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HMRC powers revised

24 / 11 / 2014
HMRC powers revisedPowers given to HM Revenue and Customs (HMRC) to allow them to access bank accounts to claim tax debts have been revised by the Treasury.

It had been suggested that HMRC would be able to seize funds directly, but following widespread criticism, the Treasury has stepped in.

The changes mean that taxpayers will have longer to appeal any decisions and HMRC will not be allowed to completely empty bank accounts.

Instead, debtors will be invited to face-to-face interviews before any money is seized and when bank accounts are accessed, the HMRC must leave at least £5,000 – even if the outstanding debts are higher.

The plans were originally announced by George Osbourne at the last Budget but many banks, MPs and charities raised concerns it could have significant and unfair repercussions.

It was stressed by the Treasury that these powers would only be used against debtors who failed to contact HMRC or make valid attempts to meet their tax obligations.

"The Direct Recovery of Debts (DRD), announced by the chancellor in the 2014 Budget, is an important tool in helping to level the playing field between those who pay what they owe, when they owe it, and those who do not," said the financial secretary to the Treasury, David Gauke.

"Only debtors who have received this face-to-face visit and are not identified as vulnerable, have sufficient money in the bank and have still refused to settle their debts, or enter an appropriate Time to Pay arrangement, will be considered for debt recovery through DRD," he added.

It is estimated around 17,000 people currently own an average of £5,800 and fall into this category, with estimates suggesting the new powers could return around £375 million in tax over the next four years.

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