HMRC Direct Recovery Powers – sign the petition

You may have heard that there are proposals out from Government / HMRC to grant HMRC a so-called “direct recovery” power.

In essence this would allow HMRC to debit a tax payers bank account for any unpaid tax arrears, without oversight or prior notice. There would be a stipulation that the bank balance must remain at a minimum £5,000 after the debit so as not to dip into people’s business working capital or immediate household funds, but that’s more or less the only safeguard.

These proposals cover business and personal tax debts.

Many people are very worried about these proposals. HMRC already have powers to achieve the same end via the Courts, Direct Recovery cuts out that element of oversight and due process. It could be argued its “efficiency” for HMRC, or from an opposite perspective laziness.

The accounting profession has major concerns over HMRCs administrative capability – simply there are too many erroneous assessments, mistakes and misallocations – and the bottom line is many feel this is a step to far with HMRCs powers.

There is a longer article about some of the problems on the Taxation web site (you should be able to read this without a login) and a petition on the Government e-petitions web site.

Can I urge people to consider their response to this issue and

  1. Sign the petition
  2. Highlight the issue to colleagues, family and friends (feel free to share this post)
  3. Consider a letter of objection to your MP

This post first appeared at Whitefield Tax on August 21st.

2 Comments

  1. john77 says:

    “In essence this would allow HMRC to debit a tax payers bank account for any unpaid tax arrears, without oversight or prior notice.”
    Not quite true – the tax non-payer will have been typically contacted Nine times, and a *minimum* of Four times, which *does* amount to prior notice – more times in cases where the non-payer has “previously been compliant”
    “HMRC already have powers to achieve the same end via the Courts,” Again: not quite – the courts will grant permission for HMRC to enter premises and seize goods but the HMRC document points out that the non-payer might not actually own the goods. Presumably there have been red faces while innocents have suffered seizure of *their* goods and the unscathed non-payer has laughed.
    Of course I am worried about HMRC’s incompetence which suggests to me that there is a risk that they will take money from the wrong person’s bank account – I should worry if my last name was Smith. However I do not regard the proposal to create this new power, whose use is heavily circumscribed, to be a step too far.

  2. john77 says:

    Sorry, I have spotted another risk in the new procedure: if a self-employed taxpayer drops dead and fails to notify HMRC that he has done so (?through a ouija board) then HMRC will make many attempts to contact him followed by applying the new procedure. The bank *should* block this if it has followed standard procedures and frozen the account.