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”.