HMRC Rethink on Debt Recovery

Tax debt recovery powers diluted

Following huge opposition to its plans to be able to storm taxpayers’ bank accounts to collect outstanding debts, HMRC has now bowed to pressure and tempered its proposals.

Direct Recovery of Debts (DRD) will give HMRC the ability to recover cash directly from the bank accounts, building society accounts and ISA accounts of a small number of people who owe £1,000 or more. These measures are expected to bring in around £100 million a year.

HMRC estimates DRD will apply to around 17,000 cases a year, with the average debt of those affected being £5,800. Around half of these cases will involve taxpayers with more than £20,000 in their bank and building society accounts.

In the face of widespread condemnation to its proposals announced in this year’s Budget and set out in a consultation document, HMRC has responded by further strengthening the safeguards which will apply to the limited use of DRD. These include:

  • Guaranteed visits to debtors from an HMRC officer to meet them face-to-face. This will ensure that everyone subject to DRD will have had a chance to challenge and settle their affairs, whether by paying in full or setting up a payment plan, and that DRD will only apply to those who have chosen not to do so. The visit will also allow HMRC to identify vulnerable members of society to provide them with appropriate support.
  • Establishing a new specialist unit to deal with cases involving vulnerable members of society, as well as providing a dedicated DRD team and helpline.
  • Ensuring that judicial oversight of the process is enshrined in legislation, by allowing for appeal to the County Court.
  • Putting a hold on debtors’ accounts and giving them 30 days, more than twice as long as previously planned, to contact HMRC and arrange payment of the debt or object to the use of DRD, before any money is taken.
  • Further new safeguards relating to transparency, governance and a phased implementation of the DRD powers.

These measures are in addition to the existing guarantees, such as only taking action against those owing more than £1,000 and to always leave a minimum of £5,000 across the debtors’ accounts.

The legislation will not be forced through before next year’s general election but instead will be legislated after this parliament.

Financial Secretary to the Treasury, David Gauke, said, “We already set out robust safeguards to protect vulnerable debtors in our original DRD proposals, but feedback from the consultation process told us that we could do more to make sure this only catches those who are playing the system.

We’re strengthening the guarantees we can offer taxpayers that the powers will only be used when debtors have consistently refused to talk to HMRC and settle their debts, and their use will be subject to the toughest scrutiny and oversight possible.”

1 Comment

  • Peter says:

    Even with diluted powers to raid peoples’ bank accounts, this is still a terrible proposal given the toxic combination of the institutional incompetence of HMRC and the assumption in this proposal that HMRC have done their sums correctly (HMRC are notorious for massive errors in calculating what people owe), and that they will actually respond within any time period at all to someone challenging them.

    For example the proposal of
    “•Putting a hold on debtors’ accounts and giving them 30 days, more than twice as long as previously planned, to contact HMRC and arrange payment of the debt or object to the use of DRD, before any money is taken”

    At face value, this sounds reasonable, until you take into account that HMRC routinely takes 3 months to even open its mail, very regularly never responds at all to letters, and that it take HMRC 3 months to even send an internal email and get a response (I was flabbergasted that HMRC are this incompetent when they told me this when I made a routine enquiry – telling me this was supposed to “managed my expectations”

    HMRC have not demonstrated the basic institutional competence to be given any of these additional powers and the whole idea should be scrapped.

Leave a Reply

Your email address will not be published.

★ ★ ★ ★ ★

Very pleasant. Excellent price for what I needed. I will be a returning customer.

Rhino Review

Mr Paul D

Great staff. Customer focused and a team who recognise and understand their customers 100%.

Rhino Review

Vijay S

Fantastic accountants who helped me submit my last 2 years personal tax returns! I really rate this company!!!

QAccounting Review

Natalie

Fantastic service.

Rhino Review

Marco G

Been with QAccounting for several months now, very good service, very personal and the best prices I have seen.

QAccounting Review

Muhammed A

I switched over to QAccounting a few months ago and haven't looked back. I get to speak to my own client manager and accountant, the prices were the best I had seen, and I paid exactly what it said online (no extra costs). Very happy with QA.

QAccounting Review

Jeremy H