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HMRC wants beefed-up tax avoidance powers to take money from Isas

HM Revenue & Customs has moved to extend the power it was given in the Budget to take debts directly from bank accounts to include the ability to take money from Isas.

The Government set out plans in the Budget for HMRC to have the power to recover 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 will ensure debtors are left with at least £5,000 in their account.

In a consultation paper on the “direct recovery of debts” published this afternoon, HMRC says the power should be extended to Isas.

It says: “[The DRD] is an administrative measure which will allow HMRC to recover tax and tax credit debts directly from debtors’ bank and building society accounts, including Isas without the need to apply to a court.

It adds this is a “quicker, lower cost and less invasive” approach.

HMRC estimates the power will be used against 17,000 taxpayers a year.  It says this equates to 0.2 per cent of taxpayers and that half of these have over £20,000 in bank and building society accounts and Isas, despite owing HMRC money.

The consultation says the new power will be used for debts accrued through unpaid tax, overpaid tax credits, unpaid National Insurance contributions and unpaid fines.

HMRC says it will review each case before it moves to recover the debt directly from the debtor’s bank account or Isa in conjunction with the relevant bank or provider. It would then obtain information on the accounts going back 12 months to ensure it does not cause ”inadvertant hardships”.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Bloody hell.

    Avoidance is still legal and now we have confiscation for what is technically a legal act. It would seem this Government is determined not to win the next election.

    Is this Facist or Communist – I don’t know any more.

  2. Sorry Harry – could you clarify ? what is legal about owing tax and not paying it ? If they have asked nicely and not been paid then I’m happy for the Revenue to take what is owed.

  3. It's a Spade! 6th May 2014 at 7:56 pm

    Of course HMRC never makes mistakes.

    Will individuals have the same power to money out of their “bank account” when they’ve cocked up?

    You only have to read the money pages in the papers every weekend and without fail there is usually a story about incorrect tax demands. How quick do you think they will be at paying it back?

    They already have the law on their side to use where necessary. This makes them judge, jury and executioner. Shoot first and we’ll think about asking questions later.

    Harry is correct avoidance is legal, it’s evasion that’s illegal!

  4. Bethell Codrington 7th May 2014 at 9:25 am

    If HMRC are wrong, how does one gets ones money back. HMRC are very keen on charging interest and taking your money, but never pay interest, and good luck trying to get a mistake paid back.
    Will the tax payer have to go to Court to get an adjudication? In fact in a dispute, who will be the arbitrator if not the Court
    “Quicker, lower cost and less invasive” !! To who? Certainly not the tax payer.

  5. Bones –

    Just look at the title of the article. And the comments above. Says it all I think.

    In my own experience the Revenue are more often wrong than right. Something to do with lack of decent staff I believe.

  6. John Stirling 7th May 2014 at 9:38 am

    The main worry will be where there is a dispute. It is now that case that if HMRC don’t think your planning works they can charge the tax until the issue is settled, and then give it back if it turns out you were right. Taking money from your account when the amount is under dispute is the moral challenge here.

    There are obvious cases at each end of the spectrum where we will all agree that either HMRC or the tax payer are behaving dreadfully, and remedies are either over the top or absolutely required – but it’s the many many cases in the middle where there is a dispute, and it isn’t obvious as to the right outcome that will be problematic. Given the new rules to restrict primary residence relief, selling a house to release capital could become something of a perilous financial decision.

    Having said that, my experience is that if HMRC admit they are wrong they are pretty quick to return what isn’t theirs – but only once they have admitted it isn’t theirs. I’d also like to see clearer rules preventing cross subsidy (using personal funds to pay corporate debts or similar) as that is another game they have historically played.

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