Tag: Budget 2014

Should HMRC be allowed to collect tax debts from bank accounts?

Last Wednesday’s Budget included a proposal to allow HMRC to recover tax and tax credit debts of £1,000 or more directly from the taxpayer’s bank and building society accounts, including ISAs.

HMRC can already seize goods, or take proceedings for recovery of income tax in the courts, and interest is charged on tax paid late. But the proposal for “direct recovery” of debts has caused some alarm. We are promised a consultation but the idea is a worrying one, particularly in relation to tax credit claimants.

The government has said at least £5,000 will be left for the taxpayer, and the new power – to be introduced in Finance Bill 2015 – will be “subject to rigorous safeguards”. BBC News quoted an HMRC spokesman as saying the measure was targeted at “people who have, on average, over £20,000 in their accounts but are refusing to pay their debts”. He added that the power “will only affect a tiny number of debtors whom we have contacted a minimum of four times to ask for payment”.

But the BBC also quoted Chas Roy-Chowdhury, head of taxation at ACCA, as saying that if a business’s bank account was raided, it may find there was not enough money to pay staff.

In a submission on Friday to the House of Commons Treasury Committee, the Chartered Institute of Taxation warned that the announcement gave no details of judicial or other safeguards (other than the £5,000 rule) to protect taxpayers on low incomes struggling with debt.

The CIOT said that the power “could actually discourage compliant behaviour”.

It added: “People who owe HMRC £1,000 or just over may simply be people on low incomes or low wages who have come into difficulties and are in debt not only to HMRC but also to others, notably public utilities. To let HMRC raid their bank accounts without safeguards or recourse to the courts – or with inadequate safeguards – would be to flout the rule of law in a manner unworthy of a public service body. It is not the same as seizing physical goods, it is depriving the debtor of the very means to live.”

The idea may be short lived. Based on what we have seen so far, I hope so.

Budget 2014: The detail and the summaries

HM Treasury and HMRC have posted hundreds of pages of information on yesterday’s Budget, and this page is a useful starting point. HMRC’s short overview of the key announcements is here.

A longer HMT/HMRC overview of tax legislation and rates etc has more than 170 pages but it deals with more than the Budget. It sets out

(a) measures to be included in next week’s Finance Bill (most of which had already been announced) and

(b) measures to be legislated in next year’s Finance Bill (or, in the case of the class 2 NICs simplification measure for example, “when parliamentary time allows”).

There is a lot to digest for tax professionals, and some of yesterday’s announcements will affect clients either immediately or very soon.

Some professional firms and tax publishers have already posted summaries, but much of the detail will not be known until the Finance Bill appears on 27 March. The summaries focus, naturally, on the practical impact of a tax policy announcement rather than the policy itself, and they include this one from LexisNexis*:

Budget 2014: Lexis PSL Tax Analysis

Budget 2014: Tolley Guidance and Tolley Library

There is also useful commentary elsewhere, including:

Financial Times (£)

ICAEW Tax Faculty

KPMG

Macfarlanes

Pinsent Masons

Budget 2014: A briefing for MPs

The Budget will be delivered on Wednesday 19 March. Every year I have more sympathy with the (very few) people who call for it to be banned. Tax policy announcements and other major developments can now happen at any time, in written ministerial statements and appearances on the Andrew Marr Show, and tax policy and administration are debated daily. There really is no need for such a fuss.

Tax professionals will be less interested in the rowdy proceedings in the Commons bear pit than the hundreds of pages of Budget documents released when the chancellor sits down. There will be a new Finance Bill on 27 March, most of which was released in draft last December for consultation.

Yesterday (14 March) the Treasury and Parliament websites linked to information on the Budget including a briefing for MPs, prepared by the House of Commons library:

Treasury: Budget 2014

Treasury: All about the Budget

Parliament: Budget 2014 statement

Parliament: Background briefing Continue reading “Budget 2014: A briefing for MPs”