December CPD Newsbrief — Personal tax
Treasury concession on HMRC bank account raids
In a significant watering down of the new rules, the Treasury has said that anyonesubject to new HMRC powers to directly recover tax debts from bank accounts willhave the right to a face-to-face meeting with officials and an appeals process beforeaction is taken.
The powers, unveiled in this year’s Budget, will allow HMRC to directly dip into bank accounts,building society accounts or ISAs to recover tax owed if it is more than £1,000.
HMRC estimates direct debt recovery will apply to around 17,000 cases a year, with theaverage debt of those affected being £5,800. Around half of these cases will involve debtorswith more than £20,000 in their bank and building society accounts.
The Treasury select committee, banks and platforms had criticised whether there were enoughprotections in place to stop HMRC abusing the new powers.
In response, the Treasury has watered down the reforms so anyone who has action takenagainst them will receive a face-to-face meeting with the Revenue first. The Treasury says thisgives everyone a chance to “challenge and settle” their bill, whether through a settlement planor paying in full. It says the visit will also allow HMRC to identify vulnerable members of societyto provide them with appropriate support.
HMRC will also put a hold on debtors’ accounts and give them 30 days − more than twiceas long as previously planned − to contact the taxman and arrange payment of the debt orobject to the use of direct action before any money is taken.
In addition, there will be a new, specialist unit to deal with cases involving vulnerable membersof society, as well as providing a dedicated team and helpline. Judicial oversight of the processis enshrined in legislation, by allowing for appeal to the County Court.
There are other safeguards too around transparency, governance and a phased implementationof the new powers.
The chairman of the Treasury Select Committee Andrew Tyrie said his committeewould continue to scrutinise the proposals to ensure safeguards for taxpayers.
Scotland’s new land tax
The Scottish Finance Secretary has published the final details of the Land andBuildings Transaction Tax (LBTT), which will replace Stamp Duty Land Tax (SDLT)in Scotland from 1 April 2015.
SDLT has been described as “a strong contender for the UK’s worst-designed tax” becauseof its slab structure with substantial tax jumps at the various thresholds. LBTT replaces thisconstruction with a series of bands (i.e. the income tax approach).
However, to produce the same revenue, this means that the marginal rate of LBTT is0% on the first £135,000, 2% on the value between £135,001 and £250,000, 10% on£250,001−£1,000,000 and a punitive 12% thereafter.
For those calling for SDLT reform, this may be food for thought.
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