New safeguards for debt recovery
HMRC has agreed to introduce significant safeguards to its plans for the introduction of Direct Recovery of Debts (DRD) that was announced as part of the Budget measures earlier this year. The new DRD powers will allow HMRC to recover Income Tax debts directly from taxpayer’s bank and buildingsociety accounts.
The new powers will allow HMRC to target non-compliant taxpayers that owe more than £1,000 and who have sufficient funds in their accounts to pay. The proposals included measures to leave a minimum of £5,000 so as not to create unnecessary financial trouble for those affected.
A consultation was launched earlier this year that included a significant number of guarantees to provide certainty to taxpayers, such as only applying the powers to established debts and only targeting debtors who have repeatedly ignored attempts to make contact.
However, following feedback from professional and representative bodies, HMRC announced on 21 November 2014 further safeguards which will apply to the use of DRD.
- Guaranteed visits to debtors from an HMRC officer to meet them face-to-face.
- Establishing a new, specialist unit to deal with cases involving vulnerable members of society, as well as providing a dedicated DRD team and helpline.
- Ensuring that judicial oversight of the process is enshrined in legislation, by allowing for appeal to the County Court.
- Putting a hold on debtors’ accounts and giving them 30 days – more than twice as long as previously planned – to contact HMRC and arrange payment of the debt or object to the use of DRD, before any money is taken.
- Further new safeguards relating to transparency, governance and a phased implementation of the DRD powers.
Draft legislation will be published for consultation in due course and the legislation is expected to be included as part of the 2015 Finance Bill, during the next Parliament.