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Banks warn Osborne on HMRC tax grab powers

Banks have warned Chancellor George Osborne that HM Revenue & Customs is not competent enough to be trusted with the power to seize unpaid tax directly from people’s bank accounts.

British Bankers’ Association chief executive Anthony Browne has written to the Chancellor saying the plans are not proportionate and risk falling foul of human rights laws.

In the letter, Browne says: “HMRC’s performance cannot yet be considered sufficiently competent to wield an unchecked power this strong, at least not without significant reputational damage and potential litigation. HMRC would effectively be a judge in its own cause.”

The Government set out plans in the Budget for HMRC to have the power to recover unpaid tax directly from debtors’ bank accounts where they owe more than £1,000 and have previously been contacted about paying the tax. 

In using this power, HMRC would ensure debtors were left with at least £5,000 in their account.

The BBA says the threshold of £1,000 is too low and could put many vulnerable taxpayers at risk.

The organisation is also calling for greater independent oversight of the power, claiming HMRC’s systems and processes for avoiding mistakes are insufficiently robust.

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