Direct recovery of debts by HMRC
In the Budget earlier this year the Chancellor announced that the Government was looking at introducing a new power called Direct Recovery of Debts that would allow HMRC to recover Income Tax debts directly from taxpayer’s bank and building society accounts. A consultation was launched in May of this year and HMRC is currently analysing the feedback that was received.
It is expected that draft legislation will be published for consultation in the Autumn Statement 2014 and the legislation is expected to be included as part of the 2015 Finance Bill. The proposals include the targeting of non-compliant taxpayers that owe more than £1,000 and who have sufficient funds in their accounts to pay. The proposals also include measures to leave a minimum of £5,000 in taxpayers’ accounts to minimise unnecessary financial trouble for those affected.
It has also been revealed that these plans include targeting some 3,000 bank accounts a year for overpaid tax credits. These figures were revealed by HMRC in response to a Freedom of Information request by the campaign group False Economy. This measure would allow HMRC to take money from some of the country’s lowest paid families’ bank accounts even if the error had been made by HMRC in the first place.
Whilst HMRC seeks to assure taxpayers that there are controls in place to stop mistakes, this would obviously be a very draconian measure.