MPs Question Proposed Government Tax Powers
12/05/2014
A group of MPs have criticised government plans to give the tax authority the power to take unpaid taxes directly from peoples bank accounts.
The Treasury Committee has expressed its concern that the past performance of the HMRC, as it has a track record of making mistakes.
They said that because of HMRC’s past failures to accurately calculate tax bills, many could find they have money incorrectly taken from their account, only for it to have to be paid back later on.
In his 2014 Budget speech, Chancellor George Osborne outlined plans to allow the UK tax authority to take money directly from the bank accounts of those who owe more than £1,000 in unpaid taxes.
‘Unacceptable’
Speaking about their concerns over HMRC’s past failures to accurately calculate tax bills, Andrew Tyrie, Treasury Committee Chairman said: "Some taxpayers may find money taken from their accounts that later should be paid back. That would be unacceptable."
He also spoke of “deep reservations” about plans to change tax policies in order to demand an upfront payment of any disputed tax associated with tax avoidance schemes.
He said "Retrospection should be considered only in wholly exceptional circumstances. The latest measure would have to be justified on those grounds."
"Retrospection puts policy on a slippery path to arbitrary taxation, discouraging investment and innovation and creating the scope for great unfairness."
‘Less fearsome than first thought’
However, accountancy body, ACCA, are less concerned than when plans were originally announced.
Originally ACCA called the plans “seriously draconian”, but after learning the specifics of how the system will work they have said the plans are “less fearsome than originally thought”.
This is because the government have announced that only those who have long-term tax debts will be targeted, and will have to have money left over in their account after the unpaid taxes are collected.
For taxes to be collected from someone’s bank account they must have received at least four demands for payment. Additionally, the tax authority will have to ensure there is a minimum of £5,000 left in total across all the debtors accounts after the tax is taken.
Because of this Chas Roy-Chowdhury, Head of Taxation at ACCA said “On paper, the safeguards look relatively robust, and the reality is it is unlikely that anyone will be left penniless."
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