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UK to Raid Bank A/Cs Over Tax Debts

UK to Raid Bank A/Cs Over Tax Debts
UK to Raid Bank A/Cs Over Tax Debts

Controversial plans that allow Britain's HM Revenue and Customs (HMRC) to raid bank accounts to collect tax debts have been revised by the Treasury.

Under the revised plans, taxpayers will have longer to appeal before any raid, BBC reported. Announced by George Osborne in the Budget, the powers allow HMRC to seize assets from anyone who owes more than £1,000 ($1,565.7) in tax or tax credits, subject to certain safeguards. But the proposals attracted criticism from banks, MPs and debt charities.

The revised plans also mean that HMRC will have to hold face-to-face meetings with debtors first before taking any money from their accounts. And under the original safeguards, HMRC said it would not empty debtors' bank accounts completely, but leave at least £5,000 in them.

"It's a good day for taxpayer confidentiality," says Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants (ACCA).

"While ACCA would have preferred the power were not being proposed at all, we consider where we are today is light years better than what was originally being proposed." Roy-Chowdhury welcomed the fact that vulnerable taxpayers would be "identified and taken out of the process entirely".

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said the changes were "something of an improvement", but added: "These new powers to raid bank accounts may still be subject to HMRC error, which is far from unknown. "We remain concerned that this could cause further financial problems for people who are already in difficulty."

  Judicial Review

Under the revised proposals, the appeal process will be extended from 14 days to 30 days, the Treasury said.

Debtors will have the right to appeal first to HMRC, but if they are still unhappy they will be allowed a further 30 days to appeal to the County Court for independent judicial review.

"Throughout the consultation process, we have maintained that the rule of law should not be undermined," said Anne Fairpo, president of the Chartered Institute of Taxation.

"It is for this reason that we are especially pleased to see changes allowing appeals to the county court."

The Treasury reiterated that these powers would only be used against debtors who had consistently refused to engage with HMRC or pay their debts. About 17,000 people are estimated to fall into this category, owing £5,800 each on average. Recovering these debts could return £375m to the Treasury over four years, Budget papers revealed.

 

Financialtribune.com