Government to raid peoples bank accounts for unpaid tax
08/05/2014
New rules will allow the government to raid an estimated 17,000 bank accounts to recoup unpaid tax, according to the UK tax authority.
If approved by Parliament, the new rules will come into force as early as 2015-16, allowing the government to recover tax debts from anybody who owes more than £1,000.
New Rules
HM Revenue and Customs have now explained exactly how the system will work and the criteria that will have to be met by the government.
HMRC will be able to take money from bank accounts, building society accounts and Individual Savings Accounts (ISAs) if a person owes more than £1,000 in unpaid tax, or through overpayments in tax credits.
They also announced the following criteria that will need to be met in order to seize any money:
1. Only those with long-term debts who have received a minimum of four demands for payment can be targeted.
2. A minimum of £5,000 will have to be left across all the debtor’s accounts after the unpaid tax is seized.
3. The amount that will be seized will have to be frozen in the debtors account for 14 days before the money is taken. This is to allow the debtor enough time to make an appeal or pay their debt before their money it is seized.
The tax authority has denied suggestions that people will be left without any money as a result of the rules. This is because the average debt that is likely to be targeted is £5,800, whilst half of these debtors will have more than £20,000 in their bank account.
Less fearsome than first thought
The rules were originally called “seriously draconian” by the accountancy body ‘ACCA’. However, following the announcement of how the system will work, they have now said the rules are “less fearsome than first thought”.
Chas Roy-Chowdhury head of taxation at the ACCA said: "On paper, the safeguards look relatively robust, and the reality is it is unlikely that anyone will be left penniless.”
The rules were also praised by Treasury Minister, David Gauke, as he claimed that people should pay the tax they owe on time so that the government can fund essential services.
He said: "Providing HMRC with the powers to directly recover tax debts will reduce the debt owed to HMRC in the most effective way so that the government can continue to fund vital public services."
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