Extended HMRC powers are ëseriously draconianí, says ACCA
New powers that have been provisionally allocated to the HM Revenue and Customs that enables them to access personal bank accounts and forcefully recuperate outstanding tax balances are ëseriously draconianí, a prominent accountancy organisation has argued.
ACCA have criticised Chancellor George Osborneís new plan to enable tax collectors to forcefully take assets and money from any persons account if they have over £1,000 of tax or tax credits outstanding, arguing that it is fundamentally wrong as the HMRC have a history of making administrative errors and false claims.
However, an HMRC spokesperson has defended the provisional extension of powers, identifying that if they are enacted that safeguards would be implemented as well in order to give tax payers protection as well.
The new powers were formally identified in Wednesdayís budget by Chancellor of the Exchequer George Osborne, and are now set for implementation providing that the government can finalise terms of the arrangement with the banking sector and HMRC.
The new powers will grant the HMRC the ability to take control of personal bank accounts without consent, though this can only be undertaken if the dissenting taxpayer consistently avoids contact with them in order to avoid making their payment.
The HMRC will not be able to take all of the continents out the tax evaderís account, but can take as much as they have to otherwise providing that £5,000 is left afterward.
They have argued that the move will bolster tax revenue for the Treasury- a significant measure in order to bring down the countryís public deficit- and bring the UK ëin lineí with many other prominent western countries that have granted their tax authorities the ability to access tax evaders accounts.
"This brings the UK in line with many other tax authorities which already have the power to recover debts directly from an individual's account, such as France and the US," the Budget documents identified.
However, Chas Roy-Chowdhury, head of taxation at ACCA, argued that the US and French tax models do not function well enough to warrant being copied by the UK, and warned that granting powers to tax authorities to forcefully take assets could have series repercussions that should be considered.
The prime side effect cited was if the HMRC seized money from a businessís bank account, which would then inhibit them from paying their employees on time and possibly even trading for a while.
However, the HMRC have highlighted that they will implement a number of safeguards if the powers are granted to them which will make sure that people who have paid their tax will not be penalised, though their spokesperson did not confirm any information on the nature of these protective measures.
"Most people pay their taxes on time, but a minority do not and some refuse to engage with us at all. It is wrong that this should hand an advantage to those who simply dodge their obligations, and is unfair on the vast majority who pay their taxes in full and on time," he said
"We will shortly be consulting on a new measure with appropriate safeguards to help level the playing field, and tackle those who have the means to pay but are choosing not to. These are people who have, on average, over £20,000 in their accounts but are refusing to pay their debts.
"This will only affect a tiny number of debtors whom we have contacted a minimum of four times to ask for payment."
He also pointed out that if anyone was unfairly penalised, then they would always be able to appeal the decision, and this would more often than not result in their case being dropped.
ACCA are not the only group to have criticised the provisional plan to extend the HMRCís powers, with the Low Incomes Tax Reform Group brandishing the move as ëdraconianí, and essentially a mechanism in which they propel themselves above creditors when it comes to outstanding debt collection.
"To let HMRC raid their bank accounts without safeguards or recourse to the courts - or with inadequate safeguards - would be to flout the rule of law in a manner unworthy of a public service body. It is not the same as seizing physical goods, it is depriving the debtor of the very means to live," said the group's chairman, Anthony Thomas.
"Given the way HMRC continually fail to deal with taxpayers properly or fairly this provision is hugely worrying. To introduce such draconian measures without proper safeguards could well lead to an abuse of power.
"Besides, it would allow HMRC to steal a march on other creditors in the event of a bankruptcy, something which was abandoned long ago with the abolition of Crown preference in bankruptcy proceedings."