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 measure. Echoing 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.”
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...