Deep within the Summer Budget 2015, straddling pages 94 and 95 of the official publication and unannounced in the Chancellor’s speech on Wednesday, tax inspectors have been given the power to raid personal bank accounts. The controversial ‘American-style’ powers are intended to allow HM Revenue and Customs (HMRC) to recover unpaid tax.
The relevant section of the Budget, which will be formally debated by MPs and peers in the Summer Finance Bill, reads:
This government will introduce legislation to modernise and strengthen HMRC’s powers to recover tax and tax credit debts directly from debtors’ bank and building society accounts, including funds held in cash ISAs. Having widely consulted, this measure will be subject to robust safeguards including a county court appeal process and a face-to-face visit to every debtor before they are considered for debt recovery through this measure.
The Telegraph reports that HMRC forecasts claim each year the rules will affect 17,000 individuals and businesses owing over £1,000 of tax or tax credits debt. The law will cost £800,000 to implement but is predicted to raise a total of £470 million between now and 2020.
“Speaking to Breitbart London, Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, reacted forcefully:”Not only do these new rules fly in the face of the property rights laid down in principle in the Magna Carta, they allow a ludicrously incompetent government agency the ability to put individuals into real trouble. Allowing a government agency to seize money directly from a taxpayers’ pocket is simply beyond the pale.
If HMRC wants to make administering the tax code easier, it should lobby politicians to simplify the tax code.”
John Allan, national chairman at the Federation of Small Businesses, responded equally strongly, tying the issued into a wider argument about intrusive ‘Big Brother’ style government. He said:
“The proposals come alongside a broad raft of new data collection measures allowing HMRC ever more power to pry directly into the affairs of citizens most of whom are trying to do the right thing. HMRC already has a clear legal route to making debtors pay, but the system requires HMRC to prove money is owed in court before being able to take it.
The proposed new powers permit HMRC to take the money on its own say-so. Essentially it allows HMRC to play both judge and jury with little or no external oversight.
In our view this undermines due process without independent, judicial oversight and is a step too far.”
HMRC freely admits that it regularly miscalculates tax owed to it so an appeal process involving the courts is part of the plan, but it is probable that many faced with a demand from the taxman will simply allow the money to be confiscated rather than risk losing further money protecting it.
The Tax Faculty of the Institute of Chartered Accountants in England & Wales wrote about the idea previously, saying: “we think this measure is wrong in principle and infringes fundamental civil liberties that no-one should access someone else’s bank account without their permission or under the supervision of a judge. We believe that principle should remain.”