Member Article

HMRC could raid personal bank accounts, warns Mitchells

Mitchells Chartered Accountants and Business Advisers is warning that thousands of people will soon have their personal bank and building society accounts, and even their Individual Savings Accounts (ISAs), attacked by HM Revenue and Customs (HMRC) chasing unpaid tax bills following a proposed law change which is about to go through Parliament.

The ‘Direct recovery of HM Revenue and Customs debts from debtors’ bank and building society accounts’ Bill will be published on Wednesday 15th July.

The proposed measure, announced in the 2014 Budget, will give HMRC the power to recover debt directly from cash held in the bank and building society accounts, in credit, of debtors who have the means to pay but choose not to do so.

Currently, HMRC does not have the power to hold and then remove debts directly from the bank accounts of debtors, without first applying to the courts for a Third Party Debt order in England and Wales, or seeking a garnishee order from the Enforcement of Judgements Office in Northern Ireland.

Concerned about the implication of the proposals, Andrew McDaid, Partner at Chesterfield-based Mitchells said: “The proposed new powers permit HMRC to take the money on its own say-so. Essentially it allows HMRC to play both judge and jury with little or no external oversight. We will be looking closely at the draft legislation when it is published to ensure that the safeguards are clearly and fully set out.”

No further detail has been provided regarding its passage through Parliament. Speculation, however is that Royal Assent will be either the week commencing the 12 October or 19 October after which the proposals will come into force.

HMRC has stated that it would only ‘take action against debtors who owe over £1,000 of tax or tax credits debt,’ which they forecast will affect 11,000 individuals and businesses a year.

The law change will cost HMRC £800,000 to implement over five years but over the same term it is forecasted to raise a total of £420million.

The Treasury has agreed to implement safeguards which will give people the right to appeal in the county courts and ‘a face to face visit to every debtor before they are considered for debt recovery through this measure.’ It also said that it would ‘always leave a minimum aggregate of £5,000 across debtors accounts.’

More information about the proposed changes to The Tax Information and Impact Note (TIIN), which takes effect from Royal Assent of the Summer Finance Bill 2015, can be found here.

Ends.

This was posted in Bdaily's Members' News section by Anna Melton .