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HMRC debt recovery proposals under attack

Plans to hand HM Revenue & Customs powers to take tax from people’s bank accounts have been fiercely criticised by accountants, lawyers and building societies. 

Direct Recovery of Debts proposals outlined as part of the Budget would allow the Revenue to go into a person’s savings and deposits and recoup tax owed without the need to gain court approval.

In response to the consultation, the City of London Law Society says the proposals are “seriously misguided”. It fears the “real potential for mistakes to be made by HMRC and the adverse consequences that will have for taxpayers”.

The CLLS says HMRC must not be allowed to use the powers without approval from the judicial system.

The Association of Chartered Certified Accountants says each time the power is used the decision should be reviewed by at least four members of staff at HMRC.

The Building Societies Association says appeals against incorrect use of the DRD would have to go through county courts or tribunals, which it describes as “an expensive and complex route for consumers, which may not be accessible to many”.

The BSA also says the £1,000 tax-owed threshold for the powers is too low, which could “catch taxpayers who are unintentionally non-compliant”. It argues stocks and shares Isas should not be included within the scope of the rules and urges further clarification from HMRC.

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