8th July 2015
It has been formally announced that HMRC will be given the powers to directly collect tax debts from an individual’s bank and building society accounts. The move will also allow half of the money contained in a joint account to be removed.
Richard Morley, partner, Tax Dispute Resolution, BDO, says: “Although not mentioned at all in the Chancellor’s speech, today The absence of any mention suggests the Government was trying to sneak in this very unpopular policy, through the back door. It was originally announced in the 2014 Budget and will be applicable for tax debts over £1,000; this threshold suggests HMRC will be catching more than “big time” tax avoiders in its net.
“As part of a number of safeguards to be put in place taxpayers will be given the right to appeal through the courts before outstanding debts are removed from their accounts. Yet, despite this, as it pursues this policy, HMRC is going to need to reassure people that innocent taxpayers will not be caught out.
“If an individual has a joint bank account which holds £10k, and is shared 50:50 with a partner, HMRC is able to take up to £5k. However, a lot of questions still remain around whether the hardened debtor, who is likely to keep funds offshore, will be caught. HMRC can only seize money from UK bank accounts making it harder from them to get hold of funds outside the UK banking system. The devil is in the detail and it remains to be seen how this announcement will play out in practice.”