Direct recovery of debts: why the proposals are risky for taxpayers

The government is consulting on plans to give HMRC sweeping powers to recover debts directly from individuals' and businesses' bank accounts, but are the moves too draconian? Meg Wilson, tax expert at CCH, analyses the proposals and outlines potential pitfalls to a policy shift which has been met with strident opposition from MPs to professional institutes

In his 2014 Budget speech, dealing with tax avoidance, the chancellor George Osborne announced that the government would ‘give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries’.

The details of this proposal are addressed in HMRC’s Direct Recovery of Debts consultation document published on 6 May 2014. However, the Treasury Select Committee has said that the proposal causes it ‘considerable concern’, so will HMRC really be given direct access to millions of taxpayers’ bank accounts?

HMRC already has power to collect unpaid tax so this move raises a number of questions. Is the proposed strengthening of powers necessary, what do the proposal entail, what safeguards are proposed and, above all, why should we be concerned?

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