Top earners will be at risk of having up to £17,000, owed in arrears, plucked from their pockets due to new debt-recouping capabilities being afforded to the taxman.
Currently, Her Majestyís Revenue & Customs (HMRC) are able to extract £3,000 worth of debt direct from a nonpayerís salary. However, this weekís legislative shake-up marks a £14,000 increase in the amount that can be extricated from an individual and has prompted outrage from various corners of society condemning the disproportionate degree of power now wielded by the taxman.
HMRC has argued that the limit on the previous amount of debt they were able to directly regain - £3,000 - meant they had to use unreasonably expensive methods in order to access the higher sums they were dude. Currently, the UK deploys a pay-you-earn system, however the shift to this ëcoding outí system is expected to increase efficiency in debt recoupment significantly.
The taxman has asserted that the new policy benefits high-income individuals, as they can split their debts into repayments made according to a time schedule across the year rather than having to cough up the entire amount straight-up. Moreover, it entails a stipulation synthesising a new statutory limit inhibiting employers from detracting over 50% of an employeeís pay.
The reform is set to pump an extra £115m of taxpayer money into the treasury.
Due to the already referenced method of spreading repayments across a the year combined with it not affecting debtors who earn less than £30,000 a year, the increased limit of debt able to be detracted from an individualís salary, to £17,000, has not been subjected to much public scrutiny.
Tim Stovold, of accountancy firm Kingston Smith, warned that given existing tension over plans allowing HMRC to extract funds directly from individualís bank accounts, people were not duly aware of how ënastyí the newly enforced rulings will be.
He stressed: ìThis change has had much less focus than the harshly criticised rules for the direct recovery of debts from bank accounts. If HMRC is denied that ability they are more likely to use these new powers to collect the money from salaries instead.î
It would appear that despite HMRCís re-assurances, that their latest manoeuvre has no shortage of stealth entailed within it.
HMRC & Direct Debt Extraction from Bank Accounts
Their plans to access debtorís bank accounts directly has received no condoning from any court, and this new ability to plunder professionalsí salaries has been maligned as an obscurantist, unjust measure further kerbing the freedoms of individuals within the UK. The Coalition appears to have done itself no favours with the wider public for what has been perceived as a move rooted in oppression. This radical perspective is adopted by Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, who expressed his distaste in an entirely indiscreet manner:
ìThis is another creeping of HMRCís powers, which are skewed in favour of themselves and away from the taxpayers. HMRC is becoming a more confrontational and all-powerful organisation.î
Widely condemned by professionals across UK society, ranging from lawyers to civil rights organisations, the governmentís proposal to seize funds straight from individualsí bank account is an indubitably toxic issue. However HMRC remains resolute on the issue, underscoring the ëcoding outí system potential efficiency enhancing facets as justification for its implementation. The topic will undoubtedly be high on partiesí respective election manifestos.