybe some people who use certain issues to create the same effect but they will always have a "back door".

How many German "psychopaths" escaped?

May be, but all combat is about breaking links.

and they still do pain if you break their arm but they won't understand your enjoyment.

Don't Box a boxer or grapple a grappler.

What they don't like is exposure of the truth. A cold hearted fact rather than an emotional outburst has a defence and an attack in one move.

Because

The Black Knight | | Permalink

Montrose wrote:

 Yes HMRC do have a problem, but just a few practical questions

1] Joint Bank accounts- say husband and wife?

2] What powers will HMRC require to locate bank accounts?

3] What is to stop recalcitrant non payers, knowing HMRC were likely to DD their accouints, closing them and opening another?

A comment on Black Knight's anti-Europe rant- what has UK's membership of the EU got to do with this? Indeed one strong argument against these proposals is the Human Rights aspect of the independence of the judiciary from the executive powers. Historically for example that prevented HMRC retrospectiuvely imposing penalties on undeclared income or gains of deceased taxpayers.

Because our laws are now made in europe and then copper plated by the english parish council (parliament as was)

England would still be England if it wasn't for this nonsense that spews forth.

I expect returning to the topic that HMRC will demand that the account holder Bank , solicitor, accountant disclose what they hold and deduct this from said account. A blanket demand much like an audit request. Usually an authority is required from the client for the transfer of money and they are presumably going to by pass this protection.

HMRC have plenty of legitimate means of recovery at their disposal but fail to use the basics. They are simply a disgrace to this nation.

Basically if you want to run a business you will need to keep a cash reserve under the bed.

What an ideal get out for a long firm fraudster too "whoops HMRC stopped us trading! not our fault gov!"

Europe

The Black Knight | | Permalink

In his Budget speech in March, the Chancellor promised, “We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries.”

 

I assume he was referring to Europe rather than south america.

Pathetic

The Black Knight | | Permalink

But then Tory MP Jesse Norman turned his attention to the tax experts’ concerns about HMRC  powers to remove cash from people’s accounts. “Could one of you explain why it is such an animating point for you?” he asked.

 

This is the scary bit? Should one need to explain even.

New world order? the final solution? not irritating to him I'm sure! he has already had his 20 pieces of silver?

How about representing the British people particularly those that pay your wages i.e. small business.

US powers    1 thanks

Montrose | | Permalink

Forget Europe. To see where this is leading look at the US !

Notice of Federal Tax Lien

"If the IRS sends you a valid tax bill and you don’t pay it, you may receive a written demand to pay. This paper is called a CP-501 notice, referring to the IRS number on the right-hand corner. If you don’t pay within 30 days, the IRS has to the right to file a notice in the public records showing your tax debt. This paper is officially called a Notice of Federal Tax Lien."  

Recorded tax liens are just notices to the world that an individual or business owes the IRS. No money or property is taken by the filing of a notice of lien. Instead, the IRS collects by seizing your real or personal property through the levy process. Typically, levies are made on money or other financial accounts held for you by others—such as a bank, stockbroker, or employer. Although the IRS usually records a tax lien before levying on property, it does not have to. The IRS makes about four million levies per year. 

 

As one US tax lawyer explains:

-A recorded tax lien damages your borrowing ability by scaring off potential creditors or lenders, making it difficult for you to finance any purchases or get a home loan. Tax lien notices are picked up by credit reporting agencies, such as Experian, Equifax, and TransUnion. 

 

johnjenkins's picture

We might as well    1 thanks

johnjenkins | | Permalink

earn no money at all and let the government of the day decide how much pocket money we can all have according to our work. No taxes, no allowances, no benefits, no investigations etc etc oooooooh yes no IR35.