Thousands Could Have Bank Accounts Raided By The Taxman

HM Revenue & Customs (HMRC) has outlined plans for new powers to recover money from anyone who owes more than £1,000 in tax by taking it direct from their bank accounts. The plans are currently going through the consultation process and, if approved by Parliament, will take effect in 2015-16.

According to the department, only people with long-term debts of on average £5,800, who have received at least four demands for payment, will be targeted under the new regime.

However, if the taxman does collect from an account – and he can access any of a debtor’s accounts, including building society accounts and individual savings accounts (Isas) – he will ensure that at least £5,000 is left in them.

If this happens, the amount owed will be frozen in the accounts for 14 days to allow time for the debtor to pay before the money is taken. The taxman will also be able to claw back tax credit overpayments.

Interestingly, according to the department, typical debtors will have at least £20,000 in their various accounts, even though they have refused to pay their tax debts.

Despite initial fears over the draconian-sounding nature of the new powers, the Association of Chartered Certified Accountants (ACCA) has now called them “less fearsome than first thought”.

A spokesman for the ACCA said that the safeguards look relatively robust, on paper at least, and it is unlikely that any who has unpaid tax taken in this way will be left penniless.

However, he added that there remain some concerns over how efficient HMRC can be in maintaining the safeguards. Meanwhile the Low Incomes Tax Reform Group has called on the taxman to give more concrete assurances about the right to appeal any seizure.