One of the unexpected measures introduced in the budget was a right for HMRC to take money in settlement of tax debts straight from taxpayer bank accounts so long as at least £5,000 is left for their remaining use.
I admit I have significant concerns about this new right despite the fact that I have, for some time, demanded that HMRC take better steps to recover tax debt. That is because there are two issues that need to be separated here.
One is about people not paying tax debt. Measures to help recover this are reasonable, including the power to take assets. There is no doubt at all that many people with proven tax debt where there remains no dispute remaining as to the sum owing do still try to avoid making settlement to HMRC using almost any ruse they can. For these people I have little sympathy. Powers for HMRC to recover debt in these cases at lowest cost are reasonable. This new power could help achieve this goal.
However, the other situation is taking payment when the tax debt is disputed. That is unacceptable. When a debt has not been proven there should not, in my opinion, be a right for HMRC to take cash from a taxpayers account. This new rule does therefore require proper protections including a fast track appeals system against any threat of inappropriate recovery of sums in dispute (which of course may be only part of the total sum owing) that must be administered efficiently, quickly, and independently of HMRC or there is real risk of abuse here.
Tax justice is, I stress, a two way process. Very often I am concerned at taxpayer abuse but it would be quite wrong to think a tax authority could not abuse its powers. Appropriate checks and balances must always be in place, and in this situation it is not clear that HMRC will be subject to them and that worries me.
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I don’t feel concerned about this proposal which is unlikely to affect many ordinary people. Any one who has not yet retired and has more than £5000 sitting in a bank account s a pretty wealthy individual, and you would have thought they would have complicated enough tax affairs to need to talk to HMRC rather than defy them.
You are very out of date – £5000 “sitting in a bank account” is not wealth, it is less than six months’ salary (which is what people are recommended to have set aside in case they lose their job suddenly), and it is less than the price of a new central heating boiler.
I am nit sure who you buy boilers from
My last was much less than that
It’s bang up to date for me Rachel. There are not many civil servants or other public sector workers with £5000 sitting in a bank account, unless it’s the sort that manages another 100 public sector workers.
I’m afraid you and LeeT are simply a different class from me and at least 70% of the country. For ordinary people a mortgage and £5000 owed on a credit card is more likely
And isn’t it strange that the self-employed people with on paper less money than a civil servant or even negative income still live in big detached houses and drive BMWs?
Perhaps I should have spelled it out: new boiler plus the labour and materials to install it and bring the system up to date, ie to comply with current legal requirements. I live in London.
“Any one who has not yet retired and has more than £5000 sitting in a bank account s a pretty wealthy individual”
Nonsense. Leaving aside the risk that someone might have a larger sum in their account for a limited period (e.g. between receiving funds on a loan and paying for whatever the loan was for) £5,000 is a modest level of savings. Anyone saving up for a house deposit, for example, could have much more than that. Anyone who likes to keep 6 months pay as ‘rainy day’ savings would have more than £5,000.
Of course there are millions of people who could only dream of having that much saved – but that doesn’t mean that those that do are especially wealthy.
“and you would have thought they would have complicated enough tax affairs to need to talk to HMRC rather than defy them.”
Well, except for all those self-employed people who inevitably have compliexities in their tax affairs, but (as this blog regularly points out) are usually far from wealthy. Or, perhaps, you could fall victim to an error? It happens frequently (as we’d expect, given the number of people HMRC have to deal with. Or perhaps a tax dispute might arise as a result of an atypical event (an inheritance, perhaps). Lots of things can go wrong.
Richard is absolutely right. HMRC is already immeasurably powerful when pitted against any individual (and the vast majority of companies) and this change, whilst it might be well intended, gives them the power to ‘impoverish now, ask questions later’, which is entirely inappropriate.
I am well aware that for those in the lowest 20% of the wealth profile £5,000 is a lot
It may be for many a sum quite unimaginable
But it should not be
A rainy day fund is not wealth, it is a safety net
The threading on this blog is very odd.
I don’t have £5,000 sitting in the bank but most of my acquaintance seem to have a lot more than that.
Perhaps it’s the chancellors way of advising us not to keep more than £5k in a bank account?
A little off topic, but I remember the “man from the pru” coming around when I was a lad. My parents were never wealthy – when I was born my mother was a barmaid and my father a sales rep for a whisky company – but they could manage to put a few quid away each month in a scheme which prevented them having easy access to the money. I am not certain such a thing exists these days – thrift clubs are the closest analogy but seem often to be the targets of fraud. And I am not pretending the man from the pru was without fault – no doubt he was blighted with many of the faults of the financial system generally. But it meant that people had the chance to build up a safety net that could only be accessed in true times of need.
Perhaps nothing indicates the change of culture in the last 30 years more than the decline of such schemes and the rise of commoditised credit, most obviously in the case of mobile phone plans. I had to go to court recently and at least half of the cases were people being sued by phone companies for £600 to cover the “remainder” of their contract after losing their job. Why on earth have we ended up with a system that, for so many, makes it so easy to become mired in debt and so difficult to make the savings that would provide a safety net?
The man from the pru and the coop were endowment policies. You could still get them 10 years ago, I think especially the coop they have advanced their systems.
These were great schemes, however they got caught up in the endowment mortgage scam that happened.
I agree they are great schemes its a shame they lost their goal during the 80’s.
Roger, the answer to your last question is essentially what this blog seeks to oppose, namely neoliberal economics. Far from doing what its right wing proponents say, namely promote ‘self-reliance’, ‘self-help’ (and any other dreary Thatcherite slogan you care to think of), it has given us ever increasing levels of debt, both private and public. Well done Mrs T!
And mrs T thought that the only money government had was that which came from Tax payers – she was mendacious and hypocritical, she knew she was hoodwinking the populous as her husband was high up in the oil industry (Burma Oil -then).
She never stood on her own feet!
¨Osborne snubs pleas to shelve self employment crackdown¨
http://www.constructionenquirer.com/2014/03/19/osborne-snubs-plea-to-shelve-self-employment-crackdown/
Well said. I recall reading of one business who was shut down by officials from another government department (possibly environment) who took a very zealous approach to enforcing waste or IP regulations. The businesses in question were shutdown due to funds being seized, even though it was later proved incorrect (and I do not recall if funds had been returned by the time of writing). The officials meanwhile were proceeding under a target culture which incentivised the outcome.