The government is determined to raid private and business bank accounts for unpaid tax debts, according to a consultation document from HM Revenue & Customs (HMRC).
A new law – direct recovery of debts – will let HMRC take money from taxpayer bank and building society accounts, and even ISAs of anyone owing £1,000 or more in tax.
The government argues this will stop deliberate non-payers who have the cash to settle their tax bills from manipulating the system by negotiating extra time to pay.
HMRC reckons the new wide-ranging power will have a limited use that only affects about 17,000 cases each year.
The average tax debt for these cases is £5,800, and half the taxpayers owing cash had more than £20,000 in bank or building society savings.
Taxpayers will have safeguards against cash grabs from HMRC.
The consultation measures include protection for taxpayers like:
- Snatching cash will only happen when a taxpayer has exhausted payment appeal procedures
- Taxpayers who have proved difficult to contact are the main targets of the proposals – HMRC says contact will have been tried between four and nine times
- Tax debts of less than £1,000 will be outside the measures
- HMRC must leave a minimum £5,000 balance in taxpayer accounts
- Taxpayers will have 14 days’ notice of enforcement action to make arrangements to pay their tax
Exchequer Secretary to the Treasury David Gauke said: “It is important people pay tax they owe on time. The majority do this, but a minority choose not to pay, despite having the money.
“Giving HMRC powers to directly recover tax debts will reduce tax debt in the most effective way so that the government can continue to fund vital public services.”
Gauke also pointed out HMRC offers many taxpayers with financial problems time to pay.
The consultation is open until July 29, 2014.
For more information, please contact Ian Abrey