HM Revenue & Customs plans to ask banks for thousands of customers’ personal bank statements under plans to seize tax directly from accounts.
The Financial Times reports the statements will be handed to HMRC so it can work out how much money it can take out of individuals’ accounts without causing “hardship”.
MPs were told on Tuesday the statements would be checked for “patterns of expenditure”, such as payments of mortgages or salaries, to assess whether an individual should be left with more than the minimum amount of £5,000.
HMRC chief executive Lin Homer defended the measures, which she said were aimed at “a small number of people wilfully not paying their taxes”, in evidence to the Treasury select committee.
But TSC chair Andrew Tyrie said overall HMRC’s planned new powers remain a “considerable concern”.
The power is currently under consultation, and in its May report on this year’s Budget the committee said the proposal is “extremely worrying and excessive” and should not go ahead without independent oversight.
After a lengthy and at times heated exchange on the issue in an evidence session yesterday in which HMRC tried to defend the proposal to recoup tax from bank accounts and Isas, Tyrie said the committee remains unconvinced.
He said: “The proposal to grant HMRC powers directly to recover money from taxpayers’ bank accounts remains of considerable concern to the Treasury committee in the light of today’s hearing.
“Prior independent oversight is essential. Mistakes could have serious financial consequences for taxpayers, and risk undermining public confidence in HMRC.”
HMRC chief executive Lin Homer said the power would only be applied to around 17,000 people who “simply refused to pay” tax they owed.
She said taxpayers would have a “right to appeal” to a Tribunal ahead of the accounts being frozen and the individual being given 14 days to explain why the debt is incorrect or why they cannot pay ahead of the power is used.
But Tyrie said if that right has not been exercised the decision to recover debts directly from bank accounts would be purely at the discretion of HMRC.
Homer said safeguards for the power were important but disagreed with the committee’s recommendation that there be prior independent oversight of the power.
She said: “I do not think there is merit because it puts us back in the position where these recalcitrant debtors know that there has to be a court order and they keep resisting.”
Liberal Democrat MP John Thurso said he expects Parliament to reject the proposal when it is put to a vote because HMRC wanted to be “judge, jury and executioner”.
Conservative MP Steve Baker said: “I am horrified this power is being taken essentially because HMRC is frustrated with a small minority of people.”