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Treasury revises plans to give HMRC new tax powers


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.

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