HMRC’s consultation document on recovering tax arrears from individuals’ bank accounts, titled ‘Direct Recovery of Debts’ (DRD), came to a close last month. Not surprisingly, it sparked a lot of debate and much protest.
The Revenue want to be given the power to allow them to help themselves to taxpayers bank accounts where people who owe them money but either ignore or fail to respond to repeated requests by the Revenue. These new powers would be used in cases where a person owes £1,000 or more and has been contacted by HMRC nine times but fails to respond.
Professional institutes and societies have responded negatively to these proposals with many condemning them as unconstitutional. Up until now UK citizens could rest easy in the knowledge that the state would not seize their property, in relation to taxation matters, without going down the proper judicial channels.
The Institute of Chartered Accountants in England and Wales (ICAEW) have criticised the proposals saying, “HMRC should not have the power to collect debts from bank accounts without independent judicial oversight: this contravenes the constitutional principle of separation of powers.”
The Law Society have also pointed out that HMRC could be in violation of Article 8 (right to privacy) of the European Convention on Human Rights, should the department seek details of all a taxpayer’s financial transactions. Furthermore, such a request is also likely to be considered unlawful under the Data Protection Act for breach of confidence.
On 8th July, HMRC were called to give evidence to the House of Commons Treasury Select Committee in respect of their 2014 – 2016 business plan, and DRD was a hot topic. It was pointed out that the idea of raiding peoples’ bank accounts to settle tax debts had been raised in 2007 but was rejected by the government at the time.
During that session, the HMRC witnesses were quizzed by George Mudie (Labour MP) about the number of cases the department had taken to court over debts in the past year and that if they could give no indication that they had used this option, then how could the Revenue expect the committee to support them in their proposals. HMRC responded by saying that court action is not widely resorted to as it is not cost effective and is an inappropriate use of taxpayers money, leading Mr Mudie to conclude that to give DRD the green light would be dangerous.
On 1st July, Early Day Motion (EDM) 200 was tabled in the House of Commons, supported by 37 MP’s, mainly from Labour and the Liberal Democrat parties. The Tories are conspicuous by their absence! The EDM, in full, states, “That this House notes with grave concern the proposal in the 2014 Budget to grant powers to HMRC to gain direct access to citizens’ bank accounts without judicial oversight; further notes the evidence given to the Treasury Committee and the Committee’s recommendations in its Thirteenth Report, Budget 2014; is concerned by the continuing failure of HMRC to manage and store data in a manner commensurate with such powers; believes that the granting of such powers would constitute an unprecedented reduction in the rights of citizens and their right to fair protection from the state by reintroducing Crown Preference without due process; and therefore calls on the Government to abandon these plans.”
Although this has little chance of being debated, objections in the form of petitions can send out a message to the government that they face sizeable opposition, especially where some of those signatories are those of MP’s from the coalition parties. Writing to your MP to encourage them to join in the wide condemnation of these proposals and sign the EDM is therefore well worth doing.
In 2006, ‘Taxation’ magazine raised a petition, containing 5,500 signatures, objecting to the tax return deadline being moved to 30th November. This, along with more than 70 MP’s signing an EDM, helped prevent that from happening.
There is currently an e-petition that can be signed by those who feel strongly enough to object to HMRC’s proposals, which can be found here. I, for one, will be adding my name to this.