Treasury revises plans to give HMRC new tax powers
21/11/2014
Plans to give HM Revenue and Customs (HMRC) the power to raid people’s bank accounts for unpaid taxes have been revised, according to the Treasury.
George Osborne originally announced in his 2014 Budget speech, that HMRC would be given the ability to raid the bank accounts of those who owe more than £1,000 in unpaid taxes.
However, following intense criticism from Banks, MPs and debt charities, the plans have been revised so that taxpayers will have 30 days to appeal a decision.
Additionally, HMRC will also be forced to hold a face-to-face meeting with a debtor, before they are granted access to their bank account.
Furthermore, the original rules will still apply, where a bank account cannot be emptied by the taxman, and a minimum of £5,000 must be left untouched.
This means that if a person owes £1,000 in tax, but they only have £5,500 in their bank account, then HMRC can only recover £500.
Chas Roy-Chowdhury, head of taxation at the association of Chartered Certified Accountants (ACCA), stated that he would prefer it if the plans were not implemented at all. However, he did concede that the decision to revise the plans meant that it was “a good day for taxpayer confidentiality”.
He also praised the decision to identify vulnerable taxpayers, and give them special dispensation from the new powers.
Consistent offenders
Speaking about the new tax powers, the Treasury defended the plans as 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."
David Gauke, Financial Secretary to the Treasury said: "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 (Direct Recovery of Debts)".
The Treasury have estimated that unpaid taxes could be recovered from over 17,000 people, each owing an average of £5,800.
However, Mr Roy-Chowdhury from ACCA believes that the powers will be enforced on less than 1,000 people in the first 12 months.
Need financial advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
When will the UK government chance increasing taxes?
As UK national debt continues to creep higher and is expected to reach £1 trillion over the next two years there is an acknowledgement that UK taxes will need to rise substantially in years to come. While we have seen the introduction of a number of indirect taxes it will be changes to income tax and VAT which will dictate the way ahead and the timing of tax increases in the UK. So when will Gord...
Read MoreGovernment announce new emissions targets - with conditions!
News that the UK government had announced a new emissions target which would see the country reduce all emissions by 80% prior to 2050 received a standing ovation from the green sector, until they saw the small print!
In Ed Miliband's first speech to parliament in his new role as Secretary of State for Energy and Climate Change it was hoped that this would mark the start of a new ph...
UK government cracks down on business tax credits
The UK government has been accused of being overzealous in its pursuit of companies claiming research and development tax credits. HM Revenue and Customs (HMRC) has admitted that officers have been assigned to review thousands of cases of research and development tax credits being claimed by small, medium and large companies in the UK.
Despite the fact that the reduction of any clai...
Probate fee proposals could mean millions pay more
22/02/2016 Millions of people will be required to pay an increased fee when they die, if new proposals from the Ministry of Justice go ahead. The Ministry of Justice want to raise an extra £250m for the courts service and they have proposed that people should pay up to £20,000 in probate fees when they die, depending on the size of their estate. Probate is a legal process that is carrie...
Read MoreMassive jump in gilt futures reflects changing government policy
The announcement earlier this week that the Bank of England has up to £150 billion available to acquire government bonds and financial assets in the open market has created quite a stir in the gilt futures market. Since the announcement was made we have seen a substantial rise in investor interest in the sector and prices have risen substantially. But why are investors so keen on gilts?