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HMRC allowed access to debtors’ bank accounts


Under new rules written into the summer Budget but not announced by George Osborne in his speech, HMRC are allowed to recover tax and tax credit debts directly from debtors' bank and building society accounts, including funds held in cash ISAs.

Direct Recovery of Debts will means HMRC will be able to recover money directly from peoples bank accounts without their permission if they owe £1,000 or over. They also have the power to freeze all but £5,000 of a persons assets.

A “hold notice” will be issued to an individual who owes more than £1,000 in tax, but if they do not react in time, HMRC will serve a deduction notice and will force the bank to transfer the requested funds.

The Budget document said:
"Having widely consulted, this measure will be subject to robust safeguards including a county court appeal process and a face-to-face visit to every debtor before they are considered for debt recovery through this measure."

The Taxpayers Alliance has (TPA) has hit back at this rule change, claiming they “fly in the face of Magna Carta”.

In a report commissioned by the TPA, barrister Francis Hoar said:
“The greatest legacy of the Magna Carta is the principle that the executive is subject to the law as much as the people, and yet the direct recovery legislation places the Crown in a superior position to individuals and businesses.

“Most dangerously of all, it treats individual property as the property of the state once the state has determined it so.”

A spokesperson for HMRC said:
“The direct recovery of debt provisions tackle only a small number of people who simply refuse to pay the tax due even though they are well able to. It is not about forcing money out of those who have cashflow problems.”

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