Keep Your Hands Off My Stash

How can HMRC be trusted with our bank accounts

‘Direct Recovery of Debts’ is a recent consultation document that considered HMRC being able to raid individuals bank accounts to recover tax arrears with a view to enshrining that power in legislation next year. The consultation closed at the end of July but as we await its findings a further recent Revenue gaff has added further reason as to why the department should not be allowed anywhere near taxpayers’ bank accounts.

Four months ago HMRC wrote to 5 million taxpayers to inform them they had overpaid or underpaid tax by an average of £300. It has now emerged that thousands of those tax calculations maybe incorrect.

To err once is a misfortune but twice is carelessness and the department’s incompetence will now see their tax assurance commissioner, Edward Troup, being hauled in front of the Treasury Select Committee to account for their actions.

If HMRC cannot be trusted to get an individuals tax bill right first time, then surely they should not be given licence to run amok taxpayers bank accounts.

Independent financial advice group deVere told the Sunday Express that the combination of HMRC errors and proposed new powers could cause people to consider moving their financial affairs out of the UK and therefore out of reach of the Revenue.  

Direct Recovery of Debts would allow HMRC to dip into the bank accounts of those people who owe them money but either ignore or fail to respond to repeated requests by the Revenue. A number of safeguards however would be put in place to ensure that:

  • it does not target the wrong persons account;
  • a minimum of £5,000 will be left in the individuals bank accounts and that it does not cause undue hardship by removing funds from accounts that are required to meet immediate and essential day-to-day business and living expenses; and
  • any mistakes are rectified quickly and compensation is paid as appropriate.

Maybe hiding your money under the mattress might be a safer bet if HMRC get their way!

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