HMRC can now take money from your bank account without your permission-Budget 2014

keyser666

Think this takes the pee

Buried deep in the Budget document, there's a pretty significant HMRC power grab.

If officials decide you owe them money, they now have the ability to take it directly out your bank account. No insolvency proceedings, asset freezes or debt collection agencies. Just the government taking out whatever it thinks it's owed.

There are restrictions. The power can only be used once you've received a couple of letter and a phone call from enforcement. It only applies to people who owe over £1,000. HMRC must leave at least £5,000 in your account.

Once they get the money they put it on hold for 14 days and you've got a chance to get in touch and set up a payment plan. If you don't, or you still refuse to pay up, they go ahead and keep it.

All's fair in tax dodging, you might think – and indeed that will be the sentiment that George Osborne hopes will override concerns about the policy.

But the plot thickens.

A couple of points above the bank account section, there is another power HMRC has taken for itself: it now gets to take money from you in expectation of a future legal victory.

This is how it works: your tax adviser recommends you use a tax avoidance scheme. They reckon HMRC might dispute it, but it's worth a punt. You legally have to mention the fact you're using the scheme to HMRC. If they don't like the look of it, they challenge you. Usually (80% of the time) they win. The internal decision, unsurprisingly, goes their way, and most subsequent legal challenges to it fail.

Up until now, you could keep the money while the process took place. Now, HMRC takes the money immediately and gives it back to you with interest if you win.

From the Treasury's view, this is just a case of applying the same rules to tax dodgers as they do to normal taxpayers. After all, you don't get to hand your income tax over to officials when you fancy it. It's taken before it gets to you.

But in truth this is a completely different matter. This is a dispute. The new rules mean you are being penalised in expectation of a future government legal victory. Which seems a bit off, constitutionally speaking.

But if you put these two policies together, something quite drastic rears its head.

This is a significant power grab.

The state can now confiscate your money directly from your bank account while it decides if you have broken the law or not.

Valli

wow...that's appalling - very 'Big Brother'

powerful_Rogue

I personally see no problem with it. Then again, I have no issue with 'Big Brother'.

jaydeeuk1

Time to get an offshore bank account methinks.


Does this just apply to individuals or LTD companies too? Not that it would affect vodafone etc

browneyedbazzi

This doesn't bother me at all...I pay my taxes and have no intention to try to avoid doing so.

As for something being 'a bit off, constitutionally speaking', I don't see how it can be since the UK does not have a constitution. It may not be in keeping with the ECHR as it gives people the right to peaceful enjoyment of possessions, so it may be open to challenge - however that right is no absolute in the way that many others are.

Pennywise

browneyedbazzi wrote: »

This doesn't bother me at all...I pay my taxes and have no intention to try to avoid doing so.

In theory I agree, but after having many painful dealings with HMRC including their sheer incompetency and being unable to actually get them to correct mistakes, this change is a big risk and could well cause a lot of people serious problems.

For example, if a business, on one hand, owes VAT, but on the other is due a repayment of say PAYE tax, common sense would dictate that one should be set against the other, but in the barmy world of HMRC, they'll hound you to the ends of the Earth for the amount due to them yet stall and find every excuse under the sun not to refund the amount they owe you. Neither department will talk to eachother and all you can ever speak to are the call centre operatives who have no power to actually do anything.

Until you've been at the receiving end of HMRC mistakes and found yourself unable to communicate with anyone with authority to correct problems, you can't possibly imagine just how bad they are to deal with.

George_Michael

browneyedbazzi wrote: »

This doesn't bother me at all...I pay my taxes and have no intention to try to avoid doing so.

I also pay my income tax on time every year and have my tax return processed by a professional accountant but this didn't prevent HMCE sending me a demand for £14,200 a couple of years ago.
They claimed that I had underpaid over the previous 3 years and despite me getting my figures checked and double checked, it still took them 11 months before they finally admitted that I actually owed them nothing.
If they had been able to simply access my bank account and take this money, It would have left me very hard up until it was returned.

I do my weekly shopping in ASDA and do you think that it would be acceptable for a supermarket security guard to delve into my shopping bag and confiscate my goods until I had a chance to prove that I had paid for them?

Baggieboy_2

Not in the least bit worried. HMRC keep impeccable records and never make mistakes. Oh wait...

molerat

HMRC are always correct, they would never send out a refund cheque unrequested if they thought they did not owe it would they

marliepanda

George_Michael wrote: »

I also pay my income tax on time every year and have my tax return processed by a professional accountant but this didn't prevent HMCE sending me a demand for £14,200 a couple of years ago.
They claimed that I had underpaid over the previous 3 years and despite me getting my figures checked and double checked, it still took them 11 months before they finally admitted that I actually owed them nothing.

In this case though you would have had 2 letters, and a phone call from 'enforcement' so plenty of time to get the ball rolling on fixing it, and I dont see how leaving anyone with £5000 in an account would cause hardship.

keyser666

marliepanda wrote: »

In this case though you would have had 2 letters, and a phone call from 'enforcement' so plenty of time to get the ball rolling on fixing it, and I dont see how leaving anyone with £5000 in an account would cause hardship.

Possibly would to a business in terms of costly items to complete contracts and cashflow