As the deadline for feedback on new HMRC powers to raid bank accounts passes, CIOT and the ATT have stressed strong opposition to the measures, publishing their responses to HMRC’s consultation on Direct Recovery of Debts (DRD).
While they support the government’s motive of increasing tax compliance, both bodies stress that ‘some form of judicial oversight should be required before anyone, including government departments, can take money directly from a citizen or business’s bank account’.
In its response, CIOT says it does not consider that a valid case has been made to justify giving HMRC the power for DRD.
While CIOT recognises that the current court system is ‘too slow and expensive’, it says that private individuals and businesses who are owed money are equally subject to the court process.
Instead of enabling HMRC to bypass the courts and take money directly out of bank accounts, a measure which CIOT president, Anne Fairpo, describes as ‘disproportionate’, the CIOT suggests that the DRD process be subject to judicial oversight and that the government ‘reform the court process for all so that small claims can pass through it in a more efficient and less costly way, rather than providing special powers to one body to circumvent it’.
Fairpo adds that it ‘would be preferable to let tax tribunals give an “express form” of judicial oversight if County Courts cannot be improved upon’.
ATT president Natalie Miller says ‘in reality, HMRC make errors, and sometimes significant ones’.
The ATT is concerned that DRD could have an adverse impact on otherwise compliant taxpayers and cause them ‘real financial hardship’. It cites examples of sickness or moving home, which could lead to otherwise compliant taxpayers not receiving or being able to respond to HMRC correspondence.
In its response, the ATT says ‘such a fundamental departure from the normal operation of debt enforcement requires a commensurately strong raft of safeguards’. It therefore recommends ‘that DRD notices should be delivered by a recorded delivery service’ and, in the case of joint accounts, that ‘the DRD notice was actually delivered to the third-party account holder’ in order to establish HMRC’s claim to the tax.
The measures do include a minor safeguard that the tax authorities will not be able to raise bank accounts with less than £5,000 on deposit.
The original consultation document, which closed for comment on 29 July 2014, is available here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/309624/Direct_Recovery_of_Debts.pdf
CIOT’s response is available at http://www.tax.org.uk/Resources/CIOT/Documents/2014/07/140728-direct-recovery-of-debts-ciot-comments.pdf and ATT’s is available at http://www.att.org.uk/Resources/ATT/Documents/2014/07/140729%20Direct%20Recovery%20of%20Debts%20-%20ATT%20comments.pdf
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