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MPs sound alarm over HMRC tax recovery powers

The Treasury select committee has warned the Government that allowing HM Revenue & Customs to recover debts from people’s bank accounts would be “wholly unacceptable” without prior independent oversight.

Last week, HMRC published its consultation on the direct recovery of debts power set out in the Budget. It proposes allowing the Revenue to recover debts of over £1,000 directly from bank accounts, including Isas, as long as at least £5,000 is left in the account.

In its report on the Budget, published this morning, the committee says the proposal is of “considerable concern”and that it intends to investigate it further.

It says: “The Chancellor argues this measure can be justified because the Department for Work and Pensions already has the right to take money directly from people’s bank accounts to pay child maintenance. However, the parallel is not exact: in those cases, DWP is acting as an intermediary between two individuals.

“HMRC would be acting not as an intermediary between two individuals but rather in pursuit of its own objective of bringing in revenue for the Exchequer.”

MPs also say the increased flexibility to savings brought about by changes announced in the Budget to pensions and Isas will mean the two will become “increasingly interchangable”, and so the Government should set out details on how it intends to tax savings in the future.

TSC chair Andrew Tyrie says: “There may be scope in the long term for bringing the tax treatment of savings and pensions together to create a ‘single savings’ vehicle that can be used—with additions and withdrawals—throughout working life and retirement. This would be a great prize.

“For too long, double taxation has discouraged some forms of saving.” 

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Employed people have tax taken ( via the employer) every month. So what is the big deal about taking the money from 17,000 who have already been billed and refused to pay ?

  2. Anthony Badaloo 13th July 2014 at 11:36 pm

    It is important to have simple and cost effective ways to collect taxes. However, with an alleged 40 % error rate, this may not be the right thing for society and long term trust.
    With HMRC also planning to not inform taxpayers of overpayments, people could well develop strong feelings of resentment towards the HMRC. particularly when companies line Barclays, Google, and Amazon. appear to be getting a nearly tax free ride through UK PLC.

    Anthony Badaloo dipPFS ACPA. is Principal at Church Hill Finance http://www.church-hill.net

  3. Anthony Badaloo 13th July 2014 at 11:40 pm

    It is important to have simple
    and cost effective ways to collect taxes. However, with an alleged 40 % error rate, this may not be the right thing for society and long term trust.
    With HMRC also planning to not inform taxpayers of overpayments, people could well develop strong feelings of resentment towards the HMRC. particularly when companies line Barclays, Google, and Amazon. appear to be getting a nearly tax free ride through UK PLC.

    Anthony Badaloo dipPFS ACPA. is Principal at Church Hill Finance http://www.church-hill.net

  4. Anthony Badaloo 14th July 2014 at 1:06 pm

    It is important to have simple
    and cost effective ways to collect taxes. However, with an alleged 40 % error rate, this may not be the right thing for society and long term trust.
    With HMRC also planning to not inform taxpayers of overpayments, people could well develop strong feelings of resentment towards the HMRC. particularly when companies line Barclays, Google, and Amazon. appear to be getting a nearly tax free ride through UK PLC.

    Anthony Badaloo dipPFS ACPA. is Principal at Church Hill Finance http://www.church-hill.net

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